Kyrgyzstan has taken huge strides since gaining independence in 1991. Having embarked upon a rapid transition to a market economy, it has been equally bold in developing the political and social institutions of a modern democratic state. Although progress has not always been smooth, recent elections have demonstrated the growing stability of Kygyzstan’s political system, while its economy has shown great resilience in recent years.

Social protection in Kyrgyzstan covers a broad range of risks, receives a significant proportion of government funding and plays a critical role in alleviating poverty. However, provision is unevenly distributed; expenditure on social insurance is approximately five times higher than spending on social assistance, while social services and labour market policies for vulnerable workers are extremely small. Moreover, important gaps in social protection coverage exist, particularly for the urban poor, young people and the significant numbers of workers employed abroad.

Kyrgyzstan made a rapid transition to a market economy following independence from the Soviet Union. However, social protection provision has been much slower to adapt to the post-Communist context, due in part to the social insurance system that it inherited. Although pension receipt is almost universal among the elderly and thus serves as a critical buffer against poverty for them and their families, the cost of maintaining this system has imposed severe constraints on the development of social assistance, social services and labour market policies in place.

Following the shock of the collapse of the Soviet Union and the disruption caused by the rapid transition to a market economy, Kyrgyzstan is enjoying a period of economic and political stability. However, the decline in income poverty has slowed over the past decade and certain measures of broader deprivation are alarmingly high, reflecting the challenge of improving services in a context of severe fiscal constraints. Tight labour market conditions are resulting in high levels of international migration, which is a boon for the Kyrgyz economy but socially disruptive. Major long-term threats related to demographics and climate change are on the horizon.

This chapter charts the evolution of social protection in Kyrgyzstan. It outlines the economic, political and legislative context for social protection, which is still undergoing transition from a Soviet-era system predicated on full employment, to a system more appropriate for a market-based economy with chronic unemployment and long-term poverty. It inventories existing social protection schemes, analyses their key design features and scale of operation, and discusses how well they meet the present and future needs identified in Chapter 1.

This chapter evaluates the effectiveness of the largest components of the social protection system according to their coverage rates, adequacy, equity and efficiency, using administrative and household survey data. It examines the Monthly Benefit for Poor Families with children (MBPF), the Monthly Social Benefit (MSB) and contributory pensions paid by the Social Fund, as well as the overall effectiveness of the pension and the health-care systems in responding to the population’s needs. It also analyses the impact of possible reforms to the state benefits for children.

This chapter examines spending on social protection from a systemic and whole-of-government perspective. It locates social protection expenditure within the Government’s overall budget and examines spending trends across the different pillars of the social protection sector, as well as across individual programmes within this sector. It also analyses the composition of government revenues and the financing of social protection in particular, identifying the increasing subsidisation of the social insurance system by the Republican Budget as a major cause for concern. It concludes with a fiscal incidence analysis showing the overall system of taxes and transfers significantly reduces inequality but its impact on poverty is less clear.

This chapter outlines a vision for a social protection system in Kyrgyzstan. It considers systematisation along a number of dimensions, including institutional, financial and programme-level, as well as the existence of an information architecture underpinning this system. The breadth of social protection programmes and high expenditure levels provide great potential for gains through systematisation but to fully capitalise on these requires rebalancing between different pillars of social protection provision and an increase in expenditure. Such reforms would complete the transition of the social protection provision from its Soviet legacy but the political economy of these measures would be highly challenging.