WORK IS NO WOLF BUT IT CAN STILL RUN AWAY

A wave of unemployment has en-gulfed the world. The global financial crisis has turned into a social crisis for many developed countries. Just recently major corporations in the USA and Europe announced the losses of more than 76,000 jobs in an attempt to cut costs during the worsening economic downturn. American companies such as Caterpillar, General Motors, Sprint Nextel, Texas Instruments and Home Depot led the list of employers who were dismissing "surplus" staff. Pharmaceutical company Pfizer also made its contribution, announcing that as a result of the takeover of Wyeth 19,500 people would be out of work. Dutch electronics company Philips, the ING financial group and Anglo-Dutch steel company Corus, owned by India's Tata Group, topped the European redundancies list.

Under great pressure

Mass unemployment is one of the toughest consequences of the global economic crisis. In most cases news of redundancies followed the publication of poor quarterly reports for October to December 2008 or pessimistic forecasts for 2009. In the current recession employers are shedding jobs much more quickly than in the early 1990s, the head of the International Labour Organi-zation's research institute, Raymond Torres, has said. "We have a vicious circle of depression, where job losses lead to falling consumption, which lowers industrial confidence, which leads to less investment, which results in more job losses, and so on," Raymond Torres said.

The situation is tense in Azerbaijan's neighbouring states too: specialists in leading Russian personnel agencies say that in January wages were at the December 2008 level and forecast that in the first quarter of 2009 employers might lower financial remuneration to their staff. "We are forecasting a fall in the wage level in 2009. Many companies have not yet decided on these measures, but the adjustment, which will most likely take place in the first quarter of 2009, will entail a reduction in basic wages and bonuses," the recruitment director for Ankor personnel agency, Tatyana Baskina, told Interfax.

Overall unemployment in Russia grew by 511,000 in December 2008, compared to November, and was 5.8 million at the end of the month. The Russian government decided from this year to ban the involvement of foreigners in the retail trade. This means that most of the labour migrants, including those from Azerbaijan, engaged in this sector of the economy, are losing their work and most probably will have to return home. As a result, tension could arise on the Azerbaijani market too, although the Ministry of Labour and Social Security is sure that there is no cause for concern.

Facts and figures

Over the past two months information has appeared regularly in the press about mass redundancies at Azerbaijan's major enterprises. The trailblazer is Azerbaijan's leading steel producer, the Baku Steel Company, which sent more than 1,000 employees on leave. "At present production has been stopped at the steel works. This is because it is proving impossible to obtain the volume of metal required for production," a company spokesman said. The thing is that suppliers of scrap metal are not satisfied with the price offered by the Baku Steel Company. The plant used to buy one tonne of scrap metal for 200 manats, but has now dropped the price to 115 manats in line with the falling price for the plant's output. In addition, 250 workers at Azerboru's Sumqayit plant have been sent on compulsory leave and production has stopped because of the crisis. Their output was mainly exported to Russia and Kazakhstan. A further 1,500 workers in the Akkord construction company have been sent on leave, because the company has completed several of its projects. 

The chairman of the Confede-ration of Trade Unions of Azerbaijan, Sattar Mehbaliyev, and Labour and Social Security Minister Fuzuli Alagbarov have acknowledged that the job losses in some Azerbaijani companies are connected to the global financial and economic crisis. The former said that the Confederation of Trade Unions is now studying the instances of enforced leave for large numbers of workers and planning to hold a special sitting on the issue. 

"The Azerbaijani economy is closely integrated into the world economy, as we know, and the financial crisis is bound to affect the economy of the republic," Fuad Alagbarov said. "In setting priorities we take into account changes in the economy and structure of employment and must devise our policy to ensure that the action plan to reinvigorate business activity is met." He reported as well that Azerbaijan's export enterprises have recalled from leave around 3,000 of their employees because they have resumed operations.

At present 52,100 enterprises operate in Azerbaijan, of which 156 businesses employ more than 1,000 people and around 50,000 have up to 100 employees. The Labour Ministry is contacting 3,463 businesses to study the labour situation - to find out whether they are expecting redundancies or enforced holidays, etc. "These businesses employ 244,000 workers, of whom around 2,000 have had their contracts terminated, which is 0.86 per cent of the overall number of employed, and more than 2 per cent of workers are on compulsory unpaid, open-ended leave. In addition, these enterprises are expecting to contract their workforce by approximately another 0.98 per cent," the minister said.

Weclome, or no unauthorized access?

It is another story with labour migrants. While we used to associate this concept exclusively with our fellow citizens who went to earn a living in Russia or other CIS countries, now Azerbaijan itself is accepting migrant workers. According to the latest figures, 4,367 foreigners are working legally. The head of the Ministry of Labour and Social Security's migration service, Rauf Tagiyev, said that the majority of legal labour migrants in the country are Turkish citizens, while British citizens come second. Rauf Tagiyev said that more than 70 per cent of legal labour migrants work in the non-oil sector. This is without taking into consideration illegals from China, the Arab countries etc. But it will probably soon not be so easy to come and work in Azerbaijan, or to be more accurate, not so cheap. The government is at present considering proposals to increase the state duty for foreign citizens who wish to receive individual permits to work in the country. It is proposed to raise the state duty from 45 to 1,000 manats. The official aim of the increase in the state duty is to prevent an influx of workers to the Azerbaijani market who want to get involved in unnecessary and illegal activities. However, some experts also see in this an attempt by the government to insure the local labour market against the crisis and the possibility of the return home of its own migrant workers. 

According to Russian statistics, a migrant works in Russia for 25 months on average. During this period the average Azerbaijani migrant sends home $5,825. Some 69,000 Azerbaijani migrants are registered in Russia, although there are far more illegal migrants. And even if the remittances sent by migrants do not amount to more than 1 per cent of Azerbaijani GDP and do not have a serious effect on the Azerbaijani economy, this is the main source of income and means of existence for some families. And the loss of this income could become a serious social problem if the migrants who return home cannot find work here.

However, the Azerbaijani Ministry of Labour and Social Security is convinced that there will be no mass return of migrants. "This was expected before, when two years ago Russia took similar decisions on restricting trade, but these fears were not realized," Fuad Alagbarov said. "Some of our compatriots may come back, but they will be provided with work on their return home."

The minister said that sometimes an Azerbaijani returning home from Russia provides work for at least five to 10 people by starting his own business and becoming a small trader. It is worth noting that usually they try to set up business in their home region, thereby relieving the pressure on the labour market in Baku. "If we carry out infrastructure projects in every village and district, then I am sure that some people will return to their home villages," Fuad Alagbarov thinks.

In this way, Azerbaijan has every opportunity to avoid mass redundancies and the negative consequences of labour migrants returning home, especially since over the past five years enough jobs have been created in the country to allow us to be optimistic even during a Great Depression.