Analysis Materials 16 November 2005 12:05 (UTC +04:00)

The achievement of high level of employment is one of the major objectives of macroeconomic policy of Azerbaijan today. The economic system, creating additional amount of jobs sets a task of increasing the gross product and cover the financial demand of the nation. The direction of the reforms throughout the country promises to qualitative reforms in the labor market.

Governmental forecasts on the labor market

Thus, the forecasts by the Azerbaijani government on employment indices in 2006-2009, urge next year the number of employed in the economic sector of the country will increase as compared to 2005 figure (3884,300) by 2.14% and comprise 3967,400 people. It is conditioned with rise of economically active population, which depends on rise of population. Rise is expected on both indices in 2006, which will reach 4028,200 and 8504,000 people respectively.

According to the State Statistics Committee, 39.5% of able population of the country are involved in agriculture. The possession of plots automatically makes them to the category of employed. Through labor markets, organized from the beginning of 2005 the Ministry of Labor and Social Security, 4804 people were provided with jobs in regions of the country, including over 1300 people вЂ" at private enterprises.

The next large sphere of involvement is trade and repair of cars and technique. In January to October 2005 16.7% of able people were busy in this sector. Next year 652,100 people will be involved here.

The sphere of education, which involves more than 330,000 people, ranks as the third. The construction of new school in the country requires additional personnel in this sphere. The employees of the health and social sectors are also expected to grow 179,500 in 2005 to 180,800 in 2006.

In the contrary, a cut in the personnel is predicted in the state government and defense and social provision. Next year 263,200 people will be employed in this sector, which is 0.5% down as compared to 2005. It is first of all linked with the reforms in the pensions system and wage payment system.

A process of cut in personnel in the state sector and rise in the number of employed in the private sector in underway. Thus, in 2006 a total of 1092,500 people will be employed in the state sector, while in private sector вЂ"2,874,900 people.

Additional work force will be required in the industrial sector. As the forecasts show, rise in employment is expected to reach 13.3% (from 194,200 to 220,100 people) in refining industry, whereas in extractive industry the growth will be rather low вЂ" 0.2% (from 42,500 to 42,600 people).

Employment continues rising in the construction sector, while in 2006 it will comprise 252,400. The forecast is linked with the construction boom, which started in the capital city and encompassed the regional centers, and respectively provided large army of unemployed with jobs.

The highest demand for workforce was fixed in small and medium business.

However, despite the job places to be offered next year the number of jobless will increase 4% as compared to 2005 and reach 60,800.

Let’s listen to the World Bank

The World Bank has stated its opinion on the labor market in the post-Soviet countries in its report on �Expansion of employment opportunities in East Europe and former Soviet Union’, which contains analysis of labor market in 27 countries with transition economy, including Azerbaijan upon 15 years of collapse of communism. Despite some progress, achieved over the past few years, in many Soviet countries the state analysis remains tense.

The report notes that in post-Soviet countries with weak development of reforms, like Azerbaijan, Moldova, and Ukraine, many able people are obliged to work in low-income jobs, or return to natural agriculture. The labor opportunities are restricted here, whereas the employment can be stimulated only in case the programs on re-organization of enterprises and improvement of investment climate are implemented.

Earlier high unemployment ratio, covering post-soviet countries while transition to market economy, will be of temporary, and it will reduce as soon as the private sector will produce new jobs.

The report calls on the countries to improve the investment climate to stimulate the companies to the realization of investments and establishment of effective job places. The economic and political indefiniteness, corruption, high level of taxation and ineffective legal system are regarded as key factors repressing the entrepreneur activities.

The major recommendation for CIS countries is as follows: as the jobs are created merely by small private companies, the authorities should support reforms, with favorable impact on the state of business. Only the programs and strategy on employment, which envisages re-development of employees or assistance to jobless, are insufficient for the resolution of problem.