El Tiregi Brainstorming

An open discussion of the initiative from the 'El Tiregi' Industrialists and Entrepreneurs Union took place on July 29: Universal basic income "42500 to everyone who needs. ALWAYS!"

Madiyar Kenzhebulat, Economic Research Institute leading researcher took part in the brainstorming session once again.

The event speakers were public figures and economists: Murat Abenov, Kasymkhan Kapparov, Khalida Azhigulova, Kanat Nurov, Aziza Shuzheeva, Bakhyt Syzdykova and many others.

The views of international experts were presented in the broadcast: Dalin Hasan - Executive Director and Host of Euronews UAE;  Giovanni Capanneli, Director of the Representative Office of the Asian Development Bank in Kazakhstan;  Brandon Bochenski - Mayor of Grand Forks, North Dakota (ex-captain of the Kazakhstan national team and Astana-based HC "Barys").

The universal basic income is a response to inequalities that have exacerbated during the Covid-19 pandemic.

During the Covid-19 outbreak, many countries are considering support measures for the population to mitigate the ongoing parallel crises: a pandemic and a developing economic depression.

Economic initiatives are necessary, but they must be strategic and sustainable, experts say.  Universal basic income (UBI) proposal has been submitted to the government as a financial “safety cushion” for citizens.

The introduction of UBD in Kazakhstan is necessary, because protection from poverty should be a right, not a privilege.

Note that, according to the latest forecasts of the World Bank, Kazakhstan's poverty level may increase from the projected 8.3 to 12.7 percent in 2020. This means that 800 thousand citizens of the country may find themselves below the poverty line.

Speaking about the effectiveness of UBD introduction, Madiyar Kenzhebulat appeals to the experience of other countries.

According to him, basic income was introduced in Spain during the pandemic, and Alaska has been paying similar benefits to all residents of the state for decades.

“The universal basic income (UBI) is able to meet the minimum needs of citizens.  However, according to the World Bank criterion, it should be targeted to those whose income is below 60% of the median income level.  Over the past 10 years, the share of such a population in Kazakhstan averaged 10% (9.7% in 2019).  Accordingly, if UBD is provided in the amount of the subsistence minimum (42,500 tenge) to 1.9 million people monthly, the cost of it will amount to 970 billion tenge annually,” the economist notes.

In his opinion, it is quite possible to introduce this measure without resorting to an additional increase in tax rates.

“There is a problem of the shadow economy.  Even according to official data, 24% of the economy is in the shadows. If this economy is brought to light, then it can give 4% of GDP.  This covers almost three times (the amount required for annual UBD payments - ed.).  That is, even without increasing taxes, we can (pay UBD - ed.) "

As world experience shows, basic payments from the state have a positive effect on many social and economic indicators, including issues of employment and crime reduction.

In this situation, the universal basic income could become a stimulus for the economy of Kazakhstan, contributing to the reduction of social inequality.