Minimum wage and pensions increases in Azerbaijan - experts uncertain
Minimum wage and pensions increase in Azerbaijan
Starting January 1, 2023, the minimum monthly wage and pension was increased in Azerbaijan. The increase of minimum wage is 15%, and the minimum pension 16%. According to experts, wage growth is inferior to the rate of inflation. Opposition politician Gubad Ibadoglu also believes that Azerbaijan is violating the European Social Charter, according to which the minimum wage cannot be lower than the average salary in a country by more than 40%.
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Azerbaijani President Ilham Aliyev today signed an order according to which the minimum wage in the country would increase from 300 to 345 manats (about $203) or by 15%.
The last time the minimum wage was raised was exactly a year ago, on January 1, 2022, by about the same amount.
The country’s government was instructed to submit proposals to increase the minimum labor pension from 240 by 16.6% to 280 manats (about $165), as well as social benefits and scholarships.
Violation of the European Social Charter
According to official statistics, as of November 1, 2022, the average monthly salary in Azerbaijan was about 830 manats ($488). Starting January 1, 2023, the minimum wage in the country was 345 manats ($203). Thus the minimum wage is only 41.6% of the average monthly wage.
Economist Gubad Ibadoglu considers this increase in the minimum wage insufficient, since the requirement of the European Social Charter stipulates an increase in the minimum wage in Azerbaijan to 500 manats per month. “The government has committed itself to comply with the requirement of the ESC, of which the Republic of Azerbaijan is a member,” Ibadoglu said on his Facebook page.
“According to Azerbaijan’s obligation to the ESC, the minimum wage in the country should not be less than 60% of the average wage. This means that the minimum wage should be at least 500 manats per month,” the economist said.
The increase in the minimum wage will also affect the wages of employees who work on a tariff wage.
Ibadoglu believes that it is better to determine the minimum wage by hourly pay. “Hourly rates of payment are standard in the USA. On January 1, the hourly minimum wage in the country will be 1 manat 76 qepiks, and after deducting taxes, 1.7 manats, or one dollar, will remain,” the expert added.
Inadequate for inflation rate
Raising the minimum wage in Azerbaijan to 345 manats is inadequate for the rate of inflation. This opinion was expressed in an interview with Turan news agency by Natig Jafarli, an economist and member of the political committee of the Republican Alternative opposition party.
According to official statistics, the annual inflation in Azerbaijan as of November 1, 2022 was 13.7%. Independent experts believe that real inflation is several times higher than what is officially recognized.