Many parts of Kazakhstan’s economy have experienced the painful impact of the recession, but education has been hit particularly hard. All Kazakhstan’s higher education institutions have been hurt recently by falling enrolments and dwindling budgets, but the downturn has especially affected small tuition-dependent universities.

As in many countries around the world, the higher education system in Kazakhstan depends on public and private spending on education. However, in a time of economic difficulties it is education that usually suffers the most, as policy makers and private individuals tend to make their first spending cuts there. The education system’s ability to navigate through stormy weather depends on its institutional strength, its curriculum flexibility, and its ability to raise additional funding through various private initiatives and to adapt to the changing environment.

In this regard the higher education system in Kazakhstan gets mixed reviews. The country’s institutions of higher learning have benefited from a decade of unprecedented economic growth. Fueled by rapidly rising energy export revenues between 1999 and 2008, the national economy grew at an average annual rate of 7 to 11 percent. Encouraged on the one hand by good economic news and motivated on the other by the desire to avoid the so-called Dutch Disease – in which some sectors of the economy are left behind while a country experiences a boom thanks to its sought-after natural resources – Kazakhstan’s government introduced an ambitious program of reforms with the goal of entering the club of the 50 most developed nations within the next decade. Reforms in the education system have become a part of these ambitions.

In 2001, the government introduced a decade-long initiative to develop education, which was later extended until 2020. In 2008 alone, Astana channeled about $4.7 billion into education. The list of the changes introduced in education in general and in higher education in particular has been impressive. The universities have emerged much stronger and healthier than in the difficult 1990s, as higher salaries and educational state funding for research and development helped to attract and retain experienced educators and administrators. Standards have been improved with the introduction of the Unified National Test, roughly similar to the SAT test in the United States. The introduction of a Western-style credit system has helped to achieve a certain level of flexibility in the education process. Among the most important changes have been the decentralization of the education system and the introduction of private education, which allowed additional funding to be raised by accepting fee-paying students to state and private universities across the nation. Fee-paying students constitute a substantial proportion of the student population of about 180,000 in all 140 universities in Kazakhstan; these fees have helped fund many ambitious projects and hire new faculty, with the result of acquiring new technologies and introducing new courses and classes.

These reforms, however, have been incomplete. Kazakhstan’s universities still have not diversified their financial base and overwhelmingly depend on two sources of income – state funding and tuition fees; they have struggled to attract private philanthropic contributions and private research funding. Both state-funded and private universities need to get approval for new courses and programs from the Ministry of Education; the long and painful bureaucratic delays undermine their flexibility at a time when they need to adapt quickly to a changing environment and to demands for retraining for new jobs and professions.

The Fall to Earth

The global financial crisis arrived in Kazakhstan relatively late, as until the second half of 2008 the country’s economy was safeguarded against the economic difficulties by high energy prices. However, when the price for oil plummeted from its high of $148 per barrel in summer 2008 to about $40 to $42 per barrel in fall 2008, Astana began to feel the full impact of the global meltdown.

As in other countries real estate and banking have been hit particularly hard. Since 2008 real estate has stagnated, as the sales of new houses plunged by nearly 50 percent and many construction companies suspended their projects or simply closed their doors till better times. Kazakhstan’s banking sector sits on a huge pile of so-called toxic assets and needs to undergo consolidation and a series of mergers and even bankruptcies in order to become more stable and profitable. According to the National Statistical Agency, hundreds of thousands of people lost their jobs in the last quarter of 2008, and the unemployment rate reached 6.9 percent this month. Moreover, in late January, the tenge, Kazakhstan’s currency, fell more than 20 percent against the U.S. dollar in a matter of days.

Although the government has promised not to cut the nearly $5-billion education budget, universities across the country have already begun experiencing serious difficulties. One of the main problems is that only one-fifth of the country’s students are fully funded from the state budget. For the rest, who were not lucky enough to obtain the highest scores in the UNT and get a state scholarship, the burden of paying for their education rests on the family budget. Moreover, even the full state tuition funding does not cover living expenses, and students still need substantial support from their families. As the current academic year began many students were already struggling to pay their tuition fees. The situation will probably worsen.

“The crisis hurts all universities, including such established and prestigious private universities as KIMEP,” says Assel Rustemova, a former lecturer at the Kazakhstan Institute of Management, Economics, and Strategic Research, better known as KIMEP, and a doctoral student at Rutgers University in New Jersey. “The crisis is worsened by the fact that universities have fewer students entering the higher education system. For example, in 2008 KIMEP was forced to drop at least 18 courses due to shrinking demand.”

The Education Ministry closed about 40 underperforming universities and university branches around the country between 2004 and 2008. Some experts believe that another 15 to 30 small universities and branches might close their doors in the next two years if the economic crisis continues.

Hopes for a Stimulus

Kazakhstan’s government has adopted a stimulus package in order to jump-start the economy and avoid a nationwide recession and mass unemployment. Among other measures, the government increased teachers’ salaries by 25 percent in January and promised not to cut funding for students and research and development.

However, small tuition-dependent universities will inevitably experience significant difficulties if the state education system does not come up with bold measures. Many families will probably be unable to fund their children’s education in a time of crisis or will decide to postpone higher education until better times.

International experience, particularly that of industrialized Western countries, suggests that in a period of economic difficulties education is often a solution for retraining for new jobs or a temporary refuge to steer the turbulence in the labor market. As labor market conditions change due to technological changes, industrial restructuring, globalization, or economic recession, workers can improve their position in the market by acquiring new skills and knowledge or changing profession altogether. In the market economy, the labor market is often deregulated and it is vital for workers to stay competitive. Unfortunately, the Kazakh colleges and universities lack the flexibility and independence to respond quickly to the rapidly changing labor market environment and demands in the emerging sectors of the economy.

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