JPMorgan - KASE

Principal Sectors of the Economy
Historically, metallurgy (including mining and mineral processing) has been the main industrial
activity in Kazakhstan, although oil and gas related industries have become an increasingly
important component of the country’s industrial base. The mineral products sector, which
accounts for over 30 per cent. of exports, is Kazakhstan’s largest employer. In 1999, industrial
production in the fuel industry sector increased by 14.3 per cent. from 1998 levels largely as a
result of increases in the price of oil and other commodities. However, in 2000, coal production
increased by 28.2 per cent. and there was an increase in crude oil production of 15.9 per cent.
compared to 1999. In 2001, coal production increased by 25.4 per cent. (based upon revenues
derived from coal produced as compared with 2000) and oil production increased by 4.5 per cent.
(based upon revenues derived from oil produced as compared with 2000). See also “ – Natural
Resources”.
Agriculture has traditionally been the second largest sector in the economy, both in terms of
employment and contribution to GDP. However, its relative importance has diminished in recent
years due to the severe disruption of trade with the former Soviet Union, the breakdown of the
agricultural credit system, as well as a lack of vital components such as fuel, fertilizers and spare
parts for machinery. All agricultural production is now in the private sector and, generally,
producer prices reflect world market prices.
Cereal grains are an important component of agricultural output and Kazakhstan is a major
producer of hard wheat, with annual production normally in the 6.8 to 8.4 million ton range. In
1998, 13.5 million hectares were sown with grain, of which 10.6 million hectares were sown with
wheat and beans producing a total harvest in the region of 6.4 million tons. In 1999, the area
sown with grain decreased by 8.1 per cent. compared to 1998. However, due to favorable
weather conditions and the introduction of new farm machinery, gross production was 28.0 per
cent. higher in 1999 than in 1998. In 2000, the area sown with grain increased by 6 per cent.
compared to 1999 but total production in this sector decreased by 3.3 per cent. in 2000. In 2001
the area sown with grain remained the same as in 2000 but total production was 15.9 million
tons, 37.0 per cent. higher than in 2000.
Employment and Wages
In 2001, on average 6.7 million people were employed in Kazakhstan representing approximately
89.6 per cent. of the eligible workforce. Of the eligible workforce, approximately 22.7 per cent.
were employed in the public sector, and approximately 66.9 per cent. of the eligible workforce
were employed in the private sector.
Officially registered unemployment was close to zero in the 1980s. At the end of 2001, the
officially registered unemployment figure was 780,000 or 10.4 per cent. of those eligible to work.
Average wages vary significantly from sector to sector. In 2001, the financial sector had the
highest average wage (more than twice the national average) while wages were lowest in the
agricultural sector, nearly three times less than the national average. Wages in industry currently
average 37.0 per cent. higher than the national average. In 2001, the average monthly wage was
17,364 Tenge, an increase of 10.4 per cent. In real terms and 26.0 per cent. in nominal terms
compared with 2000.
Social Security System
In the years following independence, pension arrears gradually accumulated. However, by the
end of 1997, the Government had cleared outstanding State pension arrears amounting to 36
billion Tenge. The funding to clear these arrears came partially from reduced Government
expenditures (10.7 billion Tenge) and an increase in the 1997 budget deficit from the originally
budgeted 3.16 per cent. of GDP to 3.66 per cent. of GDP. All arrears in pensions were paid at the
end of 1999 and the State is now current in payments.
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