INSTITUTIONS OF
BANKING SYSTEM
The two-tier banking sector, established in 1991, is composed of the central bank (CBRU) and commercial banks (29). In the commercial banking sector, domi- nated by the state (>65%), the most common model is that of a universal bank. The banking reforms brought legal restrictions on the liberalization of interest rates, the crawling peg of the som currency (UZS), the in- The labour code of Uzbekistan (adopted in 1995) enables relatively free formation of labour relations. However, there are restrictions concerning the ap- plication of temporary contracts and the period of notice is independent of seniority and equals two months. There is a minimum wage but established at a low level. In 1992-2012 the employment rate
troduction of a system of deposit insurance (DGF) and the Capital Adequacy Ratio at the level of 1%. Both the shape and the surface area of the banking reforms triangle (BRT) indicate the lack of progress in the construction of the banking sector institutions in Uzbekistan. In relation to industrialised market econo- mies, the country exhibits a very significant transition gap. The scope of bank intermediation, measured by the domestic credit to private sector in per cent of GDP, has dropped below 20% and is relatively low. The banking sector in Uzbekistan does not support the economic growth of the country.
hardly changed, remaining largely at the average level of 53% (42% for women). Just as in other countries of Central Asia, the scale of economic emigration is quite significant, especially to Russia. It is estimated that the value of remittances sent to Uzbekistan was the largest among all the immigrant groups working on the Russian market.
Tab. 1. Labour market institutional indicators
Source: Lehmann and Muravyev [2012], Muravyev [2010]
Fig. 3. Index of Labour Freedom Source: Heritage Foundation [2014] 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 0 10 20 30 40 50 60 70 1995 2000 2005 2010 2005 2010 1990 1995 2000 2005 2010
IEF FREEDOM HOUSE
3,0 3,5 4,0 4,5 0 10 20 30 1995 2000 2005 2010
IEF FREEDOM HOUSE
1996 2004 2011
1990 2000 2010 POLE POWIERZCHNI
TRB KREDYT DLA SEKTORA PRYWATNEGO
2.6 2.33 1995 2007 - 38% - 36% - - - - - 6 GOVERNMENT EFFECTIVENESS VOICE AND ACCOUNTABILITY -1.5 -0.5 0.5 1.5 CONTROL OF CORRUPTION
INDEKS REFORM BANKOWYCH
POLITICAL STABILITY NO VIOLENCE
REGULATORY QUALITY
UDZIAŁ SEKTORA PRYWATNEGO W AKTYWACH BANKÓW
INDEKS REFORM PRZEDSIĘBIORSTW
RULE OF LAW
Pole powierzchni trójkąta reform bankowych (lewa oś)
Kredyt dla sektora prywatnego (w relacji do PKB, prawa oś)
10 20 30 40 50 60 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 1995 r. 2007 r.
Indeks prawnej ochrony
pracowników (EPL) 2,6 2,1
Udział podatków i składek na
ubez. społ. w kosztach pracy - 33,4% Zasiłek dla bezrobotnych w
relacji do średniej płacy 45% 18% Zasiłek dla bezrobotnych -
maks. czas wypłacania 12 mies. 12 mies. Wydatki na ALMP jako odsetek
PKB - 0,1%
Odsetek prac. najemnych
należących do związków zaw. - 20%
Wskaźniki instytucjonalne rynku pracy
100 90 80 70 60 50 40 30 20
INDEX OF LABOUR FREEDOM EMPLOYMENT PROTECTION
LEGISLATION INDEX (EPL) SHARE OF TAXES AND SOCIAL SECURITY CONTRIBUTIONS IN LABOUR COSTS
AVERAGE UNEMP. BENEFIT AS A % OF THE AVERAGE WAGE MAXIMUM DURATION OF UNEMP. BENEFITS (IN MONTHS)
EXPENDITURES ON ALMP AS A % OF GDP
TRADE UNION MEMBERS AS A % OF THE EMPLOYED 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 0 10 20 30 40 50 60 70 1995 2000 2005 2010 1990 1995 2000 2005 2010 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 0 10 20 30 40 50 60 70 1995 2000 2005 2010
IEF FREEDOM HOUSE
10 20 30 40 50 60 70 80 90 100 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 3.0 2.0 1.0
BANKING REFORM AND INTEREST RATE LIBERALISATION ASSET SHARE OF PRIVATE BANKS
77
CONCLUSIONS
When at the beginning of the 90s of the 20th c. the transition process began, the countries of Central and
Eastern Europe were quite a homogenous group, at least with respect to their institutional environment. This homogeneity was the result of the lack of political and economic freedom, and the low quality of governance. The economy was dominated by the state ownership of the means of production and the non-market, planned allocation of resources. On the labour market one could observe the imbalance of demand and ineffective use of workforce. In the banking sector, there was a monopoly dominated by state ownership.
However, with time, transition countries started to differ with respect to institutions and economic results. These were influenced by the pace of democratization, the adopted strategies of economic transition (concerning macroeconomic liberalization and stabilization, as well as ownership transformation), initial conditions (especially with respect to the structure of the economy), the extent of transition recession, the size of the country, etc.i Apart
from that, some of them, i.e. countries which emerged after the dissolution of Yugoslavia and the USSR, were ad- ditionally affected by political instability and ethnic conflicts. Another factor important for the efficiency of political and economic reforms was a country’s willingness to join the EU, the OECD or the NATO, as membership in these organizations is subject to compliance with standards of democracy and civil liberties.
After more than two decades, the group of transition countries is quite heterogeneous with respect to both politics and economy. It includes both fully democratic and authoritarian countries, countries of both high and low income per capita. In some countries, the transition process may be regarded as completed – they have turned into demo- cratic market economies, which was confirmed by their accession to the EU (at the end of 2013 this applied to as many as 11 of these countries) or the OECD (6 countries in 2013). The pioneers of changes with respect to political and economic reforms were the countries of Central Europe and Baltics (CEB) and Slovenia. In 2012, 8 countries regarded as fully democratic (Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Slovakia, Slovenia) were classified as countries of high income per capitaii (according to the World Bank’s methodology, these are
countries with the income exceeding 12 615 USD). Still, not all the transition countries have smoothly undergone their transition into a democratic market economy. Some are still in the process, encountering serious political and economic problems. In 2012, two countries – Kyrgyzstan and Tajikistan – were still classified as countries of low income per capita (below 1 035 USD). At the same time, Belarus, Turkmenistan and Uzbekistan are regarded as countries which have not introduced reforms to become democratic market economy. They are still dictatorships and their economic systems are far from market economies.
The analysis carried out in this report, as well as in other studies conducted by its Authors as part of a research project of the National Science Centre, NCN (referred to in the footnotes), brings conclusions and recommenda- tions concerning institutions conducive to the economic efficiency in the transition countries.
Having analysed and compared state institutions in the transition countries, the Authors of the report drew the following conclusions:
1. As far as the institution of state is concerned, there has been an institutional divergence among the transition countriesiii. We can distinguish between two main groups:
78
political and economic freedom, we can observe the progress of institutional convergence between the EU-15 countries and the CEB and SEE countries. With respect to governance and the execution of property rights, the distance to the EU-15 countries is still significantiv. Only in Estonia and Slovenia the rule of law and control ofcorruption are at a high level.
- the countries belonging to the Commonwealth of Independent States (CIS), in which the results of the transition of state institutions have been very diverse. In countries such as Belarus, Turkmenistan and Uzbekistan, the transition has come to a halt. They are dictatorships, offering little economic freedom and poor governance. The situation is lightly better in Armenia, Azerbaijan, Kazakhstan, Kirgizstan, Russia and Tajikistan. The greatest scope of political freedom is offered by Georgia, Moldova and Ukraine, but only in the first two of them, political freedom is combined with a significant scope of economic freedom and a high – in comparison to other coun- tries in this group – quality of governance.
2. In the transition countries, the changes in the scope of political and economic freedom have usually taken place simultaneously. The countries with a significant scope of political freedom have also significant scope of economic freedom and vice versa – in countries where the political system is repressive, the level of economic freedom is also low. Countries which made the greatest progress with respect to political freedom, have also significantly increased their economic freedom and governance. There are no clear examples of the so-called “benevolent dictatorships”, i.e. countries deprived of political freedom but offering economic freedom, rule of law and good governancev.
3. In the transition countries, democracy and economic growth are not competitive goals of development. The countries which had at their disposal the best state institutions achieved in the analysed period the greatest pace of economic growth. The relation between state institutions and the economic growth was not only po- sitive but also mutualvi.
4. Countries which have not developed efficient state institutions are more prone to political and social desta- bilisation and a slow pace of economic growth. The persisting significant distance between the developed countries and the transition countries (mainly from the CIS group) with respect to state institutions may indi- cate that these institutions may function as barriers to economic development.
Having analysed and compared the labour market institutions in the transition countries, the Authors drew the following conclusions:
1 The labour market institutions in the transition countries were developing in 1990-2013 in a very diverse way, as a consequence ofvii:
- the heterogeneous pace of transition in particular countries;
- the structural differences between particular economies at the starting point of the transition; - frequent changes of economic policies concerning the labour market.
It must, however, be mentioned that the fact that many governments implemented interim labour market po- licies is not only a manifestation of low political stability of the transition countries, but also a result of the lack of clear-cut recommendations concerning the labour market policy, which could be successfully implemented in these countries.
2. Despite significant differences, some general tendencies common for the transition countries can be found. Those countries which at the early stage of the transition decided to significantly increase the flexibility of their labour markets, recorded a quicker growth of labour productivity and real wagesviii. In spite of the considerable
increase of the unemployment in the short run – in the long run, the changes resulted in easier access to the global economic system and enabled the integration with the EU. At the same time, those countries which chose a slower pace of reforms, recorded a slower increase in labour productivity and a slower pace of eco- nomic development. As a result, the level of expenses on the labour market policy has been lower, just as real wages. A common problem is also a lower level of respect for the labour law, as well as significant informal employment.
3. The transition countries have been a kind of laboratory in which one can observe interdependencies between the changes in the labour market institutions and the changes in other institutions of the social and economic life. The findings includeix:
- there is a correlation between the progress of the privatisation process and the increase in expenses on the labour market policy and the decrease in the trade union density;
- those transition countries which supported the development of free competition also often decided to strengthen the legal protection of employees;