KUALA LUMPUR - For decades, Central Asia has been recognised for its resilience. 

A region that rebuilt from the collapse of the Soviet Union, embraced market reforms, and charted new paths for economic growth.

Despite steady progress, the benefits of growth have not been evenly distributed across Central Asia’s workforce.

The World Bank Fall 2025 Europe and Central Asia Economic Update cautions that Central Asia’s economic success conceals a deeper structural issue while employment is rising, too many workers remain in low-quality or insecure jobs.

The report describes this as a quality gap and growing divide between economic expansion and decent employment.

Central Asia is now the fastest-growing part of Europe and Central Asia, yet much of that progress is built on shaky foundations.

The report projects the region’s economy to grow 5.9% in 2025, up from 5.7% last year, driven by higher oil output in Kazakhstan, strong remittances, and rising investment.

However, much of this growth comes from low-productivity and informal sectors, meaning workers are busy but not necessarily better off.

The World Bank notes that job creation has outpaced population growth and employment in the wider region rose 12% between 2009 and 2024, compared with a 7% population increase but warns that high employment figures do not always translate into prosperity.

The Job Numbers Look Good but the Quality Tells Another Story

The World Bank finds that many Central Asians are working without protection, benefits, or training.

Across the region, more than half of workers in several Central Asian economies are in the informal sector, meaning they work without contracts or social protection.

In Kyrgyz Republic and Tajikistan, informality exceeds 60% of total employment, one of the highest rates in Europe and Central Asia.

Informality is particularly widespread in construction, retail, and small-scale services, the very sectors driving short-term job growth.

The report notes that while services now account for over half of all jobs in Central Asia, most new service positions are low-skill and low-wage.

This leaves millions employed but still one shock away from poverty, with limited access to healthcare or unemployment support.

The International Labour Organization (ILO) also estimates that informal workers across Central Asia earn, on average, 30 to 40% less than those in formal jobs and are more vulnerable to sudden income loss.

The World Bank warns that rising employment numbers do not always lead to better jobs, especially for young and low-skilled workers, many of whom remain trapped in unstable or temporary work.

The Role of Firms in Job Creation

Private companies remain the backbone of job creation, but the report shows clear differences in which types of firms actually create employment.

According to the report, young firms and large enterprises account for nearly all net job creation across the region, while older small and medium enterprises (SMEs) tend to shed more jobs than they add.

Start-ups and young SMEs make up around 14% of total employment but contribute almost 40 per cent of gross new jobs, showing their importance to regional labour markets.

In contrast, many Central Asian SMEs remain micro-scale, employing fewer than ten workers and operating mostly in low-value sectors and access to finance remains one of the main barriers to growth.

The EBRD’s 2024 Enterprise Survey found that over 40% of firms in Uzbekistan and Kazakhstan cited limited access to credit as their biggest obstacle, well above the average in Eastern Europe.

The report also notes that firms in the region face high borrowing costs and weak competition, which discourage investment and innovation.

As a result, many businesses stay small and informal, limiting their ability to provide steady, well-paid jobs.

The OECD SME Policy Index 2024 similarly reports that most Central Asian SMEs operate with low productivity and limited export activity, and that only a small share use digital tools or participate in international value chains.

Without stronger support for private enterprise through easier financing, simpler regulations, and fairer competition, Central Asia’s job growth risks remaining concentrated in small, low-paying firms rather than dynamic, high-value industries.

The SOE Problem 

State-owned enterprises (SOEs) continue to play a dominant role in Central Asia’s economy, especially in energy, transport, and heavy industry.

The report itself finds that in countries such as Kazakhstan, Uzbekistan, and Tajikistan, SOEs still control a large share of key sectors and resources.

In markets where SOEs hold major influence, productivity growth and job creation are noticeably slower.

The report shows that SOEs create roughly half as many new jobs and cut twice as many compared to private companies, underscoring their limited role in driving employment.

This dominance also limits space for private firms to compete and invest, as many SOEs receive state subsidies or preferential treatment that distort fair competition.

The EBRD’s Transition Report notes that in some Central Asian economies, SOEs account for up to 30 to 40% of total employment and over half of industrial output, making it difficult for new businesses to enter and expand.

In Uzbekistan, for example, the government has pledged to privatise more than 1,000 state-owned companies over the next few years, but progress has been slower than expected.

The World Bank warns that without governance reforms and greater transparency, SOEs will continue to crowd out the private sector and weaken long-term productivity.

Improving oversight, ensuring equal access to credit, and opening markets to competition are seen as essential steps toward building a stronger, job-creating private sector.

Skills Mismatch: The Missing Link Between Growth and Good Jobs

Even as economies expand, many employers say they cannot find workers with the right skills.

The World Bank highlights skills shortages and declining education quality as major barriers to private sector growth.

Programme for International Student Assessment scores in mathematics have fallen across most countries in Europe and Central Asia, including Central Asia, reflecting weaker school outcomes.

Around 40 to 50% of workers in the region are overqualified for their jobs, while returns to experience are low, meaning wages hardly rise with years of work.

The report warns that outdated education systems and limited technical training leave too many young people unprepared for modern, technology-driven jobs.

The Need to Focus on Job Quality Over Quantity

The World Bank calls for a shift from job quantity to job quality.

It recommends simpler tax systems, fairer regulations, and policies that encourage competition and innovation.

Governments are urged to invest in lifelong learning, technical education, and digital skills to help workers adapt to changing markets.

The report also stresses the need to support informal workers’ transition into formal employment through incentives and social protection.

It also concludes most countries must ensure those jobs are productive, inclusive, and sustainable.

Central Asia’s rapid growth has brought new opportunities, but the region’s future prosperity will depend on the quality, not just the quantity, of its jobs.

To sustain progress, governments must build stronger private sectors, improve education systems, and ensure that economic gains translate into better livelihoods for all workers.