Labor Market Trends in Azerbaijan - Policy Paper

The graduates of the "Young Economists" training of the Institute of Democratic Initiatives (IDI) prepared a document on labor market trends in Azerbaijan.

In the first section of the study, the current state of the labor market in Azerbaijan was examined. One of the main trends observed in the country's labor market is the continuous increase in the number of employees in the private sector as a result of the privatization process that came with the collapse of the Soviet Union and the transition to a free market system. According to the indicators of 2021, the specific weight of employees in the public sector in employment across the country was equal to 22.4 percent, and the specific weight of employees in the private sector was equal to 77.6 percent. However, public sector workers (52%) still dominate among wage workers. From this point of view, Azerbaijan is one of the countries with the largest share of the state in employment.

As for the unemployment rate, it is clear from the official figures that especially since the mid-2000s, the country has seen a continuous decrease in the unemployment rate after large oil revenues came into the country. Although this indicator dropped to 4.8% in 2019, when the lowest level of unemployment was recorded, it suddenly rose to 7.2% in 2020. The main reason for this is the weakening of economic activity in many areas due to pandemic restrictions. Although unemployment decreased slightly to 6% in 2021, it could not return to the pre-pandemic level. However, it should also be noted that independent experts are of the opinion that the real unemployment rate in Azerbaijan is higher. According to the country's legislation, factors such as the fact that those who own share land are considered employed regardless of whether they cultivate that land are the main reasons for this. It should also be noted that Azerbaijan is distinguished by the high level of informal employment. Because of this, many people work without official registration, so they could not take advantage of the social protection measures provided by the government for those who lost their jobs during the pandemic.

In the second part of the study, the structure of the employed population was investigated according to the types of activities. It is clear from the disclosed indicators that no significant changes have been observed in the structure of the employed population over the last 5 years. Processing and trade in that period; a relative increase in the number of workers working in the field of vehicle repair was recorded. In Azerbaijan, a large part of the population still works in the agricultural sector, and a very large part of them is the population living in the regions. However, let's take into account that the share of the agricultural sector, which has a labor force of 36.3% of the total employed population, in the composition of GDP for 2021 is only 5.88%. This situation tells us that there are serious problems in the economy and the labor market in general.

In the third section, which is called "Labor force movement in the economy", based on official figures, the increase in the number of layoffs in the country, as well as which areas are more oriented, were investigated. Analysis of statistical indicators shows that the most reliable job in Azerbaijan is in the mining industry. At the same time, the construction site, where the number of workers is constantly changing, is considered the most unreliable work area. This means that, according to the indicators of 2021, 7.5% of the employed population is constantly working at the risk of losing their job or working in temporary and non-permanent jobs. At the same time, it is noticeable that the number of permanent hires and layoffs is high in the administrative and support services, trade and vehicle repair and manufacturing industries.

The fourth section of the study focuses on the analysis of the relationship between higher education and the labor market. It is clear from the statistical indicators that there is more interest in education, technical and technological, economics and management specialties. It seems that the group of agricultural specialties, in which the majority of the population works, is one of the least selected specialty groups. These trends are observed in the number of students currently studying, along with the choice of specialty.

The main reason for this type of inconsistency is the policy that is not properly conducted and analyzed, and its elimination is in the hands of the state. Failure to provide more detailed information and data in such statistics creates difficulties for researchers and makes the analysis process less effective. In this regard, it is very important for government agencies to disclose more comprehensive statistical indicators. This can lead to an increase in the state's accountability and more active participation of citizens in the decision-making process.

In the fifth section of the study, the state of personnel training through vocational and secondary vocational education institutions was investigated. It is clear from the official figures that the demand for vocational and secondary educational institutions in Azerbaijan is lower compared to higher educational institutions. Two main reasons stand out here: people give less preference to these educational institutions in terms of prestige, and the state allocates less money to these educational institutions than to higher education institutions. Official statistics show that the interest in vocational education in the country is weakening. For example, in 1991, 82,188 people studied at this level of education in the country, but in the following years, these indicators began to decrease sharply, and now their number has decreased to 20,000 people.

The sixth part, called "Global trends in the labor market and remote work", is related to the examination of global trends created by the Covid-19 pandemic in the labor market. This section examines the challenges that telecommuting poses for employees and companies. It is clear from the results of the survey conducted within the framework of the study about the challenges of remote work that the biggest concerns of employees are related to the limited opportunities to socialize. 66.7% of respondents see this as their main problem. Addiction to the comfort zone was indicated as the next problem by 60% of the respondents. The next prominent problems are laziness and health problems. Both of these options were chosen by 33.3% of respondents.

The result of the research showed that in some cases, companies increase the workload of employees by making them stay at home. Such situations have a negative effect on the employee's motivation and reduce his produc