KZBlog

A few days ago, I talked about the ecological costs of bureaucracy in Kazakhstan. Today, just for fun I worked up some extremely rough estimates of the economic costs of bureaucracy.

According to the Agency for Statistics, the total population of the country on 1 Dec 2010 was 16,417,655 people.

Let’s assume that every year, every person is entered into some kind of government database somewhere, whether it be registration of birth, death, registering property, or whatever. Let’s assume rather conservatively that entering that person into one database takes one minute (Those of us who have worked with civil servants here know it usually takes far longer).

So we are talking about 16,417,655 minutes spent on registering the population of Kazakhstan with the central government. That comes to 273,627 minutes or 11,401 days, or 31.24 years of straight typing per calendar year. Again, this is a conservative estimate of one minute per person on data entry.

If we want to look at the costs to the government, we have to look at working days. Now let’s assume the average working day of a civil servant who deals with data entry is 9 hours a day, 6 days a week. So spending only one minute on each citizen of Kazakhstan takes up 30,403 working days or 5,067 working weeks, or 1,267 working months. If we assume that data entry specialists are not well paid, we’re talking about a salary of 30,000 tenge a month OR 38 million tenge spent to pay people per minute they spend on data entry per year. That’s a considerable chunk of change. Note that if we assume government workers spend 10 minutes entering such information, the figure increases by 10 times to 380 million. If we also assume that once the data is entered, supervisors and managers have to approve various decisions and go over that data, the amount of salary and the number of people increases and we are talking about quite large drains on government spending.

Now let’s look at the loss of productivity. Just for TSON, people submitted 62,000,000 documents in ten months which comes to 74,400,00 documents a year. Again, let’s assume conservatively that people spent 5 minutes on each document, whether it be pulling that document out of a drawer, or getting a notarized copy, or filling out a form. We’re not talking about the time it took them to go to TSON or wait in line. We’re just saying that to produce one document for TSON took 5 minutes.

That means people spent 372,000,000 minutes or 6,200,000 hours preparing documents. Now let’s again be generous and assume the average person works a 10 hour day, 6 days a week. Even with those large divisors, people still spend 25,833 working months preparing documents. Now the average income in Kazakhstan from Jan-Oct 2010 (the most recent data), according to the Agency for Statistics was 75,744 tenge per month. So 1,956,720,000 tenge of lost productivity was lost if people spend 5 minutes of work time on preparing documents only for services received at TSONs.

If you think about how much time people really spend on preparing and submitting documents, you will see that quite a bit of economy productivity goes into documents in Kazakhstan, especially if you add up the cost of paying workers to handle the paperwork AND the work time lost by people submitting those documents.

Again, I’m not a statistician. I realize these issues are very complicated. It would be interesting to see what the relation between salary and time spent submitting documents is. For example, I expect that high paid executives and government workers send their lower paid secretaries and assistants to take care of these things for them. I wholeheartedly invite people with better information and better data analysis skills to critique my analyses or give us better information. I just want to draw attention to the fact that bureaucracy costs money.

In a few days, I might look at how bureaucracy can be reduced, since that’s the obvious question to be raised by these posts of mine: what alternative do we have?