In an increasingly interconnected and globalizing world economy, newly created jobs require a higher degree of analytical and interpersonal skills. With a per capita GDP in 2012 of US$1,155, the Kyrgyz Republic is a low-income country. However, it is experiencing a number of structural changes with the size of the industrial and service sectors—especially the latter—strongly on the rise. Detailed data analysis confirms that these sectoral shifts are changing the demand for skills in the Kyrgyz Republic toward “new economy skills.” More generally, the Kyrgyz aspiration to become a middle-income economy will require a labor force that has diverse high-quality skills.

The goal of this report is to provide an in-depth analysis of the links that exist in the Kyrgyz Republic between education, skills, and labor market outcomes. The analysis builds on a unique household survey—the first ever conducted in the country—that goes beyond the traditional data and analysis on educational attainment. More specifically, the survey includes large-scale assessments of cognitive and non-cognitive skills of workers in both the formal and informal sectors, job seekers, and those who are inactive by testing and interviewing respondents. This is a relatively rare occurrence in middle- and low-income countries, though OECD countries tend to conduct these assessments more frequently.