Azerbaijan’s unrecognised army of unemployed

5 September 2017
(Ahmed Mukhtar/OC Media)

Two years after the twice devaluation of the manat and three years after world oil prices plummeted, official statistics in Azerbaijan suggest a rosy picture of the economy. Meanwhile, local companies continue to shut down, each day adding more people to the country’s army of unemployed.

[Read in Azerbaijani — Azərbaycan dilində oxuyun]

‘Today everybody, who wants to work, can find a job’, Ilham Aliyev, President of Azerbaijan proclaimed on 4 August.

According to him, 1.5 million jobs have been created since 2004, most of which are permanent.

The government seems optimistic in this regard. Although the the financial crisis has led to mass layoffs and many companies closing down, Salim Muslumov, the Minister of Labour and Social Protection, announced in 2015 that the number of people living below the official poverty level, with a monthly income of below ₼148.5 ($87), had dropped to only 5.9% of the population.

The minister added that the official unemployment rate  was 5%, ‘maintaining this figure has been our success.’

Statistics vs reality

In February 2015, the Azerbaijani manat lost 33% of its value and the government officially declared a devaluation. The next fall in the manat happened in December of the same year. Although the state budget for 2016 had already been approved, after the second devaluation it was returned to parliament and expenditures were drastically cut.

Hafiz Babali, economics editor at independent Azerbaijani outlet the Turan Information Agency told OC Media that the official statistics can be misleading.

‘In 2004–2016, the number of salaried employees increased significantly, this is my conclusion based on figures from the State Statistical Committee. The government claims that new jobs were created during this period, most of these though are recorded as self-employed, and the Taxes Ministry admits that two thirds of these new taxpayers are not currently active’, Babali said.

Economist Natig Jafarli, executive secretary of REAL, a political movement calling for democratic and social change in Azerbaijan, disagrees with Muslumov’s 5% figure.

‘The government’s figures and indicators about unemployment do not meet international standards. Recipients of state-distributed land parcels and their families are automatically registered by the government as being employed. According to official figures, there are 800,000 people with state-distributed lands. These people and their able-bodied family are no longer considered unemployed. There is no such approach anywhere else in the world’, Jafarli adds.

As of 1 May, the number of people officially registered as being unemployed in the country was 35,900.

Fifty-five-year-old Ibadat Mammadov was officially registered as unemployed in November 2016.

‘Civil servants at the State Service for Student Admission [now the State Examination Centre] where I used to work were fired after the devaluation. Even though the number of vacant positions should have allowed me to be assigned to a relevant position, I have not been employed so far. The head of the agency says that fired civil servants may apply to interview, but, the bosses do not want to accept my application documents,’ Mammadov told OC Media.

(Ahmed Mukhtar/OC Media)

Rising food prices, falling wages

According to Samir Aliyev from the Centre for Support for Economic Initiatives, a leading local development organisation, 13 banks shut down because of the devaluations, while two others decided to merge.

According to Aliyev, official figures showing rising salaries are wrong.

‘On the contrary, cuts in the private sector and falling salaries have occurred. The reduction of wages has become more visible in the banking sector.’

The decline in the national currency against the dollar has also resulted in higher food prices, as well as for some utilities and fuel.

‘It is no coincidence that official statistics show that food prices have risen by about 14–15%’, Aliyev told OC Media.

Cuts at SOCAR

Given that the state budget is largely comprised of oil revenues, falling oil prices in 2014  was the first stimulant for the country’s crisis.

Mirvari Gahramanli, who chairs the independent Oil Workers’ Rights Protection Organisation (OWRPO), says that the sharp decline in oil prices and subsequent reductions in oil production in the country have led to large numbers of  layoffs in the state oil and gas company, SOCAR, and its partner companies.

According to the OWRPO, there are currently about 40 court cases regarding the layoffs at SOCAR. It was not possible to speak with workers who had been laid off on the subject, as they said that speaking out could have a negative impact on the case.

(Aziz Karimov/OC Media)

Trump Tower in limbo

Economist Natig Jafarli says that one of the sectors worst hit by unemployment is the construction sector, given that state investments have dropped by 40% in the past two years.

Jafarli notes that around 80,000 are likely unemployed people in this sector, despite the Statistical Committee’s figure of only 20,000.

He says the country’s construction boom was fueled by increasing government investments paid for through oil funds, which have since dried up.

Mesud Asker, 27, has been unemployed since November 2016. He had worked as an assistant logistics manager on the construction of Trump Tower Baku. Anar Mammadov, the son of a former transport minister, was a partner in the project. Asgar says that construction halted after the second depreciation in December 2015.

The Washington Post reported that the delay was due to financial shortages after the collapse of the manat. Construction was supposed to finish by 2015.

‘The company I was working for has stopped functioning completely’, says Asgar.

A graduate of Azerbaijan’s Tourism and Management University, he used to work in his own field, but now has difficulty finding any job at all.

Although the devaluation has hit the construction sector hard, many companies which have gone under are not officially registered as being closed. This includes several companies owned by AKKORD, a major corporation, which were terminated in early August. Other companies, such as AZENKO and EVRACON, have, according to information leaked to the media, had problems paying employees.

Investigative journalist Hafiz Babali says that the situation is starting to go back to normal in the construction sector with the exception of state investments, which have decreased to a third of what they were.

‘The reason is a policy of liberalisation in this sector, such as simplifying the issuance of licenses and permits for construction’, Babali told OC Media.

A country in crisis?

According to Samir Aliyev, the government does not officially recognise that the country is even in crisis, claiming it is nothing but temporary difficulty. Whereas other countries have often employed an anti-crisis programme to respond to such situations, Azerbaijan has reacted through drafting ‘road maps’.

‘Admitting that there is a crisis would be admitting the failure of the country’s economic policy so far. Therefore, by presenting the current situation as an unexpected one, the government refuses to acknowledge that they have not taken the necessary steps to reduce oil dependence’, Aliyev says.

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