LABOUR REMUNERATION

Avoiding questions about the salary is one of the basic rules of etiquette almost everywhere. Nevertheless, if we really have to talk about it, then negative notes cannot be avoided - this topic is the main point of disagreement between employees and employers. The former, as a rule, believe that they could receive more money for their work, while the latter are convinced that too much money is being allocated for the wage fund anyway. It is quite difficult to solve this age-old dispute. The salary is essentially a very subjective concept in the economy, and it depends largely on economic processes in the world, in the country, at an enterprise or organization and on the views of particular employers.

Theory of relativity

The Azerbaijani media recently published a mini review of wages in two or three areas, which clearly showed that the salary market in our country is still not very well regulated. This is mainly reflected in the large difference between the amount of remuneration for the same position in different subjects in one sphere of the economy. Is it possible to regulate relations on the salary market in a market economy or is such a situation normal in capitalism?

To begin with, there is no unity among economists in assessing the labour market and its mechanism of functioning. Classical political economics is based on the fact that the labour market, where only one production resource is realized, like all other markets, acts on the basis of price equilibrium. The main market regulator is the price of labour force. According to proponents of this concept, wages help govern the supply of and demand for labour force, maintaining their balance. The price of labour force responds flexibly to market requirements, increasing or decreasing depending on demand and supply.

It must be noted that there is no single labour market for the whole economy. It is divided by professions, industries and territories. Workers of different professions and qualifications receive different salaries. It also depends on where they work. There are dangerous, unpleasant and unattractive types of labour. Conditions of equilibrium on the labour market are largely determined by government intervention, and its functioning is linked to trade unions and associations of entrepreneurs. Labour supply is also affected by the availability of unemployment benefits and minimum wage rates.

The identification of specific wage rates depends on the structure of a specific labour market. On a competitive market, the equilibrium of wage rates and employment levels will be determined at the intersection of labour supply and demand curves. An employer must offer workers a salary that will encourage them to abandon all other options. If there are no such opportunities, then workers will be forced to accept the employer's proposal. On a competitive market, entrepreneurs cannot establish the level of wages they prefer. As long as the number of businesses is great and they do not enter into agreements between themselves, their demand for any category of labour force will cause a rise in wages to the level at which all labour force offered on the market in the subsequent period will be absorbed. Workers also may seek higher rates, but in a competitive environment, they will never get what they would like.

Historical injustice

Such is the theoretical environment of the concept of "wages". In Azerbaijan, many of the above principles do not function, and there are objective and subjective reasons for that. First, we should note that our salaries are divided generally into two categories: budgetary and so-called commercial salaries. The first category is fully financed from the state treasury and is based on the minimum wage - 75 manats to date. That is, the minimum salary established by the government is multiplied for each public sector employee by a factor corresponding to his category and specialization, according to the staff list.

It's no secret that it is "budget" wages that we consider to be relatively small. It is noteworthy that their recipients are representatives of professions that do not produce a specific product in material terms, but at the same time perform very important work for the normal life of any society. Teachers, doctors, bureaucrats, academics, representatives of law enforcement agencies, artists - today few of them can boast of a high salary. And interestingly, this trend has developed historically: remember classical authors who normally attributed teachers, poets, scientists and police to the poor stratum. Recall the dialogue between the surgeon Lukashin and the secondary school teacher Nadya from the popular Soviet film "Enjoy Your Bath":

- We have important professions, Nadya!

- Judging by the salary, I would not say so...

That is, despite all respect for representatives of these professions in society, their work has historically been valued low, which, again, is due to the fact that they do not give the economy a product that is the subject of trade relations. Unfortunately, this trend continues to this day, although developed countries have partially addressed the problem through the commercialization of education, health, science, etc. In Azerbaijan, although this process has begun, it has not yet taken on a mass scale. Thus, as some universities adopted a system of paid education, teachers started to get bonuses along with their basic salary. There are also private secondary and higher education institutions based solely on the commercial principles of education - of course, the level of wages is much higher there, but so are requirements to the staff. There is almost a similar situation in the health and science sector, that is, there are faint signs of competition on the salary market. On the one hand, this is a positive factor as it stimulates representatives of these professions to improve their standard in order to "get" into the commercial sphere, and on the other, it turns out that purely budgetary organizations will gradually bring together low-skilled professionals, which cannot be acceptable to most of the population using their services.

It should be noted that the state, in turn, is trying to regulate the situation in this area, annually increasing the salaries of public sector employees. This is done by increasing the minimum wages and based on specific instructions from the head of state on individual sectors. Due to this, the salaries of teachers, doctors, police officers, officials, etc. have increased several times over in the past 5 years.

Dual reality

Meanwhile, according to the head of the League to Protect Workers' Rights, Sahib Mammadov, it is too early to talk about competition on the wage market in Azerbaijan, because there is a clear preponderance of supply over demand on the country's labour market. "Competition can only exist at the level of high-level specialists, and there is no point in talking about a significant difference in the salaries offered for the same position in institutions of the same type," he believes.

In that case, where do differences in analytical materials on the review of the wage market come from? According to the expert, today in Azerbaijan it is almost impossible to carry out a real and objective analysis of wages. The main reason is the presence of double-entry bookkeeping at many businesses, which is used for evading taxes and social benefits. In Azerbaijan, this system is called the "envelope", because workers at some companies, apart from their meagre official salaries, receive their "real" earnings in envelopes.

For the sake of fairness, we should note that in the last couple of years, some companies, especially organizations and businesses that care about their image, have given up such practices. The point is that highly skilled professionals are attracted by "white" salaries, without which it is impossible to obtain bank loans, mortgages, pensions, maternity payments, insurance and other "benefits" of the civilized world. Perhaps these are the "sprouts" of competition on the wage market in Azerbaijan.

By the way, I would like to mention one more thing: despite the fact that, 10-15 years ago, the practice of paying higher wages for skilled work was introduced in Azerbaijan by foreign oil companies, today the difference between the wages offered by foreign firms and local companies is not so great. On the contrary, in some of our companies, the labour compensation package is much more attractive than in branches and representative offices of foreign firms. This trend became even more evident in times of crisis when Azerbaijani companies, due to the stable economic situation in the country, managed to maintain the level of their employees' earnings, while foreign companies had to cut them.

In other words, although the salary market in Azerbaijan cannot be called perfect, certain improvements in the situation allow us to hope that eventually, it will succumb to an objective analysis, and this will increase competition and fairness on the market.