Boosting Competitiveness through Skills Development in Uzbekistan

Larissa (right) with the author at the factory.
Larissa (right) with the author at the factory.

By Cristina Martinez

More available skills at a low cost will help young Uzbeks make the most of their education.

Larissa has a degree in chemical engineering. Unfortunately, she works on the packing line of a local company filling boxes with copper pipes in Angren, a district in Tashkent region, Uzbekistan. Larissa is keen on getting a higher-level job, but needs formal training that is not available, so she is forced to teach herself the skills required for a promotion.

This Uzbek woman works in a manufacturing plant of 195 employees—85 of whom are college graduates, and 43 are women—that produces copper pipes for refrigerators and air conditioners sold in the domestic market. The company wants to become more competitive, but achieving this goal requires investing in technology and in its human resources, and for the government to create a conducive environment for businesses to flourish. New jobs can then be created as the firm expands its operations – hopefully higher quality jobs.

Anticipating and addressing labor market challenges has become a priority in Uzbekistan, where the working age population is projected to increase over 30% by 2030 with a rising unemployment rate (5.2% in 2015). As one of the youngest countries in Asia and almost 60% of the population under the age of 30, Uzbekistan will require a high rate of job creation and well-functioning labor markets to absorb this economically active young population.

Larissa is the victim of the mismatch of skills and demand in the labor market, and a lack of employer-specific skills training. To address the mismatch and the skills gap, the country needs to obtain a thorough understanding of the future skills needs, what training is available, and establish a comprehensive skills development plan.

ADB recently approved a policy and advisory technical assistance program financed by the Government of Japan that will contribute to establishing a framework for a more effective and relevant skills development system that supports industrial modernization and inclusive growth. The focus of the program will be on building a cross-ministry system for identifying existing skills gaps, forecasting the country’s skill needs, and mapping the nature and scale of technical and vocational education and training (TVET) in the country. It will also design options to improve the skills development system. The technical assistance aims to improve the labor market and enhance regional competitiveness in three pilot industrial areas: Navoi, Angren, and Andijan.

The program will help Uzbekistan analyze the demand and supply of skills through dedicated surveys of firms and education providers. It will provide a platform for the government to assess the degree of mismatch between skills supply and demand. The technical assistance will also design and establish a pilot skills monitoring system—including gender-disaggregated components—to monitor the changing demands for skills, identify changes in industry skills needs, and provide information for TVET providers to adjust program offerings to meet emerging skill demands. This system will include mechanisms for anticipating and responding to changing skills needs resulting from shifts in regional trade patterns, and the emergence of greening key sectors like energy and water.

For the first time in Central Asia, ADB will focus on the skills development needs of small firms. Small and medium-sized enterprises (SMEs) are crucial for industrial modernization, trade and exporting strategies and for the development of regional and global value chains in the region. The needs of SMEs differ sharply from those of large enterprises; they have greater challenges accessing capital, maintaining their growth, and in identifying skills needs to develop and innovate their products and services. Significantly, SMEs train employees up to 50% less than large firms, and access to training is often limited to the management or owner.

Although the project will be implemented in Uzbekistan, the issues to be addressed are relevant for all Central Asian countries. A knowledge-sharing platform, open to all countries in the region, will discuss how investing in SME skills development can accelerate the preparedness of these firms to compete in regional and global markets, and enhance the productivity of their human resources.

More available skills at a low cost will hopefully help Larissa and young people like her to make the most of their education to achieve their professional ambitions.