Azerbaijan's proposed hourly wage system: Who stands to benefit – workers, employers or state?
Introduction of hourly wages in Azerbaijan
Azerbaijan plans to introduce a minimum hourly wage from 2027. The announcement was made on 11 November by Deputy Minister of Labour and Social Protection Zaur Aliyev during a meeting of the Milli Majlis Committee on Labour and Social Policy. According to Aliyev, the new system will initially apply to agricultural production and the catering sector.
Back in 2024, we reported that the introduction of hourly wages was under discussion in Azerbaijan. The main provisions of the proposed amendments to the Labour Code have now emerged.
The government and MPs have presented the initiative as a way to make employment more flexible and bring informal employment into the formal economy. However, critics have raised a different question:
Who will benefit from hourly wages, and could the system be used to split full-time positions into part-time roles in the public sector?
What does the draft law propose?
According to media reports, the draft law provides for hourly wages in two cases: when an employment contract is concluded for less than one month or when the working week does not exceed 20 hours. The Cabinet of Ministers will determine which sectors the new system will apply to.
The draft law also includes several safeguards for employees:
- If an employee works less than one hour in a day, they must be paid at least the minimum hourly rate. Any part of an hour must be paid as a full hour.
- For part-time employees paid a monthly salary, wages cannot fall below the minimum wage calculated in proportion to their working hours.
- In organisations funded by the state budget, hourly wages can only be introduced if the organisation’s existing pay system allows for them, according to APA.
The minimum hourly rate has not yet been announced. According to Musa Guliyev, chairman of the Milli Majlis Committee on Labour and Social Policy, the draft law stipulates that:
The minimum hourly rate cannot be lower than the hourly equivalent of the minimum monthly wage.
However, the deputy minister of labour and social protection said that the proposed minimum hourly rate would be set above this level.
Since January 2025, Azerbaijan’s minimum monthly wage has stood at 400 manats (approximately $235). According to calculations by economist Natig Jafarli, this translates into around 2 manats and 50 gapiks per hour (approximately $1.47) for a five-day working week, or around 2 manats (approximately $1.18) for a six-day working week.
What do authorities say?
Musa Guliyev believes that hourly wages could make it easier for women with young children, students and pensioners to enter the labour market. According to him, the current minimum monthly wage system creates “inequality and social injustice” for part-time, seasonal and short-term workers.
However, the minimum wage cannot serve as a universal benchmark for all working arrangements.
Guliyev described hourly wages as a “social instrument that helps formalise informal employment”. Deputy Minister Zaur Aliyev, meanwhile, said the changes would allow for greater flexibility in applying the minimum wage system and make wage calculations more transparent.
The introduction of hourly wages has not come as a surprise. In May 2026, the government, the Confederation of Trade Unions and the Confederation of Entrepreneurs of Azerbaijan signed a General Collective Agreement for 2026–2028, committing to securing legislative amendments introducing a minimum hourly wage.
What concerns have critics raised?
Natig Jafarli, an economist and chairman of the Republican Alternative Party, raised three questions in a social media post.
The first concerns the benefits for workers. What would they gain from the introduction of a minimum hourly wage? Jafarli gave an example: if someone were hired for two hours a day and paid 5 manats (approximately $3), “who would benefit from this?”
The second question concerns the public sector. According to Jafarli, nearly half of all salaried employees work in the public sector, and it would be difficult to introduce hourly working arrangements for teachers, doctors, police officers and judicial employees. According to figures from the State Statistical Committee, as of 1 September, 834,200 of Azerbaijan’s 1,776,800 salaried employees, or around 47%, worked in the public sector.
The third question concerns the private sector. Jafarli argues that hourly wages should not be “imposed on the private sector, but rather encouraged through incentives”. In his view, employers spend time and money recruiting and training staff and may therefore have little incentive to hire two or three hourly paid employees instead of one full-time worker.
Economist Akif Nasirli argued last year that Azerbaijan was not ready to introduce such a system. He identified the lack of effective mechanisms to monitor compliance with labour legislation as the main obstacle.
Human resources manager Royal Ahmadov told Bakupost on 6 November that introducing hourly wages would not automatically lead to higher salaries. According to him, much would depend on the minimum hourly rate and how working hours are recorded.
“The main goal is not to provide employers with cheaper labour,” he stressed.
Could full-time positions be split into part-time roles?
Jafarli’s most serious concerns relate to the public sector. He believes the new system will primarily be used in state-funded organisations.
The economist gives the following example: a ministry employing 100 people on an average salary of 1,500 manats (approximately $882) could hire another 100 employees without dismissing anyone. If each of the two employees sharing a position worked four hours a day and earned 600 manats (approximately $353), the cost of one full-time equivalent position would fall from 1,500 to 1,200 manats (approximately $706).
According to Jafarli, this would allow the authorities to report the creation of “new jobs”, while saving the state budget 300 manats (approximately $176) per full-time equivalent position.
The economist describes this as “an attempt to create the appearance of sweeping changes without changing anything in substance”.
Government representatives have not yet responded to the criticism. However, the draft law does not exclude state-funded organisations from the new system: hourly wages would be permitted where the organisation’s existing pay structure allows for them.
Jafarli’s example of a four-hour working day also falls within the conditions set out in the draft law, as it would amount to a 20-hour working week over five days.
These concerns come against a backdrop of declining public-sector employment. In 2025, the number of public-sector employees fell by 2%, equivalent to around 17,000 jobs. Employment also declined in education and public administration, while private-sector employment grew by 5.2%.
Who could benefit?
Supporters of the new system argue that workers currently employed without formal contracts stand to benefit the most. MP Razi Nurullayev explained the reasoning last year:
“Workers will be paid for the hours they actually work.”
Economist Khalid Kerimli said in May that the current monthly wage system is primarily designed for full-time employees. In his view, introducing a minimum hourly rate would help protect the rights of part-time workers and give the Labour Inspectorate greater scope to monitor compliance with labour legislation.
However, Kerimli stressed that “introducing a minimum hourly wage does not mean an increase in the minimum wage”.
The impact of the reform will therefore depend on two decisions that have yet to be made: setting the minimum hourly rate and approving the list of sectors in which it will apply.
The new system will first be introduced in agricultural production and the catering sector. If hourly wages help bring informal employment in these industries into the formal economy, supporters’ expectations will be met. However, if the system leads to full-time positions being split into part-time roles and lower labour costs, critics’ concerns may prove justified.
