Live and Save People can handle their incomes in this way, judging the official statistics

Analysis Materials 27 June 2007 12:05 (UTC +04:00)

If to judge on the official statistics on community incomes and expenses, over the past two years living conditions in Azerbaijan are improving in stable rate. This tendency has been observed since the first half-year of 2005, when for the first time the real incomes began exceeding the expenses. Indeed, by the end of the year due to increase of tax rates on social insurance, as well as rise in communal tariffs for gas and water, the community incomes were lower than expenses by AZN 243.7mln, whereas net incomes exceeded the expenses by AZN 149.3mln.

To estimate the level and dynamic of community the face, used and real incomes of the population are taken into consideration. Nominal approach stipulates the amount of money received by definte people during definite time. The used incomes are the funds used for personal consumption and private savings. The used incomes are lower than the face incomes by the amount of taxes and obligatory payments. The real amount of used incomes represents the amount of goods and services, which can be purchased at the used funds during the definite period, i.e. the used funds with correction to the consumer price index (CPI).

It was succeeded to maintain this tendency in 2006. Thus, in 2006 the net incomes of the Azerbaijani population made up AZN 9.949.8mln, or more by 23.4%, but 3.6% less than the indices of 2005. the used incomes, that have been left after the payment of taxes and obligatory membership fees, comprised AZN 8.793.8mln a year, or 24.1% more as compared to previous year. The community expenses constituted AZN 8.009.58mln in that period, or AZN 1.940.2mn less than the net incomes and less AZN 784.2mln the used incomes. Taking into consideration that growth rate of inflation was 8.3% in 2006, which is lower than the community incomes, the Azerbaijan citizens managed to save definite part of their incomes.

However, to retain the domination of incomes over expenses in 2006 definite work has been done in the social sector of Azerbaijan to improve the living conditions of people. The amount of monthly salary, dynamic of retail prices, sufficiency of the consumer market will have positive impact on the amount of salary.

Rise in prices of diesel fuel, kerosene and consumer boosted inflation taking additional expenses from the population. Rise in the amount of the public budget enabled to increase salaries and payments of the budget organizations and it resulted in domination of the growth pace of salaries in the public sector over the private sector. Moreover, the distribution of targeted social aid began in the country in 2006 and reforms in the pension system were continued. As a result of 2006, the poverty ratio in the country reduced by 20.8%.

Currently, the difference between incomes and incomes increases more and more in the favor of the first. According to the State Statistics Committee, in January to April 2007 the net incomes of the Azerbaijani population made up AZN 4.008.9mln, or 36.7% ore than 2006. In this period used incomes comprised AZN 3.606mln, or 39.2% more than 2006. The used incomes per capita made up AZN 427.8 with an increase of 37.6%.

It is necessary to note that information on incomes is less exact due to variety in income sources, presence of incomes from the 'shadow economy' activities, difference between the work and payment for it realized and the payment for it, as well as presence of other types of payment than money, including the natural revenues in foodstuff and privileges for people. Therefore, statistics is more focused on study of expenses, study of incomes through expenses.

Thus, the community expenses for January to April 2007 made up AZN 3,249,800,000, or AZN 759.1mln less than the net incomes and AZN 356.2mln less than community incomes. The community expense rose by 23.65% as compared to relevant period of 2006.

Increase in minimal salary and in basic part of pensions up to AZN 40 in the beginning of 2007 affected increase in the incomes of the Azerbaijani population. Moreover, by the decision of the President dating to 1 January, 2007 the allowances monthly allotted to displaced persons for food was raised by 50%. However, immediately after the New Year, the Tariff Council of Azerbaijan introduced new higher tariffs for energy, public utilities, police services, as well as passenger transport. That was followed by rise in prices for almost all public consumer goods and other services. In particular, the prices increased even for daily newspapers from AZN 0.2 up to AZN 0.3 and weekly newspapers from AZN 0.4 up to 0.6. In order to support poor strata of the population the President signed a number of important social decrees intended to improvement of life level of the population. The decrees were put into effect on 1 February, 2007.

So, minimal monthly salary and basic part of pensions made up AZN 50. The salaries were increased for the employees engaged in the fields of sports, youth and culture, scientific-research institutions, social security, education, health. The salaries increased by 25% for the employees of the Ministry of Emergency Situations, reserve management places and stores of mobile reserves under the subordination to city and district executive bodies, as well as for the employees of health, ecology, hydrometeorology, forestry, fishery, melioration, and water industry fields along with the State Oil Company of Azerbaijan Republic. Monthly salaries of managing employees of Azerbaijani executive power, tax bodies were also raised.

On average, scholarships of post-graduate students, students of the institutes of higher education and vocational schools, colleges were raised by 50%. Indexation of insurance part of labor pensions and pension capital collected in the insurance part of personal accounts of insurers by 1 January, 2007 began on 1 February, 2007 in accordance with indexes of consumer prices for 2006.

Latest profound increase in salaries appeared in the 'Azerbaijani Television and Radio' (AzTV) CJSC on 1 April, 2007 closed. Salaries here were raised by 2-4 times. Since 1 June the salaries of deputies were increased by 25%.

Of course, every man handles it incomes in its own way coming out from its incomes. But generally, a mechanism on use of funds has a common way. In 2007 it is as follows: the major part of incomes was spent on purchase of goods and services - 78.39%, or AZN 9.934mln. The expenses for purchase of foreign currency, or savings comprised AZN 2.099mln (16.56%). Expenses for payment of obligatory payment (taxes) and voluntary payments made up AZN 640mln (5.05%).

However, the level of consumption directly depends on the level of incomes. Unfortunately, growth rate of salaries is not so high, whereas in the growth of inflation is not small (over the first 5 months of 2007, the inflation in the country made up 16.2%). So, an average Azerbaijani citizens spends major part of its incomes on goods and services..

We will become rich in the near future, as the Ministry of Economic Development promises. According to experts' estimations by 2025 the community incomes will exceed $8,00 a year and parity of purchase capacity it will equal $20,000.

Indeed, there is a negative side of the human happiness: the consumer prices will not remain stable and rise with the same rate. Thus, people might not feel an increase of their incomes. They promise retain inflation through titanic efforts, but it is not so easy: the Government's and NBA's opportunities in this respect are limited.