Uzbekistan sees strong labor market recovery, but productivity lags behind wages – Central Bank

According to the regulator's labor market review for January–March 2026, the number of job vacancies rose by 9.8% year-on-year in March to 15,400, marking a sharp rebound after annual declines of 4.5% in January and 6.5% in February.

Demand for workers remained particularly strong in services, retail trade, food service, and manufacturing. The Central Bank also noted renewed hiring in construction and industry, where employment trends are closely linked to investment activity and seasonal factors.

While labor demand strengthened, the supply of workers grew even faster. Citing data from HeadHunter Uzbekistan, the Central Bank said the number of active resumes increased by 31.5% in the first quarter to 636,000. The regulator said the growing pool of job seekers has intensified competition in the labor market and contributed to a gradual stabilization in wage growth.

Employment continued to expand across the economy, driven primarily by the private sector. Private sector employment grew by 5.2% in 2025, contributing 4.2 percentage points to overall employment growth. Employment in the public sector increased by 2.6%, accounting for an additional 0.5 percentage points.

Financial and insurance services, professional and technical services, and administrative and support services made the largest contribution to job creation. According to the Central Bank, this reflects the continued development of market infrastructure and rising demand for new types of services.

The report also points to ongoing structural shifts in the economy. Employment in agriculture continues to decline as workers move into other sectors, while industry and trade have maintained steady, moderate job growth.

Unemployment continued its downward trend, falling to 4.8% in the fourth quarter of 2025. The Central Bank noted that the rate has steadily declined since peaking during the COVID-19 pandemic.

Business surveys conducted by the regulator also showed positive hiring expectations in the first quarter. More companies in the services and trade sectors expect to increase staffing, while employment expectations in industry remained broadly stable and few firms anticipated reducing their workforce.

Wage growth outpaces productivity

Average nominal wages increased by 17.4% in the first quarter, compared with 18.4% a year earlier. Real wages, however, accelerated to 9.5%, up from 7.5% in the same period of 2025. The fastest wage growth was recorded in financial and insurance activities, transport and warehousing, and other service industries.

The Central Bank highlighted the widening gap between real wage growth and labor productivity as a key macroeconomic risk.

According to the regulator, workers' incomes are rising faster than the economy's ability to produce additional goods and services. Such an imbalance may encourage businesses to pass higher labor costs on to consumers through higher prices, reduce profits and investment, or slow hiring, all of which could sustain inflationary pressures.

The report estimates that labor productivity grew by an average of about 5% annually between 2018 and 2025 but slowed to roughly 3% over the past year. Uzbekistan's GDP expanded by 7.7% in 2025, while employment increased by 4.7%, suggesting that economic growth relied increasingly on extensive factors, particularly higher employment and investment, rather than improvements in productivity.

The regulator said future productivity growth will depend on how efficiently labor resources are used, improvements in workforce skills, the movement of workers into more productive sectors, and the scale and quality of investment.

"The widening gap between labor productivity growth and real wage growth indicates that pro-inflationary pressures persist in the economy," the Central Bank said, attributing the trend to real wages increasing faster than labor efficiency in recent years.

According to the International Labour Organization, Uzbekistan ranked 112th out of 185 countries for labor productivity in 2025. Measured as GDP at purchasing power parity in 2021 prices, the country's productivity stood at $13.7 per hour worked.

Uzbekistan ranked well below not only advanced European economies but also Kazakhstan, which recorded the highest labor productivity in Central Asia. Kazakhstan placed 57th with $41.5 per hour worked, roughly three times Uzbekistan's level.

At the same time, Uzbekistan outperformed Kyrgyzstan and Tajikistan. Kyrgyzstan ranked 134th with $10.0 per hour worked, while Tajikistan placed 133rd with $10.3 per hour worked.