Turkmenistan - Welfare

Welfare

Under the conditions of independence in the early 1990s, the standard of living in Turkmenistan did not drop as dramatically as it did in other former Soviet republics. Thus, the relatively small population of the nation of Turkmenistan did not require extensive state investment for the basic requirements of survival as the nation attempted the transition to a market economy.

In 1990 nearly half the population earned wages below the official poverty line, which was 100 rubles per month at that time (for value of the ruble--see Glossary). Only 3.4 percent of the population received more than 300 rubles per month in 1990. In the three years after the onset of inflation in 1991, real wages dropped by 47.6 percent, meaning a decline in the standard of living for most citizens (see Labor, this ch.).

Housing

In 1989 the state owned more than 70 percent of urban housing and about 10 percent of rural housing. The remainder of urban housing was owned privately or by housing cooperatives. The average citizen had 11.2 square meters of housing space in urban areas, 10.5 square meters in rural areas. In 1989 some 31 percent of housing (urban and rural areas combined) had running water, 27 percent had central heating, and 20 percent had a sewer line.

The pension system has two main types of expenditures: retirement and disability payments and children's payments. Employees pay 1 percent of their wages to their pension fund, and the employer's share totals 80.5 percent of the total payroll contribution. In industries, the payroll contribution is 37 percent of the total pension fund; in agricultural enterprises, it is 26 percent. Because pension fund expenditures always exceed their receipts at this ratio of contribution, additional funds are allotted from the state budget. The normal retirement age is sixty for men and fifty-five for women, but the age is five or ten years less for occupations classified as hazardous. In the early 1990s, the number of pensioners grew at a rate of 17,000 per year; in 1993 some 404,000 individuals were in this category.

In December 1994, President Niyazov issued an edict setting the minimum wage at 1,000 manat per month and the minimum old-age pension at up to 1,000 manat per month. Pensions set at 60 percent of wages will be given to men retiring at the age of sixty and women at the age of fifty-five if they have worked for twenty-five and twenty years, respectively. In 1995 pensions for invalids and war veterans were set at 3,000 manat per month. Pensions are indexed to increases in minimum wages and are funded by payroll taxes. Allowances are granted to households with children under age sixteen. Payments depend on the age of the children and the economic and marital status of their parents. In 1993 such payments ranged from 110 rubles to 270 rubles per month. That year payments were made for about 1.75 million children. Funding is from the general budget for children age six and older and from the pension fund for those younger than six.

Living Standards

Although living standards have not declined as sharply in Turkmenistan as in many other former Soviet republics, they have dropped in absolute terms for most citizens since 1991. Availability of food and consumer goods also has declined at the same time that prices have generally risen. The difference between living conditions and standards in the city and the village is immense. Aside from material differences such as the prevalence of paved streets, electricity, plumbing, and natural gas in the cities, there are also many disparities in terms of culture and way of life. Thanks to the rebirth of national culture, however, the village has assumed a more prominent role in society as a valuable repository of Turkmen language and traditional culture.

In 1991 nearly all families had television sets, refrigerators, and sewing machines, and 84 percent had washing machines. Only 26 percent owned cars, however, and the quality of durable goods was quite low by Western standards.

Prices

Prices of all commodities rose sharply in 1991 when the Soviet Union removed the pervasive state controls that had limited inflation in the 1980s. Retail prices rose by an average of 90 percent in 1991, and then they rose by more than 800 percent when the new national government freed most prices completely in 1992. The average rate for the first nine months of 1994 was 605 percent. As world market prices rise and currency fluctuations affect prices and purchasing power, consumer price increases continue to outstrip rises in per capita incomes. In 1989 the average worker spent about two-thirds of his or her salary on food, fuel, clothing, and durable goods, but that ratio increased sharply in the years that followed. As prices rose, the supply of almost all food and many consumer goods was curtailed. The introduction of the manat (see Glossary) as the national currency in November 1993 likely worsened the already deteriorating consumer purchasing power. The prices of forty basic commodities immediately rose 900 percent, and wages were raised only 200 percent to compensate.

Government Welfare Programs

In 1992, President Niyazov announced "Ten Years of Prosperity," a government program that provides virtually free natural gas, electricity, and drinking water to all households in the republic; increases minimum wages and other social payments, confirms food subsidies and price liberalizations, and aims at giving families their own house, car, and telephone. In 1993 two-thirds of the state budgetary expenditures went toward such "social needs," and half of that amount for the subsidization of food prices. Social programs also accounted for 60 percent of the 1995 budget.

Wages

Most families in Turkmenistan derive the bulk of their income from state employment of some sort. As they were under the Soviet system, wage differences among various types of employment are relatively small. Industry, construction, transportation, and science have offered the highest wages; health, education, and services, the lowest. Since 1990 direct employment in government administration has offered relatively high wages. Agricultural workers, especially those on collective farms, earn very low salaries, and the standard of living in rural areas is far below that in Turkmen cities, contributing to a widening cultural difference between the two segments of the population.

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