EurasiaNet Business & Economics - Azerbaijan: Presidential Job Promises Fall Short

BUSINESS & ECONOMICS

AZERBAIJAN: PRESIDENTIAL JOB PROMISES FALL SHORT
Elkhan Salahov 5/30/08

Five months before Azerbaijan’s presidential elections, controversy is surrounding recent claims by President Ilham Aliyev that his government oversaw the creation of 650,000 new jobs by the end of 2007.

The key problem lies in a contradiction between that figure and the number of individuals who have been registered to pay into the country’s social security system. Under Azerbaijani law, employers must report new hires to the State Social Security Fund within a month of creating a permanent job.

Since 2003, only 154,000 individuals have been registered to pay into the social insurance system, according to State Social Security Fund spokesperson Ali Samadov. This is over three times fewer than the 480,000 permanent jobs (out of a total of 650,000) that supposedly opened over the last four years, as announced by President Aliyev in February.

Vusal Gasimli, deputy chairman of the board of Baku’s Economic Research Center, says that the sizeable difference between the official number of newly established jobs and individuals registered as social insurance payers indicates that the statistics are exaggerated. The Social Security Fund’s figures show no increase in its revenues for this same period.

"Sixty to seventy percent of pension payments are financed at the expense of social insurance payments, with the remaining funds coming from the budget," Gasimli said. "If the number of new jobs were as large as stated, the revenues of the State Social Security Fund responsible for the allocation of pensions would have increased as much."

Pensions currently stand at 63 manats per month, or about $76.80.

Baku pensioner Afrahim Mammadov, like other retirement-age Azerbaijanis interviewed for this article, also wonders about that apparent contradiction. "If there are so many new jobs, why don’t they increase my retirement pension?" asked Mammadov who worked as a school principal for 30 years.

Social Security Fund spokesperson Samadov, though, has a different explanation for why the new jobs have no impact on the Fund’s revenues. Not all new employees have been registered for social insurance payments, he claims.

Similarly, Ministry of Economic Development spokesperson Abbas Aliyev says that the low number of social insurance payers does not prove that the government’s employment statistics are wrong. "A certain number of employed people conceal their employment to avoid paying social insurance fees," Aliyev argued.

ERC deputy chairman Gasimli confirms that people avoid registering their jobs with the social insurance system, but thinks this is not the most important explanation for the difference between the official employment figures and the number of people paying into the social insurance system. "In reality, there could be a difference, but not to this extent. This gives an impression that the number of new jobs has been exaggerated."

Some inconsistencies with recording the statistics also play a role, he continued. When a job term is extended, for instance, the extension is counted as a new job.

[ERC receives funding from the Open Society Institute. EurasiaNet.org operates under the auspices of OSI’s Central Eurasia Project.]

The net effect is that opposition members and observers like Gasimli now contend that, with an election coming up, the government is using these figures to appear to have made good on their earlier job-creation promises.

"Over the last four years, the government has focused its propaganda on economic issues. Therefore, it has become a traditional policy for the current government to thrust these numbers on society," said opposition presidential candidate Eldar Namazov, a former presidential advisor.

The mechanism for calculating newly established jobs is so complicated that ordinary citizens have no way of knowing whether the numbers are right or wrong, he added.

In a written response to an inquiry, Meri Amirova, a department head for the State Statistics Committee, puts the onus for the Committee’s jobs data on information received from companies, non-governmental organizations and individual businesspeople.

Doubts about the government’s job statistics, however, are not limited to Baku’s community of economic experts. Some Baku residents who have had trouble finding jobs also believe that the data has been exaggerated.

"The majority of young men in our village have left for Russia because there are no jobs in Azerbaijan. Not a single company is functioning in the region besides one or two small workshops," claimed 28-year-old Vugar Mammadov, a geologist by training who came to Baku from the central Azerbaijani town of Barda to earn his living as a construction worker.

A four-year report from the State Statistics Committee states that 82 percent of the 650,000 new jobs created since 2003 were created in the regions outside Baku. According to the document, 5,030 new jobs, 2,425 of them permanent, were created in Mammadov’s native Barda.

"As is the case with the other regions, new enterprises started to function in Barda and hundreds of people were provided with permanent and temporary jobs," said the State Statistics Committee’s Amirova. The jobs, she claims, are located in a rock quarry, two new schools, and a sewing factory.

But the alleged pick-up in employment has done little to dent the number of Azerbaijanis migrating to Russia for work -- a phenomenon also widespread in neighboring Georgia and Armenia.

Based on data supplied by Russia, the State Committee for Work with Azerbaijanis Living Abroad reports that approximately two million Azerbaijani migrants have moved to the Russian Federation to earn their living. The Committee puts the amount of transfers from Russia-based Azerbaijani migrants at "more than $1 billion."

The number released by the State Statistics Committee -- "more than $800 million" -- is slightly different, but no less significant. This figure amounts to 10 percent of Azerbaijan’s 2008 state budget of Azerbaijan and 4 percent of its 2007 Gross Domestic Product.

Editor�s Note: Elkhan Salahov is a freelance reporter in Baku.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

The views expressed in this publication do not necessarily represent the position of the Open Society Institute and are the sole responsibility of the author or authors.