Kuandyk Ainabek
The Philosophy of Life and Business
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CHAPTER 7. DECENT LIFE CONDITIONS IN SOCIALLY ORIENTED MARKET ECONOMY
While forming the social orientation of the market economy, an important indicator of development is ensuring vital conditions of the country’s citizens. Traditionally, this indicator includes minimum of subsistence, minimum wage, amounts of unemployment allowances and pensions, rate of employment, unemployment, housing, access to healthcare, education services and other social benefits.
Thus, for instance, in 2006, according to the annual report of the International Labour Office “Global tendencies in the sector of employment – 2007”, the number of the unemployed worldwide remained at an unprecedentedly high level, being 195.2 million people, or 6.3 per cent of the total number of working-age population, despite the vigorous growth of economy. This figure of the unemployment rate has not actually changed since last year [1]. . . Experts of the International Labour Organization (ILO) – a specialized agency of the UN system, the purpose of which is realization of social justice principles, internationally acknowledged human rights and rights in the labour sector – also mention that just a few of 1.37 billion working poor people – those who work but live for less than USD 2 per day per person – have managed to get out of beggary [1]. The Director-General of the International Labour Office Juan Somavia especially emphasized: “The significant economic growth fixed during the recent five years has had just a slight influence on reduction of the number of workers and their families living below the poverty line, and the reduction of the number of the working poor has taken place in just a few countries. In addition, the economic growth has not made it possible to reduce global unemployment. And, most importantly, even in the conditions of the vigorous economic growth worldwide in 2007, there is still a grave concern with regards to the prospects of creating decent job opportunities and further reduction of the number of the working poor” [1].
For the last decade, the economic growth has led, to a greater extent, to labour productivity growth, and to a smaller extent – to employment growth. Labour productivity worldwide has increased by 26 per cent, and the number of the working people in the world has grown only by 16.6%. To restrain or to reduce the unemployment rate, the interconnection between economic growth and creation of job opportunities should be consolidate. Creation of decent and productive job opportunities, not merely job opportunities is a security of decrease in unemployment and reduction of the number of working families living in poverty. In its turn, it will make the prerequisites for future development and economic growth [1].
The growing volumes of the global economy, the increase of population from 6.6 to 8 billion people in the year 2030, exasperation of colossal load on the environment, need for ensuring stable development, accelerated implementation of new technologies, nature and climate changes, as well as social changes, complicate solution of rising problems, hinder timely response of the states and mankind to modern challenges in the epoch of globalization. Experts forecast that from 2005 to 2030 the volume of the global economy will grow more than two-fold, from USD 35 to 72 trillion. In the best-case scenario, it will have grown almost three-fold already by 2020 [2]. And here arises the question: will the international community be able, with such rates of labour productivity growth worldwide, to ensure decent life to the main producer-man, eliminate poverty at the global level? Unless the consciousness and thinking of possessors, high-ranking state and supra-state officials are changed, as well as “the rules of the game” in the relationship between possessors and hired workers, state officials and the latter in realization of social justice, humanization and socialization of economy, there will be no positive answer and result to the question above.
Inaccessibility of housing to the bulk of population of Kazakhstan and CIS countries, negligibly small amounts of unemployment and disability allowances and minimum wage and revenue gained by most of the workers, do not let the citizens live a decent life and think themselves to be accomplished people, as limitations of needs to the minimum result in slavish, marginal psychology, moral decadency to the animal-level instincts.
Thus, for instance, unemployment allowances based on the standards of the minimum of subsistence are vicious as they limit people in their aspiration for development. According to the explanatory provision of the Ministry of Labour and Social Protection of Population of the Republic of Kazakhstan, the minimum of subsistence is determined as the necessary minimum cash revenue per person, equal in the value to the cost of the minimum consumer basket. The minimum consumer basket is the minimum set of foods, goods and services needed for the man’s life support in physical and monetary terms. It consists of the food basket and the fixed share of expenses on non-foods and chargeable services. The food basket is calculated by the authorized state statistics body according to the scientifically-based physiological norms of food consumption set by the authorized healthcare body. The food basket contains 43 items of foods: meat, fish, dairy, oil and fat, bread, fruit and vegetables, eggs, sugar, tea, spices, etc. The cost of the minimum food basket is determined by multiplication of minimum norms of food consumption for various gender, age and social-demographic groups of population by average prices registered in the representative facilities of the retail trade network. The share of expenses on the minimum necessary non-foods and services for calculation of the minimum of subsistence is set at the rate of 40% of the minimum consumer basket cost [3].
Chart 2 displays that within 2003-2008 the value of the minimum of subsistence in average per capita grew from 5128 to 12364 tenge, the average monthly nominal wage – from USD 155 to 503.
Further, in the conditions of the global economic crisis, the message by the head of the state emphasizes: “The government must guarantee that all obligations of the state on increasing social allowances and salary to the government sector workers will be preserved in full. As it was planned, in 2010 the salary of the government sector workers and scholarships will be increased by 25 per cent, and in 2011 – by another 30 per cent. The average amount of pensions will be increased by 25 per cent in 2010 and by 30 percent in 2011. In the meantime, by 2011 the amount of basic pension payments will grow by up to 50 per cent of the minimum of subsistence amount ” [4].
Chart 2. Indicators of living standard of the Republic of Kazakhstan’s population for 2003-2008 [3, p.52].
Indicators (years) |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
Average monthly nominal wage (USD) |
155 |
208 |
256 |
324 |
428 |
503 |
Evaluation of population’s nominal cash revenue in average per capita per month (tenge) |
10533 |
12817 |
15787 |
19152 |
25226 |
30842 |
Population’s average monthly minimum of subsistence (tenge) |
5128 |
5427 |
6014 |
8410 |
9653 |
12364 |
Ratio of wage and salary income in population’s cash revenue (%) |
76 |
76 |
77 |
80 |
82 |
82 |
.
In the conditions of forming the socially oriented market economy, we should deviate from the standards and indicators characteristic of the earlier stage of capitalism, which was built on robbery, violence, exploitation of workers and deception. Minimal expenses on the man’s life, based on ensuring physiological reproduction, seem an archaism for the modern level of the Mankind development. The above-mentioned traditional approaches are already a brake in development for the countries aimed at and having all major prerequisites for transition to the level of the highly developed states. Therefore it is necessary to radically change the approaches to determination of ensuring the citizens’ decent life, which will be a stimulus for the bulk of population in progressive development and establishment of social economy. It would be appropriate to quote B. de Juvenel saying on the matter: “Experience shows that progress is restrained in the cases when inequality is inherited excessively, and when the scale of income has gaps in it. But it is also restrained when equality is achieved by coercive measures. Obviously, there is a distribution of consuming power optimal for the purposes of progress” [5, с.69].
The civilized state, if it thinks of itself as such, should determine not the minimum of subsistence but the parameters of subsistence level for the citizen’s normal life – subsistence standard.
We determine the man’s subsistence standard by the following formula: . Pn=(Y:k1) × k2 = [GDP:(365 days×24 hours)] × (6 hours × 30 days), (8)
where Pn is the man’s subsistence standard, Y= GDP – gross domestic product per capita, k1 – coefficient equal to the value of 365 days × 24 hours, k2 = 6 hours × 30 days.
This method takes into account almost all the basic factors predetermining the man’s subsistence standard per month; they can also be calculated per day. This method determines only the cost of the man’s living standard, without costs for utilities, which should be borne by the state. Furthermore, the following categories should be introduced: social-economic standard of the man’s development; spiritual-intellectual standard of the man’s development; value of the man’s life, which would become basic, used as a basis for determining the normal salary, pension, unemployment and disability allowance, etc.
The experience of developed countries displays that the most efficient and decent options are those proposed by the Japanese and by the French with regards to the amounts and duration of payment of unemployment allowances. For comparison, see these data for the period of the 80-s of the 20th century below: the USA – 36% of the wage for 14 weeks; the UK – 28.5 pounds for 52 weeks; France – 40 francs a day in addition to 42% of the wage for 1 – 2.5 years, special allowances for 3 years [6, p. 433]. For Kazakhstan, the acceptable amount of the unemployment allowance would be, based on the number of dependents in the family, from 40 to 60% of the average salary nationwide for 12-18 months. . .
If the average salary nationwide for a particular year is denoted as Vs, coefficient of determining the unemployment allowance – k, equal to 0.4-0.6, based on the number of dependents in the family, and the amount of the unemployment allowance Vb, to Vb = Vs • k. (9)
More human standards of unemployment allowances make it possible for the normal man not to crack up, overcome unsuccessful periods in his life and continue advancement of professional qualification and adaptation to the new realia of the challenge of modern conditions. Otherwise, according to the practice of numerous countries where there are no progressive anti-unemployment approaches, people more often than not gravitate to the bottom of the community, the number of drug addicts and criminal deeds increases, families are broken, and the state will have to spend a lot more on correcting and eliminating the consequences than on preventive measures – a decent amount of unemployment allowances. . . .
The next urgent matter is the amount of the pension and time of taking the deserved rest. In the CIS countries, in particular, in Kazakhstan, these problems are still unregulated, and these indicators can not be compared with those of the highly developed countries. The domestic pensioners, excluding some categories which are a minority, when they take the deserved rest, automatically transfer to the category of the poor. This approach to the elderly witnesses that the state officials, the government, are far from understanding the national and global culture. Only that civilization is worth existence, which not only treats the elderly with respect but also really makes conditions for full-value life of the older generation. The neglect of the elderly is equal to self-annihilation of the culture, spirituality, while the latter is the essence of the Mankind development. .
Further, let us mention that pensioners should receive the allowance in the amount of at least 65-80% of the average wage nationwide, or they should have complete social security upon reaching a certain age – 50 to 60 years, depending on the labour conditions. A lot of people in the CIS countries do not live as long as the age of retirement. Those who retire mainly do not live as long as at least ten years. After they take the deserved rest, it is desirable that pensioners should be involved in organizational or other works, as consultants or experts, in the public life on the voluntary basis or agreement basis, and in self-government of the micro district and community. .
Another category of people treated unfairly is housewives. Their labour is not taken into account anywhere within the scope of the state. However, they render services on bringing up and fostering the human capital for ensuring extensive reproduction of population and, consequently, for the economy. Therefore the labour of housewives having two and more children should be paid for by the state. Then demographic problems in Kazakhstan will be solved at a swifter rate. In Russia, some steps in this direction have already been made, and there are some results characterizing the growth of population in the country. . “As of January 1, 2006, the Republic of Kazakhstan’s Law “On state allowances to families with children” came into effect, providing for payout of the following allowance: .
- one-time state allowance due to giving birth to a child, paid since 2003 regardless of the family income in the amount of 15 monthly estimate indicators (hereinafter MEI). 4.3 billion tenge in the republican budget are meant for it; . - as of January 1, 2006, the allowance for children up to 18 years of age is effective; it is assigned and paid to the families with average income per capita lower than the food basket cost. The amount of the allowance for children is 1 MEI monthly per child (1030 tenge in 2006). 6.5 billion tenge in the state budget are meant for it. According to the forecasts of local executive authorities, in the current year this allowance will be paid to over 600 thousand children; . – as of July 1, 2006, the child care allowance is effective for children less than 1 year old. It is paid regardless of the income of the family. The amounts of the child care allowance will be differentiated, depending on the succession of the child’s birth, accounting for: the first child – 3 MEI; the second child – 3.5 MEI; the third child – 4 MEI; the fourth and further child – 4.5 MEI. All the families having children below one year of age as of July 1, 2006, are eligible for the allowance” [3].
There is also a burning matter of housing in Kazakhstan and Russia, CIS countries. A lot of citizens do not have their own flat, let alone their own house. In the housing market, the dynamics of prices is mainly high, though the period of the economic crisis has made some adjustments. It can be tracked in Chart 3, where, in particular, the prices in the housing market in the Republic of Kazakhstan in January 2010 grew 1.5 times in average, as compared to December 2005.
In January 2010, as compared to the previous month, the prices of sale of new housing increased by 0.6%, re-sale of well-furnished housing and its rent – by 0.1%, ill-provided – remained unchanged [7].
Chart 3. Prices in Republic of Kazakhstan’s housing market in January 2010
(per cent; increase +, reduction -) [7]
Item |
January 2010 |
|||
price per sqm, tenge |
to previous month |
to December 2005 |
to January 2009 |
|
Sale of new housing |
138 594 |
0.6 |
48.8 |
-5.5 |
Re-sale of well-furnished housing |
100 933 |
0.1 |
65.3 |
-4.9 |
Re-sale of ill-provided housing |
59 143 |
0.0 |
110.4 |
-4.3 |
Well-furnished housing to rent |
814 |
0.1 |
57.1 |
-3.1 |
.
Based on the data above, we can make a conclusion that the majority of the population are unable to buy or rent housing. Therefore the state should take urgent and radical measures to regulate the provision of the population with housing. In particular, it should build municipal flats, houses to rent at low, accessible rates, or free of charge for the disadvantaged or state servants, employees of education, healthcare and social sectors. And the mortgage vehicle can be used by those layers of the society which have the family income per month at the level of the GDP per capita. And the very procedure of mortgage crediting should be modernized, for popularization among the general public.
No doubt, development of the science, education, culture and healthcare sectors influences the state of the human capital, which is the major national wealth. However, the measures taken in the CIS countries and, in particular, in Kazakhstan, are just half-measures not bringing considerable results. To change the situation, the scientifically based labour standards should be introduced, because in those sectors the indicators exceed 2, 3 or more times the objectively limiting figure, which affects the results and brings a lot of negative consequences for the community. And the other side is motivation of labour. It should be borne in mind that there is no innovation without motivation of intellectual labour. Regrettably, high-ranking state officials forget about it. With regards to it, we have already proposed the methods orienting at determination of the indicator based on the GDP per capita as the objective basic for salary calculation.
Thus, ensuring decent life, labor conditions and retirement are a necessity in socialization of the market economy in the modern environment of globalization, where social justice should triumph as the only way to the full-fledged spiritual development of the Mankind. “The idea that in the production sector there is no place for justice, - remarks the German philosopher P. Kozlovski, - is incorrect: justice should be observed both in distribution and creation of the social product” [8, p. 286].
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