Government slashes Jobs, cuts Pay amid Crisis
Kazakhstan's government on Wednesday announced massive layoffs at state companies and imposed a hiring freeze until the end of the year, an effort to cut spending amid the deepening financial crisis.
Prime Minister Karim Masimov said the state holding company Samruk-Kazyna will reduce its workforce by half, cut pay by an average 30 percent and that its subsidiary companies will slash their payrolls by 15 percent.
Samruk-Kazyna's subsidiaries include KazMunaiGas oil and gas company, the national airline, the railway monopoly, the postal service, Kazatomprom nuclear energy company, and several investment firms.
Samruk-Kazyna spokesman said he could not comment immediately on the announcement or give figures on the scale of the company's current work force.
Masimov also said that 9,000 state vacancies won't be filled and that the work will be carried out by existing employees.
Kazakh authorities have to date struck a bullish note about their hopes for the future of the oil-rich former Soviet nation's economy, but the announcement of job cutbacks is a stark indication of the scale of the downturn hitting the country.
The government earlier this year effectively nationalized two of the country's four largest banks, which were among the first to be hit by the global credit crunch because of high reliance on foreign borrowing.
Also Wednesday, the parliament approved a revised annual government budget to reflect falling revenues and plummeting expectations about economic growth.
Under the revised figures, revenue projections for year have been slashed by a quarter to $10.1 billion.
Planned government expenditure over the same period is expected to reach $22.6 billion.
Prospects for Kazakhstan's economy have rapidly worsened in recent months as demand and prices for the country's crucial oil and metal exports remain stagnant.
The economy was growing at average annual levels of 10 percent until 2007 on the back of soaring oil prices.
But Economy Minister Bakhyt Sultanov last week said gross domestic product growth could drop to 1 percent this year, down from 3.1 percent in 2008. Some economic analysts have predicted the country could even slide into recession this year.
Meanwhile, inflation is projected to reach 11 percent by the end of 2009, according to government estimates.
Masimov has said changes to the budget will have no impact on social spending, but rising unemployment is likely to test his commitments to maintaining welfare spending, Eurasianet.org reports.