EMPLOYMENT PROCESS

As expected, the structural and institutional reforms in Azerbaijan in 2019 covered a number of sectors funded from the state budget. Large-scale reorganisation through the removal of a number of state bodies are steps, albeit unpopular in terms of job cuts, justified in the context of improving the efficiency of economic management.

Structural reforms

Azerbaijan's economy has completed the transition to market economy long ago. Accordingly, some state-funded bodies have become economically redundant. In fact, employment policies should be based on commercial viability of these policies. In other words, each staff member should be a competent participant of the workflow, which ultimately brings financial benefits to the enterprise, hence contributing to the wages of employees.

The same applies to budget organisations. As we know, any state budget is mostly a product of taxes. Respectively, the efficiency of spending state funds is in the best interests of both the state and its citizens. We should admit however that the previous employment reforms have not been large-scale reforms at all. Obviously, the main reason was the social frailty of the process, as massive unemployment rates could do more damage to the national economy than the funding of redundant jobs. But sooner or later, the conditions should have matured, and the process should have begun.

Government promised to implement the reforms as mildly as possible to minimise social consequences. "The ultimate goal of reforms is to ensure the higher level of labour. Let me emphasise that the dismissed employees of abolished bodies will be re-employed in existing bodies. We do not expect job cuts in agriculture. We have instructed other state bodies to avoid job cuts. Our intention is to let the citizens working in these institutions, services, and agencies know that the government always pays attention to their employment," President Ilham Aliyev said.

Thus, First Vice-President of Azerbaijan Mehriban Aliyeva instructed Azerenerji OJSC to ensure the employment of the staff of Hərbiləşdirilmiş Mühafizə Dəstəsi LLC (paramilitary security detachment), reduced after the accident at the thermal power plant in Mingachevir on July 3, 2018 as part of measures to delegate the protection of similar facilities to the security police of the Ministry of Internal Affairs. Also, considering that a significant part of the protection of the Mingachevir and Varvara hydroelectric plant is undertaken by the Ministry of Emergency Situations, as well as the installation of smart surveillance cameras and fencing around the thermal power plans in Azerbaijan, it was decided to reduce some employees of these facilities. After the instruction of the first vice-president, the issue of employment was promptly resolved.

However, we should admit that sometimes it is very difficult to ensure the employment of reduced personnel, especially if their knowledge and skills do not meet modern requirements. For example, state bodies are planning to reduce the number of computer operators – such positions still exist, although almost every educated person has these skills. Therefore, the employment agencies will have to do a lot of work on retraining specialists. According to statistical data, 2,559 people were already involved in vocational training last year, including 1,447 women, 1,270 young, 215 forced migrants, and 85 individuals with disabilities.

But the scale of this process should be increased significantly, considering that the unemployment insurance system in Azerbaijan is new born and being adjusted. As a side note, unemployment insurance premiums are paid to individuals who have lost their jobs as a result of reduction, as well as those registered as unemployed at the relevant district (city) employment centre. Azerbaijan started implementing this system only in the first quarter of 2018. Last year, only 2,449 people received unemployment benefits, with a total number of beneficiaries reaching 6,331 people.

More than necessary

In principle, ​​labour market reforms should start with young people in mind, since people the middle-aged people and those close to retirement age adapt to modern requirements and are keen to acquire new or additional skills much more difficult.

The younger generation, taking into account certain educational reforms in recent years, seems to be ready for the challenges of the labour market. As Deputy Minister of Labour and Social Protection of Population Metin Kerimli said at the conference "Youth Employment: Views, Challenges and Perspectives of Employers", unemployment among young people (14-29 years) in Azerbaijan reaches 9.2%. This is twice the total unemployment rate in the country. However, the deputy minister said that Azerbaijan was one of the few states in the CIS and Eastern Europe with predominant population of the youth. "Young people aged 14-29 years are more than 25% of the population of Azerbaijan. If we take into account children under the age of fourteen, then about 50% of the population of Azerbaijan is under 29 years old. Every year, the labour market of Azerbaijan increases by 100 thousand people," Kerimli said.

Why is it more difficult for young people to find a job? According to Deputy Minister of Education Idris Isayev, Azerbaijan is not the only country with youth employment. In global scale, every fifth educated young man is a member of the labour market, while 75% of young people work informally.

As for Azerbaijan, one of the main factors creating difficulties in providing employment for the population is the training of personnel in quantities exceeding market demands and the insufficient level of professional training that would meet the requirements of employers. The real cause of problems in youth employment lies in the discrepancy that exists between the education system and the labour market - what experts have been talking about for many years.

In recent years, government agencies have been actively addressing this problem. Hence, it was decided to develop the vocational training sector based on the needs of the labour market. For example, last year, twenty new professions were created in the sector of vocational training. "62.3% of college graduates are employed in the tourism sector, 73% in information technology, 69% in service sector," said Isayev.

In 2018, Azerbaijan for the first time adopted the Law on Vocational Training, which provides for benefits in financial, legal and other areas to stimulate employers. State Agency for Vocational Training is developing mechanisms for the implementation of these items. According to the head of the department of the state agency Zamin Badirkhanov, it is planned to provide benefits depending on the level of cooperation of employers.

Also, another law on employment will indicate the need to recruit young people according to certain quotas, as well as their preference when filling vacant social jobs. According to the chairman of the parliamentary committee on youth and sports Ulvi Guliyev, the changes proposed by the law On youth policy adopted in 2002, will also be discussed, including, among other things, the provision of employment and support for entrepreneurial initiatives of population groups.

By the way, the latter could be quite an effective mechanism, given the growing interest of the younger generation in the creation of start-ups, as well as small business ventures. Thus, the government will be able to provide jobs to younger people more easily and contribute to the development of the non-oil private sector.

Confederation of Entrepreneurs of Azerbaijan expressed interest in this initiative. According to the chairman of Confederation, Mammad Musayev, the government has created favourable conditions for entrepreneurs: "It’s just necessary to be more proactive, courageous and decisive." Musaev added that youth employment is part of the total employment in Azerbaijan: "Without high-quality secondary, vocational and higher education, it is impossible to ensure decent jobs for young people. Therefore, it is necessary to improve curricula so that they meet the requirements of the labour market.

UN Resident Coordinator to Azerbaijan, Ghulam Isagzai, called on the private sector to correctly identify their needs, and the main objectives should be the creation of appropriate conditions for workers and increased competition.

Another important point is that the newly created jobs should not be concentrated in Baku. According to the chairman of the Confederation of Trade Unions of Azerbaijan (CTUA), Sattar Mehbaliyev, it is necessary to further improve the system of encouraging the employment among young people in rural areas. It is also necessary to strengthen control so that the youth demobilised from the army are restored to their previous jobs.

Mehbaliyev noted that according to the Employment Strategy of Azerbaijan for 2019-2030, by 2030, it is expected to reduce the proportion of unemployed and uneducated young people aged 15-24 years to 15%. In addition, the goal has been set by 2025 for all groups of the population, in particular for youth, women and persons with disabilities, to achieve effective employment and decent work.

In fact, every, even the most developed country in the world, suffers from the problems of employment. Each economy solves them according to its own potential and goals. Undoubtedly, today it is necessary to create new favourable conditions in the labour market. Otherwise, as stated in the appeal of Guy Ryder, Director General of the International Labour Organisation, to the participants of the conference "Youth Employment: Views, Challenges and Perspectives of Employers", this may lead to a drastic reduction in world jobs. Therefore, for us one of the most important issues is the adaptation of the labour market to the requirements of the modern world."