Azerbaijan is preparing to raise the minimum wage following the recent increases in pensions and benefits
Minimum wage in Azerbaijan
Proposals to increase the minimum wage in Azerbaijan will be prepared, according to the 2024 Action Plan of the “Labor Market” working group of the Commission on Business Environment and International Ratings.
Pensions and benefits were increased earlier this year in Azerbaijan, however, the minimum wage remains at 345 manats [about $203]. Last time, the minimum wage was raised at the beginning of 2023, from 300 [about $176] to 345 manats.
Another news in this area: there are reports that the minimum monthly wage will be replaced with an hourly wage system, similar to that used in developed countries.
Here are some figures to provide an understanding of the wage situation in Azerbaijan:
- The average salary in Azerbaijan is 345 manats [about $202].
- Contributions to the state social protection fund, unemployment insurance, and compulsory health insurance for those working in the private sector total 29 manats and 13 qəpik [about $17.13].
- For civil servants, these contributions amount to 39 manats and 28 qəpik [about $23.10].
The official number of people receiving the minimum monthly wage in Azerbaijan is not disclosed. However, during the announcement of the wage increase at the beginning of 2023, the government stated that the raise impacted 600,000 people.
“It is expected that the mandatory minimum wage will double”
Vugar Bayramov, a member of the VI convocation of the National Assembly, informed the “Turan” agency that proposals for raising the minimum wage will be discussed by November 1 of this year.
It is expected that the minimum wage will increase starting in January 2025.
Bayramov stated that the growth would be in double digits because in recent years there has been double-digit growth in average wages.
“This increase could directly affect the incomes of more than 700,000 people. Not only will the minimum wage rise, but the percentage of social support for its recipients will automatically increase,” said Bayramov.
“As the minimum wage increases, so does the tax burden”
“Increasing the minimum wage also means higher taxes for citizens under the VÖEN (personal tax number) system,” economist Natig Jafarli told Radio Azadlyg.
“They’ve created this entirely meaningless dependency in the law, and it needs to be eliminated.
Additionally, the system for calculating the minimum wage needs to be changed. The minimum consumer basket should be recalculated to reflect more realistic figures for the cost of living.
Currently, the minimum wage should be at least 500 manats (about $295). This amount can meet people’s basic needs, but it’s still not enough, especially for families where only one of the four or five members is employed. If that person earns only the minimum wage, the family is in a dire situation.
It would actually be good for Azerbaijan to switch to an hourly wage system like in developed countries. But under current economic conditions, this doesn’t seem very realistic.
In Azerbaijan’s labor market, the public sector dominates. Out of 1.7 million employees, 900,000 work in budget organizations, where a fixed working day is established.”
