Stimulus to reduce imbalance

Stimulus to reduce imbalance

Azerbaijan, Baku, September 3 / Trend /

Leyla Abdullayeva, expert of Trend 's analytical department  

Increase in the number of labor pensioners and relatively reduced birth rate will inevitably lead to absolute and relative reduction in the number of young people and growth in the number of old people in Azerbaijan. State Social Protection Fund notes an increase in the number of labor pensioners in the country, whose number reached 1,292,602 people as of July 1, 2009. The number of labor pensioners increased by 17,464 people compared with the beginning of the year.

Aging of population takes place all over the world. If formerly the average family had 6.7 members, now it is 3-4 persons. According to UN experts, the share of people over 65 years of age will double by 2050, for example, in Belarus will increase from 14 percent to 25 percent, in Russia - from 13 percent to 25 percent, in Ukraine - from 14 percent to 27 percent. Such rates are typical for developed European countries as well: Austria, Switzerland - an increase from 15 percent to 30 percent, Belgium - from 17 percent to 28 percent, Germany - from 16 percent to 28 percent, Greece - from 18 percent to 34 percent, Spain - from 17 percent to 37 percent. In China, the expected rate of growth may be even higher - from 11 percent to 33 percent.

It is necessary to take measures to prevent the decline in the number of population in Azerbaijan. In Azerbaijan, the average life duration is 72.4 years. Even if the life duration in Azerbaijan remain at current levels or rise slightly, taking into account the current situation, rapid decline will continue in the absolute number of people of working age and increase in the number of old people over the next years. Under the current parameters of the pension system and labor market, this will mean a sharp increase in the pension load for the working-age population, which can adversely affect not only the financial security of the existing pension system, but also the prospects for economic development in general.

Responding to the growing challenge of aging and the experience of economically developed European countries, a number of CIS countries follow the path of gradually increasing the pension age within the pension reforms. Azerbaijan has already decided that the female retirement age will be increased from 57 to 60 years over the next six years. It should be noted that Azerbaijan applies one of the lowest retirement age compared with other countries, except Bulgaria, where the retirement age for women is 52 years. In Norway and Iceland - 67 years, Germany, Ireland, Spain, Canada, Portugal, USA, Finland, Sweden, Japan - 65, Switzerland - 63, Austria, Great Britain, Greece, Italy, France - 60 years.

Increasing pension age is the simplest way to solve the problem.

However, there are other options. The first thing is not to allow decline in public financing for demographic reproduction, to fix the "child share" in the law as a percentage of gross domestic product. Secondly, it is necessary to raise the amount of child allowances.

The issue of restoration of child allowances payment has been raised in the country several times, but yet it has not led to concrete results, except the recent presidential order to increase the benefits for the child's birth to 50 manat.

Even last year, non-governmental organizations protecting children's rights in Azerbaijan proposed the payment of a one-time cash benefit for the birth of the child in a large amount, following the examples of other countries.

Supposedly, one child must receive $3,000, two - $10,000. But still this issue is under discussions.

The profits flowing into the country should be directed towards the development of human resources. The funds can be not given to parents, but transferred to bank accounts of children. The parents can spend monthly percentage of this amount on the needs of the child. After reaching adulthood, the children themselves can use the funds. Azerbaijan has the opportunity to ensure the future of children, transferring funds to their bank accounts. Thus, upon reaching adulthood, significant funds will be available in the account of young people. It would be good for future generations and will become an incentive for reducing the imbalance created between the young and older generation.

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