Azerbaijan, Baku, July 12 /Trend A.Akhundov/
A key measure to combat illegal employment in Azerbaijan will be the differentiation of interest rates for deductions on compulsory social insurance, Chairman of the State Social Protection Fund Salim Muslimov told reporters on Thursday.
"In the coming days we will submit proposals to amend the Law on Social Insurance and Pensions to the Government to take drastic measures against illegal employment and the concealment of the real wage. One of the measures will be the change of the proportions of
social insurance contributions between employers and employees," Muslimov said.
In Azerbaijan, 25 percent of salary directed for the payment of social security, 22 percent of which is paid by employer, three percent is deducted from employee wages.
"Today, wages of 80.5 percent of workers in the country is below 300 manat. Initially, we propose that the employer paid the 25 percent himself if the employee's salary does not exceed three times the minimum wage. If the salary is in the range from the triple to 20
times the minimum wage - 18 percent - an employer,7 percent - the employee, more than 20 times the wages - 15 percent - the employer, 10 per cent - the employee. That is, deductions for social insurance paid by employee will grow with the growth of wage. in this case, of course, the employer will try to indicate the high salaries. At the same time it is also profitable for the employee as with a salary increase more money will be accumulated on his individual account in the state fund," Muslimov said.
He noted that the current rate of contributions for compulsory social insurance in Azerbaijan is not high.
"The rate is lower only in Kazakhstan among the neighboring countries, and it is connected to the specifics of their pension system. When in 2004 Azerbaijan raised the issue of illegal employment, it was believed that if the rate for employers reduce from 27 to 22 percent then all will be legalized. However, despite the reduction in the rate of deductions for social insurance, not much has changed," Muslimov said.
Official exchange rate on July 12 is 0.7855 AZN/USD