a factor in employment and wage growth

Sabina Alizade

According to the latest data from the State Statistics Committee of Azerbaijan, in January-April 2024, the average nominal monthly salary of wage earners in the country increased by 10.2% compared to the same period last year and amounted to 1,007.5 manats. This increase reflects the overall improvement in the economic situation in the country and the increase in household income. Particularly high salaries are observed in key sectors such as mining, financial and insurance activities, scientific and technical activities, information and communication. This indicates the significant contribution of these sectors to the country’s overall economic growth and their importance in shaping wages.

As of May 1, 2024, the total number of salaried workers in the Azerbaijani economy was 1,749,100 people. Of this, 897 thousand people work in the public sector, and 852.7 thousand in the non-state sector. Interestingly, 2,100 public sector employees were laid off in 2024, reflecting changes in the employment structure and the government’s efforts to optimize budget expenditure.

MP and economist Vugar Bayramli notes that one of the main goals is to raise the average monthly salary in Azerbaijan and the average monthly salary in 2024 is expected to be higher than forecast. The increase in the average monthly salary also has a positive impact on the income of the State Social Security Fund. “The revenues of the State Social Security Fund are expected to be 190 million manats higher than forecast. This will allow for the redistribution of more funds within the fund, which will translate into savings on transfers from the state budget,” he said.

Bayramli noted that several sectors are leading the way in terms of operational growth. This applies especially to the energy, financial and banking sectors, where higher salary offers are observed. “Even in sectors where salaries are lower than the average monthly salary, we see an upward trend. In particular, in the education sector, the average monthly salary is currently lower than the national average, but in this case there is also a positive trend of salary growth. It is expected that the average monthly salary in the education sector will soon reach the national average,” he said.

Bayramli also mentioned that currently in Azerbaijan about 1.8 million contract workers work under employment contracts, of which about half are in the public sector and the other half in the private sector. The aim is to increase the number of people working in the private sector. “Current policies aim to make the private sector the engine of employment. This means that in the next period the private sector will play a greater role in creating new jobs and providing employment. Important aspects are increasing the number of jobs and employment stability. The main challenge is to increase the participation of the private sector. There are two challenges in this context. The first is to ensure a higher share of people working under employment contracts in the private sector; taking into account international practice, it is advisable that approximately 70% of people working under employment contracts work in the private sector. Currently, this percentage is approximately 50%. Ultimately, it should be increased to 70%. The second challenge is that the number of professionally active citizens exceeds 5 million people. Of them, 35.5% work on the basis of employment contracts. Therefore, increasing the number of employment contracts is also a significant challenge. Steps need to be taken in this direction. “The improvement in legislation shows that these two important challenges are at the heart of government policy and measures to address them are expanding, helping to strengthen the resilience of the labor market,” he said.

In his latest statement, Finance Minister Samir Sharifov noted that the state’s actions to develop the labor market, create new jobs and “whiten” the economy have brought productive results, which are reflected in the reduction of budget burdens. “Clear results can be seen in the systematic reduction of state treasury expenditure for the needs of the specialist fund. If we look at the stable trend, the expenses of the State Social Security Fund are increasingly covered by growing social security contributions from working citizens and entrepreneurs. This year was no exception: the government continued its course of consistently increasing social benefits. Initially, it was planned to transfer part of the budget expenditure to the State Social Protection Fund, but according to incoming data, the income of the State Social Protection Fund increased by 190 million manats, so there is no need to allocate an additional 160 million manats from the state budget to this fund, he added.

Statistics show that the increase in employment in the country is primarily due to the private sector, as the number of people officially employed in the non-state sector has increased by 10,000 in the last four months. people, reaching 852.7 thousand, while the number of people working in the public sector decreased from 899.1 thousand. up to 897 thousand

Changes in the employment structure reflect the desire to use resources more efficiently and maintain the competitiveness of the economy. However, despite positive trends in wage growth and job creation, issues such as improving the quality of the workforce, social protection and fair income distribution remain. Overall, the increasing dynamics of wages and employment in the Azerbaijani economy indicates positive trends in the country’s development and the need to continue reforms to ensure sustainable economic growth and social stability.

News.Az