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The reform of the Labor Code will bring many advantages, IBC believes

September 21, 2022

The need to reform labor legislation was announced by Executive Director of the International Business Council Askar Sydykov at a meeting of the Investment Council under the Cabinet of Ministers of the Kyrgyz Republic chaired by the head of the Cabinet Akylbek Japarov.

An effective platform for dialogue

“It's great that the first meeting of the Investment Council under the Cabinet of Ministers has finally been held in a new format. Because the Investment Council is the most effective platform for public-private dialogue, which has remained stable for over 15 years,” said Sydykov.

The business community welcomes the proposal of the Cabinet hairman to hold meetings more often — not once a quarter, but once a month.

“We have a lot of issues to discuss, and in order not to delay their solution, we need to meet more often,” the IBC head said.

“It would be good to hold meetings of the Investment Council chaired the president,” he added.

Balancing the interests of employees and employers

Labor law is one of the main areas of interest to investors in any industry around the world. Business is always interested in how things are with the regulation of labor relations in a particular country.

In Kyrgyzstan, the Labor Code largely retains elements of the Soviet Labor Code. This approach to the regulation of labor relations includes the priority of the interests of the employee over the employer.

“Such an imbalance and outdated provisions of the Labor Code affect the investment attractiveness of Kyrgyzstan and its position in international business rankings, because many of them contain an indicator on the regulation of labor relations,” IBC head said.

The market economy is guided by its own rules, and the balance of interests of the employee and the employer is maintained without bias in one direction or another. In many rapidly developing and developed countries, there is almost complete freedom to stipulate labor relations within an employment contract.

Outdated labor legislation

There are many examples of how outdated the labor legislation of Kyrgyzstan is. It does not contain any statute of limitations for the recovery of wages, which leaves room for abuse. There were cases when employees after 10-15, or even 20 years, collected wages in full and also fines with sanctions.

The situation with penalties for late return of a work book can lead to the same consequences. Although the very concept of "work book" in the modern world is no longer relevant, labor relations go electronic.

It is not easy to issue a fixed-term employment contract under the law, although many employers need it. Labor relations are often not formalized and wages are paid informally. As a result, the shadow economy is growing, the rights of neither the employee nor the employer are protected, and social payments are not deducted.

Business believes that the principle of freedom of contract, which is contained in civil law, should be largely present in the labor law.

“If we make labor legislation convenient, balanced and modern, taking into account the principles of the market economy, then employers themselves will seek to legalize labor relations in employment contracts,” IBC head believes.

Accordingly, the volume of social contributions will increase, and the rights of both the employee and the employer will be better protected. Plus, the state will receive more statistical and other information on employment.

The Chairman of the Cabinet of Ministers supported this idea, and it was decided not just to amend, but to create a completely new edition of the Labor Code, based on the principles of a market economy.