Human Rights in the Sphere of Labor Relations – The Right to Social Security
As a result of consistent state policy in the Republic of Kazakhstan in the field of remuneration of labor, a legal basis was established which allows organizations basing their legal form on the conditions of a market economy to settle matters of remuneration of labor in the course of social dialogue by means of collective agreements and branch agreements.
As is well known, the Constitution of the Republic of Kazakhstan establishes the minimum wage, lesser than which employers have no right to pay citizens. The principle of the contractual regulation of salary was introduced to control relations between employees, employers, and trade unions by means of collective agreements and contracts in the conditions of a market economy. The salaries of employees of state organizations are controlled.
Thus, by annually estimating the level of the minimum wage and increasing the salary of employees of state organizations, the Republic reaches its economic potential, since uncontrolled increase can be incommensurable with the capacities of the state budget. At the same time, to settle the issue of the determination of the minimum wage, the Government takes certain steps. Annual increase of the minimum wage surpasses corresponding inflation growth.
In addition, presently, the minimum wage is based on the minimal subsistence level.
According to data from the Statistical Agency of the Republic of Kazakhstan the number of employees who in 2008 received a salary comparable to the minimum wage was 1,5 % (40,520 people) of the total number of employees in the country.
The Government of the Republic of Kazakhstan incrementally increases the salary of employees of the state organizations with the simultaneous improvement of the labor remuneration system. Thus, the salary of employees of state organizations (excluding government employees) during the period of 1998 through 2008 increased from 6,851 tenge to 35,253 tenge, or by 5.1 times.
However, despite measures taken to increase the salary of employees of state organizations, the level of their salaries remains low in comparison with the average level in the Republic.
In the mid-term period, in compliance with the Message of the Head of State to the People of Kazakhstan on February 6, 2008, the salary of employees of state organizations will be doubled by the year 2012 in comparison with the year 2008.
In 2009, the salaries of employees of state organizations were already increased by 25% (Enactment of the Government of the Republic of Kazakhstan of December 24, 2008, No. 1257).
Currently, a work group involving representatives of trade unions and central state authorities is working under the Ministry of Labor and Social Protection. This group jointly with JSC “National Analytical Center Under the Government and National Bank of the Republic of Kazakhstan” is working to improve the labor remuneration system for employees of state organizations.
Based on their work, the development of a three-tiered system of labor remuneration is suggested, ensuring:
- Distribution of civil employees into managerial, main and auxiliary levels in accordance with their functions and level of responsibility, with a corresponding amount of official salary;
- Optimization of the system of additional payments and bonuses considering the specifics of the branch;
- The third component is the proposed introduction of compensation payments to reduce regional differences in standard of living.
The issue raised by the Trade Union Federation of the Republic of Kazakhstan (TUFRK) regarding the replacement of the base official salary (BOS) used for the calculation of salaries of employees of the state organizations with the minimum wage (MW) is also under consideration by the work group of the Ministry of Labor and Social Protection.
According to data from TUFRK, labor legislation is being violated in the Republic, adequate labor conditions and protection are far from being provided, employee discrimination is allowed, especially against women and youth, and an imperfect and unfair system of labor remuneration divides society into the poor and the rich.
The most important part the activity of trade unions are issues regarding salary, which vary in different branches and regions.
Thus, in November 2008, the average monthly nominal salary in the Republic reached the level of 59,575 tenge; however, however, the average in the agricultural sector amounted only to 46.3 percent of the national average; in health care organizations – 41.2 percent, and in educational organizations – 42.7 percent.
At the same time, the average salary of an employee in the financial sphere in November 2008 amounted to 127,000 tenge, in the mining industry – 107,500 tenge, in the transport and communication industries – 80,400 tenge, and in the construction industry – 82,600 tenge – that is 1.4-2 times more than the average national level.
In a regional cross-section there are also significant differences: in the Zhambyl, Northern Kazakhstan, and Southern Kazakhstan regions the average salary in October 2008 amounted to a little bit more than 40,000 tenge, while at the same time in the Atyrau and Mangistau regions – 114,000 and nearly 98,000 tenge correspondingly.
In the opinion of the Trade Union Federation, the Republic of Kazakhstan needs to take legislative measures to eliminate unfair disproportion in the field of labor remuneration of employees of various categories, to ensure a fitting salary for employees in the fields of education, health care, culture, and agriculture. Considering the economic growth of the regions and increased opportunities for businesses and organizations, it is necessary to reform the labor remuneration system. Correspondingly, the salary should be indexed quarterly according to the growth of prices for goods and services.
Taking into account that the Constitution declares that Kazakhstan is a social state, in 2007 the Trade Union Federation has developed suggestions on a formula for the determination of the National Standard of Living. These were sent to the Government, the Parliament, and NDP “Nur Otan.” The President of the Republic of Kazakhstan commissioned the Administration of the President to review and evaluate the reasonableness of the suggestions of the Trade Union Federation.
For this formula, the trade unions stress labor remuneration, pension security, the consumer basket, standards of medical and educational services, family social support, the provision of housing, and the provision of utility services.
First of all, they have in mind the determination of an approach to the establishment of a minimal subsistence level as the main basis for calculation of the minimum wage and other social payments.
Presently, state authorities are considering the suggestions on the National Standard of Living, taking into account the requirements of the Trade Union Federation of the Republic of Kazakhstan (further referred to as “TUFRK”).
Based on a study of the practical experience of CIS countries in the field of improvement of methodology for establishment of a minimal subsistence level, TUFRK has suggested that the Government of the Republic of Kazakhstan calculate the minimal subsistence level with due consideration to the zoning (regionalization) of the country in regards to the living conditions of the population.
In addition, TUFRK demands the re-calculation of the consumer basket based on the actual needs of the population.
It is necessary to increase the minimum wage guaranteed by legislation to a higher social indicator – the minimal consumption budget and the poverty limit should be determined at the level of minimal subsistence.
The Head of State has offered new parameters in social policy – by means of doubling the gross domestic product (GDP), to double the social expenditures of the State and eventually double the standard of living. However, the labor situation in whole reveals the unfair distribution of its results.
In Kazakhstan, the proportion of labor remuneration (even with “shady” payments) amounts to only 31.2% of the GDP, while in European Union countries it remains 50-56%.
Therefore, TUFRK thinks it is necessary to increase proportion of salary to the gross domestic product.
To implement the task of determination of the National Standard of Living, we recommend that the Government of the Republic of Kazakhstan ensure the following primary measures in the years 2009-2012:
Jointly with social partners, develop and approve the Concept of Principles of Social Policy in the Republic of Kazakhstan in order to determine the direction of forthcoming work and the rights and duties of agents of social policy regulation – state authorities, local authorities, entrepreneurs, business, and public associations;
Develop and approve the new Laws of the Republic of Kazakhstan: “On the Minimum Wage” and “On Employers;”
Ratify the International Labor Organization Convention No.131 “Minimum Wage Fixing Convention,” No.95 “Protection of Wages Convention,” No.26 “Minimum Wage-Fixing Machinery Convention,” and No.103 “Maternity Protection Convention;”
Ratify the International Labor Organization Convention No.102 “Social Security (Minimum Standards) Convention” in order to increase pension payments and on the basis of its provisions, to correspondingly amend the Law “On Pension Security;”
Establish in the Republic a special state office that would regulate prices since this function is not included in the powers of the Agency of the Republic of Kazakhstan on
Regulation of Natural Monopolies and Protection of Competition. Since there is no clear policy on regulation of prices in the Republic, the prices for goods of the first necessity keep on growing and the tariffs for utility and other services keep increasing.
In the Republic of Kazakhstan, there has long been a need to revise the employment policy with regard to categories such as “self-employed.” According to official data, the number of self-employed is 34.7%. The majority of these are women who are not paid for leave for pregnancy and birth, sick days, annual vacations, or pension installments, and who do not come under compulsory social insurance for damage to their health.
Another concern is the sum of employees’ salary debts, in view of which the social tension in labor collectives is increasing. In March 1, 2009, overdue salary debt amounted to nearly 2 billion tenge. The largest debts owed to employees belong to companies of the mining, processing, and construction industries, by region – Eastern Kazakhstan, Karaganda and Zhambyl.
According to records for the year 2008, state labor inspectors have revealed 6,008 violations of salary payment periods. In regards to the individuals who committed these violations, 3,216 written warnings were issued and 2,212 administrative fines were imposed to the sum of more than 73.5 million tenge.
The main reasons for unpaid salary violations are the impact of the world economic crisis on the country’s economy, the reduction of production, and the shutdown of companies, especially in the construction sector.
In addition, more than 13,000 companies and organizations in the Republic owe payments to pension funds.
As a result of inspections held in 2008, state labor inspectors revealed 649 instances of the unwarranted dismissal of employees. With regard to violations committed, 208 written warnings were issued and 154 administrative fines were imposed to the sum of more than 2 million tenge.
The review of violations related to the unwarranted dismissal of employees shows that employers violate laws due to lack of knowledge of labor legislation or its incorrect application, the negligence of responsible employees to their functions, or inefficient organization of labor.
There have been instances of discrimination against employees in the course of labor relations. Lack of individual standards in the Labor Code prohibiting the discrimination against citizens with regard to their right to labor remuneration, does not allow state labor inspectors to implement preventive punishment. Consequently, the people of Kazakhstan, working in their homeland, are discriminated against by foreign employers and work in unequal and more restricting conditions than foreigners.
Up to the present, foreign employers pay foreign employees salaries that dozens of times exceed the salaries of specialists from Kazakhstan fulfilling the same work and having the same qualifications.
For instance, in “Petro Kazakhstan Kumkol Resources JSC” last year the income of their foreign expert including salary and lump sum traveling costs amounted to 30 million tenge, while during the same period, the income of the expert from Kazakhstan fulfilling the same work amounted to 2.2 million tenge.
According to the labor agreement of “SNPS-Ai Dan Munai JSC,” Chinese specialists in the Republic of Kazakhstan are provided with an annual paid leave 90 calendar days long not counting travel time, while employees from Kazakhstan are given leave 24 calendar days long, additional paid leave 9 calendar days long for residence in environmentally unfriendly regions and 6 calendar days for work in hazardous (especially hazardous) and (or) in dangerous working conditions. In this company, the salary of foreign specialists amounts to 351,200 tenge, while the salary of Kazakh employees in the same positions amounts to 82,400 tenge. As a result, the difference in labor remuneration is more than four times. Discrimination in labor remuneration between foreign and domestic specialists is noted almost in all other companies.
Similar instances of discrimination are not unique and are revealed in foreign companies in the city of Almaty, and in the Aktyube, Atyrau, Western Kazakhstan, and Mangistau regions.
A review of the causes and conditions for such violations showed that despite the prohibition of discrimination for any reason, stipulated by Articles 14 and 24 of the Constitution of the Republic of Kazakhstan, the Labor Code of the Republic of Kazakhstan does not directly prohibit discrimination against employees with regard to labor remuneration.
However, these provisions are stipulated in the international agreements that are ratified not only by the Republic of Kazakhstan but also by the countries whose companies carry out their activity in our country.
Thus, according to Article 1 of the International Labor Organization Convention No. 111 “Discrimination (Employment and Occupation) Convention” (further referred to as “the Convention”), discrimination is defined as any difference, exclusion or preference made on the basis of foreign origin, resulting in elimination or violation of equality of opportunities or treatment in the field of labor and occupations.
In addition, Article 7 of the International Covenant on Economic, Social and Cultural Rights determines that the countries participating in the Covenant acknowledge the right of each person to fair and favorable working conditions, including a fair wage and equal remuneration for work of equal value without any differentiation.
It should be noted that, in harmony with Paragraph 2 of Article 1 of the Convention, any difference, exclusion, or preference with regard to certain work based on specific requirements is not considered discrimination.
In this connection, the above-mentioned problematic issues relate only to employees with the same qualifications and fulfilling the same work.
It should be noted that such social inequality causes an environment of conflict that can develop into mass and uncontrolled encounters at the international level and can destabilize the social and political situation both in individual regions and in the whole Republic.
The Labor Code of RK has established a legal framework in the field of labor protection. In the opinion of trade unions, the public inspector for labor protection is the most objective and most popular link in public control of labor safety and protection in the organizations. The public inspector for labor protection working continuously among the employees of his department affects the attitudes of employees towards the issue of labor safety and protection like no one else. The life, health, and work capability of employees depend on his competence in the field of labor safety and protection and on his active work. Meanwhile, according to data from the Emergency Ministry, in 2008 more than 216,000 violations of safety rules and standards occurred in industrial companies of Kazakhstan. According to their statistics, out of ten months of the year 2008, the total number of industrial accidents reported in the Republic of Kazakhstan amounted to 1990. The number of fatal accidents during these ten months of the year 2008 was 327.
In 2006, jointly with the International Labor Organization, the National Program of Decent Work was developed and approved for the years 2007-2009 in the Republic of Kazakhstan. The goal of the Program is the promotion of decent work as the main component of development strategy as well as the state policy maintained by the government and its social partners. It is necessary to take additional measures to improve the efficiency of labor protection specialists including the enhancement of the training system and the implementation of a systematical approach to labor protection in small companies. It is necessary to pay special attention to the adjustment of management systems to international standards.
The citizens of the Republic of Kazakhstan have the Constitutional right to a minimum pension and social security in old age, sickness, disability, or loss of breadwinner.
Foreigners and individuals without citizenship continually living in the Republic of Kazakhstan have the right to pension payments from the Center and government social benefits on the same level as the citizens of the Republic of Kazakhstan.
Since January 1, 2007, pensions and benefit payments are paid out on the principle “month to month.”
Starting from the year 2006, the uniform base social indicator for calculation of the state base social benefit payment is the minimal subsistence level.
Along with an annual increase of the minimal subsistence level, the state basic social benefit payments for disability, loss of breadwinner, or old age are incremental. Since January 1, 2009, due to the increase of the minimal subsistence level from 12,025 tenge to 13,470 tenge, the amount of the state social benefit (SSB) was increased on an average of 12 %. In the framework of the Message of the Head of State on February 6, 2008, a 9% average annual increase of the SSB is ensured with a view toward the further enhancement of the standard of living of the population.
In the Republic of Kazakhstan there is a multilevel system of pension security.
The introduction of the base pension payment in 2005, being the first (base) level, became the most important step to increase the income of elderly people.
Since 2008, its amount was established at 40% of the minimal subsistence level and it is proposed to retain this ratio until the year 2011.
Beginning in the year 2011, the amount of the base pension payment will be increased to 50% of the minimal subsistence level with subsequent incremental increases to 75%.
The second (compulsory) level of the pension security system is pensions paid from the solidarity system provided that individuals have a work record before January 1, 1998 (state budget), and from accumulation pension funds due to compulsory pension contributions.
More than 1.6 million pensioners are provided with pensions from the solidarity system, which is financed from the State budget.
Pension payments are increased annually according to the inflation level, and, beginning in the year 2005, the indexing was done in advance of the Consumer Price Index.
Since January 1, 2009, pension payments were increased by 30% for all recipients of pensions, taking into account the limitation of 75% of 28 times the monthly calculation indicator, but not less than by 22%. Because of this, the income restriction used for calculation of pension payments was raised from 25 times to 28 times the monthly calculation indicator (from 29,200 tenge to 35,644 tenge).
As a result there was an increase:
- Of 30 % – for more than 1332,800 pensioners;
- Of 22 % – for more than 1,500 pensioners;
- Of 30% with account to restriction of 26,733 tenge, but not less than by 22% – for more than 251,200 pensioners.
On the average, this allowed the increase of the average amount of pension payments by 25%.
During the last 9 years (2000-2009):
- The minimum pension payment with due account for the base pension payment was increased by 4.4 times (from 3,500 to 15,263 tenge);
- The average pension payment with due account for the base pension payment was increased by 5 times (from 4,462 to 22,493 tenge);
- The maximum pension payment was increased by 4 times (from 8,156 to 32,121 tenge).
The third (supplemental) level is pensions from voluntary individual and voluntary employer pension contributions.
The increase of pensions and state social benefit payments will be continued as well as the incremental increase of base pension payments.
Considering the fact that the accumulation pension system has existed during a relatively short period of time (by estimate, the optimal period of pension contribution allocation is over 40 years), the amount of pension payments from the accumulation pension funds are small.
With a view toward the implementation of the Message of the Head of State to the people of Kazakhstan “New Kazakhstan in the New World,” since January 2008, compulsory social insurance of pregnancy, birth and maternity for employed women has been introduced.
In case of loss of income due to pregnancy and birth, employed women receive a social benefit payment from the State Social Insurance Fund at the rate of the average monthly salary for all the days of their maternity leave as well as the social benefit payment for child care up to the age of one year in the amount of 40% of the average monthly income, provided that social benefit payments were allocated to the State Social Insurance Fund timely and fully.
If, previously, women were excluded from the accumulation pension system during their maternity and child care leave, upon the implementation of compulsory social insurance of pregnancy, birth and maternity, 10% of obligatory social payments are deducted as compulsory pension contributions and are transferred to the accumulation pension funds.
Thus, women during maternity leave and child care leave until the age of one year continue to accumulate their pension.
The increase of solidarity pensions and of the base social payment as well as the incremental increase of the state base pension payment will be continued.
The situation in the field of social relations as described above causes us to recommend that the Government of the Republic of Kazakhstan and the Ministry of Labor and Social
Protection of the Population of the Republic of Kazakhstan develop and approve the following legislative acts during the years 2009-2011:
- “On Amendments and Additions to Some Legislative Documents of the Republic of Kazakhstan with Regard to Social Security of Certain Categories of Citizens” (directed at the implementation of the Message of the Head of State to the people of Kazakhstan of 2008, time of execution – the year 2009);
- “On Amendments and Additions to Some Legislative Documents with Regard to Migration” (time of execution – fourth quarter of 2009);
- To improve the Labor Code, to make additions with regard to any kind of discrimination regarding labor remuneration of employees in foreign companies regardless of their nationality and citizenship.
- In 2011, to ratify the International Labor Organization Convention No. 128 Concerning Invalidity, Old Age and Survivors’ Benefits (Geneva, June 29, 1967).
- Take measures to toughen state control of compliance with labor legislation in companies with foreign shares; for every uncovered fact to take legislative measures to ensure the protection of the internal labor market against illegal migration and the ungrounded import of labor force into the Republic.
- In 2010, develop and ratify the Law of RK “On Collective Agreements.”