Uzbekistan could raise $250.8mn by formalizing 1mn workers, says expert

**Uzbekistan Could Boost Budget by $250.8 Million by Formalizing 1 Million Workers, Expert Says**

Uzbekistan's state budget could see an additional UZS 3 trillion (approximately $250.8 million) if 1 million informal workers were brought into formal employment, according to Uchkun Abduganiyev, a department head at the Institute for Fiscal Studies. This revenue, he noted, would be enough to fund the construction of 100 schools, each accommodating 480 students.

Abduganiyev, speaking at a Tashkent dialogue on July 30, highlighted that nearly half of Uzbekistan's employed population operates informally, without consistent tax contributions. This significantly restricts the nation's social tax base and diminishes potential government revenue. He emphasized that expanding formal employment would necessitate enhanced labor protections, streamlined employment processes, and more robust oversight.

The Institute for Fiscal Studies' analysis indicates that 48% of Uzbekistan's employed individuals currently work in the informal sector. Abduganiyev stated, "Today, 48% of employed people — nearly half — work in the informal sector, which limits the base for regular social tax payments."

The Institute for Fiscal Studies has consistently voiced concerns regarding the extent of informal employment and has put forth recommendations to improve formalization. An analysis published in April by the institute estimated informal employment at a lower figure of approximately 38–40% of total employment, compared to the 48% cited in the recent discussion.

The earlier analysis also reported that Uzbekistan had roughly 14.7 million economically active individuals, with about 5.4 million formally employed. The institute also pointed out the common practice of formally registering employees at the minimum wage while paying the remainder of their income unofficially. Such arrangements can lead to reduced tax and social security contributions, simultaneously limiting workers' access to employment-related protections and benefits.

Recent reports indicated that approximately 1.2 million employees in Uzbekistan earned up to UZS 1.3 million ($108.7) per month, an amount the institute deemed insufficient to cover basic living expenses.

These latest figures underscore the significant challenge Uzbekistan faces in its efforts to expand formal employment, strengthen labor protections, and enhance the sustainability of public revenue. The Institute for Fiscal Studies has previously suggested a review of Uzbekistan’s minimum wage system as part of broader initiatives to curb informal employment and improve income transparency. The institute maintains that policies aimed at formalizing employment should integrate stronger labor protections with simpler registration procedures and more effective oversight.