Uzbekistan Implements Changes in Cotton Industry to Stimulate Economy
Oct 6, 2020
This year, the Uzbek cotton harvest is yielding more than just bales of fluffy white fibers. As a result of the financial difficulties that the COVID-19 pandemic has created for many around the world, Uzbekistan is using its cotton harvest as a means of dispensing economic stimulus funds.
The Uzbek government established a new pay scale for cotton pickers for the 2020 harvesting season. The Cabinet of Ministers approved a resolution that introduced a number of standards designed to improve economic conditions, especially in rural areas hard-hit by the COVID-19 pandemic. As of September 18, Uzbekistan has registered 49,761 cases of COVID-19, with 415 deaths.
The resolution mandated several requirements for the 2020 harvest, namely price floors to redirect profits to harvesters themselves. As part of the resolution, the government implemented an improved rate for paying harvesters who pick cotton by hand. The Ministry of Agriculture announced a payment of $0.10 to $0.40 for every kilogram of hand-harvested cotton, marking a significant increase from the 2019 rates of $0.02 to $0.08 per kilogram. The Ministry also established a minimum price for raw cotton harvested by machine. The new price is 920,000 Uzbek som per ton, or approximately $89, compared with a price of 600,000 Uzbek som, approximately $63 at the time, per ton in 2019.
The legislation also included other provisions designed to benefit harvesters in light of the COVID-19 pandemic. New seasonal employment contracts include efforts to hire unemployed and temporarily unemployed people as heads of harvesting teams. The salary for this position is set at a minimum of 2 million Uzbek som, approximately $194, and will be funded by the Public Works Fund of the Ministry of Employment and Labor relations. The resolution recommends that all workers should be paid every five days and it also allows for farmers harvesting with machinery to defer the payment of customs duty fees for up to 270 days.
In an attempt to further stimulate the economy, the Ministry of Agriculture also announced that pickers in the Jizzakh, Tashkent, and Syrdarya regions will receive an additional 200 Uzbek som, or $0.02, per kilogram of cotton. This policy also extends to workers in some districts of the Karakalpakstan, Kashkadarya, and Surkhandarya regions.
The decree places heightened value on labor contracts. Uzbekistan continues to promote reforms and new standards in the cotton industry, especially in an attempt to combat the use of child and forced labor. On September 5, the Deputy Minister of Employment and Labor Relations Bakhodir Umurzakov stated that all hired workers must have a labor contract. This is intended to prevent families from bringing children with them into the field in order to pick higher quantities of the crop. The harvesters will prepare the contracts with the help of regional specialists, authorities from employment centers throughout the country, and representatives of the Mahalla and Family Support Ministry. Contracts are highly flexible and can be established for any time period, and any violations can be reported to the State Labor Inspectorate.
The COVID-19 pandemic lowered Uzbekistan’s expected growth rate in 2020 from more than five percent to less than two percent, according to the IMF. Despite the economic shrinkage, the new resolution marks an effort to redirect funding into the pockets of Uzbek citizens, many of whom previously relied on working abroad or remittance payments from family members. The flexibility of the labor contracts also allows for greater participation in the harvest, thus making the relief funds accessible to a larger segment of the population. By using its cotton industry as a means for distributing economic stimulus funding in rural areas, Uzbekistan may succeed in mitigating some of the economic effects of the COVID-19 pandemic in a particularly Uzbek way.