PATIENCE AND WORK...

According to the Employment Strategy of Azerbaijan for 2019-2030, the objective is to reduce unemployment to 4% and to double the labour productivity by 2030.

The previous program adopted in Azerbaijan covered a period of ten years. It was implemented in two stages as part of several state programs for 2007-2010 and 2011-2015. In general, the results of the past strategy can be assessed very positively, as over the years the unemployment rate in Azerbaijan has been reduced from 7.3 to 5%, poverty - from 29.3 to 4.9%, growth in incomes of the population - increased 5.2 times and the growth of nominal wages - 3.8 times.

The objective is to increase productivity

The success in reducing unemployment is particularly evident on the background of the average population growth rate (by 1.3 times in 2006–2017). As of January 1, 2018, the population of Azerbaijan was 9.9 million people, which is considered the highest rate among European countries.

Over the past fourteen years, 1.96 million new jobs have contributed to a reduction in unemployment, of which 73.3% are permanent. By the way, the new jobs were created mainly in the districts of Azerbaijan (70%), mostly in the agrarian sector.

Since 2006, due to a steady GDP growth in Azerbaijan, labour productivity has increased from ₼2.35/hour ($2.6 at the exchange rate of 2006) to ₼7.59/hour ($4.4 at current exchange rate). With the implementation of the new Employment Strategy, it is expected that by 2030 labour productivity will increase twice reaching $8.8/hour.

However, this will significantly change the structure of economic activities. By the end of 2016, labour productivity in the extractive industry was ₼257.7/hour ($161.4), in the construction sector - ₼9.4/hour ($5.8) and in the processing industry - ₼6.3/hour ($3.9), then in agriculture only ₼1.03/hour ($0.6).

Nevertheless, the organisation of production in the agricultural sector does not always mean low labour productivity. Rather it is about the low level of use by farmers of intensive methods of growing crops, the use of innovative services, and the absence in most cases of qualified specialists in the industry. On the other hand, improvement of the accounting system in this area is also required.

In the end, all these drawbacks adversely affect the overall indicator of labour productivity in Azerbaijan. According to the research of the analytical publication Market Watch, in terms of GDP per capita, Azerbaijan lags behind Russia ($5.6/hour) in 2017 and especially from the US ($33.7/hour) and Luxembourg ($67.8/hour).

To rectify the situation, it is necessary to increase the added value in the agriculture. For example, not only to produce cotton and export it as raw material, but to start producing ready-made clothes to cover the demand for modern and high-quality products both in Azerbaijan and in the countries of the region. To give preference to innovative projects, develop startups, use electronic commerce to export products of the non-oil sector of the country.

The need to increase labour productivity is also due to the fact that by 2030 there will be a new trend for the country - the aging of the population.

According to the UN average scenario, the population growth will reach 10.7 million by 2030. At the same time, according to the forecast in the Employment Strategy, the number of pensioners in the country compared to 2015 (841 thousand) will double by 2030. That is, if the number of pensioners to the total population in 2015 was 8.8%, then by 2030 it will grow to 15.7%. This means that almost every sixth citizen of the country will finish his career.

The dangers associated with the aging population can be seen, for example, in Japan, which caused the decline in labour productivity.

Thus, it is necessary to maximize the use of working time, which in Azerbaijan in 2018 was 1,929 hours (1,970 in Russia). This can be solved only by improving the skills of workers, as well as their retraining for the development of new industries in the national economy.

Less unemployment

According to the State Statistics Committee, as of January 1, 2018, the number of unemployed in the country was 38.5 thousand people, of which almost 7 thousand receive an allowance with an average size of ₼291.2.

According to the Law on Unemployment Insurance, which became effective on January 1, 2018, a total of 1% of the income of both the employers and employees is deducted to the newly established fund. The monthly contributions are paid by the employer (equal to 0.5% of the employee's salary), as well as by the employee (0.5% of his salary).

Currently, unemployment insurance is applied in 72 countries. In Azerbaijan, the unemployment insurance system has two main objectives: first, to provide financial protection for the unemployed and, secondly, to bring them back to the labour market through various training courses.

In market conditions, to change the structure of the economy, low unemployment is a necessary factor in which workers leave inefficient industries with low wages, change skills to take high-paying jobs in newly created industries at profitable enterprises.

It is important to increase the allocated funds for various programs for the development of the labour market, which, in accordance with the Employment Strategy, should reach 0.1% of the country's GDP by 2030, as opposed to 0.01% in 2017.

The ongoing activities in this area include an increase in the number of regional vocational training centres. It is planned to increase their number from 3 in 2017 to 10 by 2030. It is also planned to increase the coverage of persons involved in vocational training, from 3% in 2017 to 20% by 2030. As a result, the number of young people aged 15–24 who have not been able to decide on a job is supposed to decrease sharply.

In general, the role of the State Employment Service should increase, which in 2030 should provide employment for 70% of citizens instead of 40% in 2017.

The measures indicated in the Employment Strategy should ultimately contribute to the realisation of one of the constitutional rights of Azerbaijani citizens, the right to work. They will also guarantee financial support for employees after retirement.