Experts propose raising Uzbekistan's minimum wage to 40% of median salary by 2030

The proposals are outlined in a recent analytical report by the Institute of Fiscal Analysis and Reduction of the Hidden Economy under the Ministry of Economy and Finance. The document suggests gradually increasing the minimum wage to 40% of the median salary by 2030 and abandoning its use as the baseline for the state budget payroll.

Currently, the minimum wage in Uzbekistan stands at UZS 1.271 million per month, or roughly $104. According to international databases, including WageIndicator, this figure remains low compared to other CIS countries. Kazakhstan’s minimum wage is around $180, while Russia and Belarus stand at approximately $295 and $265, respectively.

Furthermore, the ratio of the minimum wage to the median wage in Uzbekistan is about 24%. In international analytical practice, particularly within the European Union and the OECD, a range of 40–60% is widely used to evaluate the adequacy of minimum pay. The report authors propose a gradual increase to reach the 40% threshold by 2030. Reaching this target based on the current median wage of roughly UZS 5.3 million would require raising the minimum wage to nearly UZS 2.1 million – 1.7 times higher than the current level. However, experts emphasize that this must be done carefully to account for income dynamics and labor market conditions.

Under the current model, the minimum wage acts as both a social guarantee and the foundational calculation base for public sector salaries, which are tied to the Unified Tariff Scale. Consequently, any increase in the minimum wage directly expands the public sector payroll, causing an automatic surge in state budget expenditures. Since public sector wages account for 42–45% of total budget spending, the minimum wage level is heavily restricted by fiscal constraints rather than purely social criteria.

To resolve this, the institute suggests an institutional separation of these functions. The proposal advises abandoning the minimum wage as an indicator for calculating the public sector payroll and introducing an independent basic tariff rate instead. This would allow the government to raise minimum social guarantees for workers without automatically triggering a proportional increase in all budget-related expenditures.

Another key recommendation is the introduction of regional and sectoral differentiation. The labor market in Uzbekistan shows stark regional disparities in income and living costs, with the average salary in Tashkent often 1.5–2 times higher than in other regions. A uniform minimum wage may not accurately reflect real expenses in the capital, while potentially imposing an excessive burden on employers in economically slower regions. To adapt to local conditions, researchers suggest tailoring the minimum wage geographically. Additionally, an experimental 30% increase to the minimum wage is proposed for the construction, retail, and catering sectors, where working conditions, hours, and income levels differ significantly from other industries.

The document also highlights the need for minimum hourly and daily wage rates. The current monthly metric is often unsuitable for part-time, temporary, and seasonal workers. Introducing hourly and daily standards would extend minimum wage protections to those with flexible schedules, shift work, or partial employment.

However, raising the official minimum wage will not solve existing problems if a large portion of the workforce remains outside the formal market or continues to receive wages in envelopes. Official data shows that informal employment in Uzbekistan hovers around 38–40%. Out of an economically active population of 14.7 million, only about 5.4 million people work in the formal sector. Estimates suggest that 15% of workers earn less than UZS 1 million, while another 21% receive an amount close to the minimum wage. Often, employers officially register workers at the minimum wage level to evade taxes while paying the remainder of their salary off the books.

Improving compliance requires developing digital tools for employment tracking, simplifying formalization procedures, and optimizing labor laws to reduce administrative and transactional costs for employers. The core idea is that the more complex and expensive it is to formalize labor relations, the higher the incentive to shift to the informal sector.

The proposals draw on international experience and recommendations from the International Labour Organization, specifically ILO Convention 131, which balances workers' needs against economic factors like productivity and employment levels. The authors note that while different countries use various models, such as collective agreements in Germany, a base salary for public workers in Kazakhstan, or prefecture-level rates in Japan, these tools must be adapted to Uzbekistan's specific institutional conditions.

Earlier, economist Otabek Bakirov noted that raising the minimum wage at a faster pace could help pull actual salaries out of the shadows. He pointed out that while almost no one actually works for just $91, many employers record this minimum on paper and settle the rest in cash.

Meanwhile, a recent Central Bank review indicated that real wage growth in Uzbekistan is lower than in neighboring countries. Nevertheless, the ratio of the annual minimum wage to per capita GDP remains high, suggesting a relatively equitable distribution of income across the country.