Environmental and Social Management Framework (esmf)

Employment and Labor Market

1. 
   Introduction
   

151. 
     Improving the quality of human resources plays a crucial role in the development of every country's labor market. Efficient use of productive forces, including labor tools, land, infrastructure, and human capital leads to steady economic growth. One of the priorities in economic and social policies worldwide is keeping the level of unemployment as low as possible. According to data from the State Statistical Committee of Azerbaijan, young people constitute the bulk of the potentially economically active population.
     
152. 
     Two problems in generating more jobs, that businesses and the public sector face in Azerbaijan, are on the one hand, the lack of qualified workers, and on the other hand, the risk that they will leave the country for better career opportunities abroad. This tendency threatens the effective development of the economy and slows down corporate growth. In order to tackle this issue, the private and public sectors in collaboration with civil society should work towards effective solutions.
     
153. 
     This chapter addresses the current trends and issues in the Azerbaijani labor market, the role of businesses and civil society in improving the human resources situation in the country, employee retention policies of businesses, and why investment in human capital is wise.
     
154. 
     Between 2005 and 2019 the number of economically active population increased by 787.9 thousand and made 5168,0 thousand persons, of which 4,915,2 thousand persons are engaged in the fields of economic activity, 252.8 thousand persons are unemployed. The main idea behind this research is to evaluate employment and labor market policy in Azerbaijan and in particular, how the socio-economic transformation following independence has affected the labor market situation. The labor market in the country has demonstrated a continuous increase in participation rate. In fact, the increasing participation rate in the country linked to high spillover effects from the energy sector on other sectors of the economy, such as the construction and service industries, as well as an increase in self-employment activities of small landowners and small to medium-sized businesses.
     
155. 
     The realization of reforms in economy, especially privatization of enterprises and organizations in the state property were the reasons of significant changes in distribution of employment by state and non-state sectors. So, in 2005 if the share of persons employed in the state sector made 30,3% of total number of persons engaged in economy, during first six months of 2019 this indicator was decreased up to 23% and the number of persons employed in non-state sector was increased for 1,4 times during this period.³⁰
     
156. 
     1613.8 thousand persons or 32% from total number of employed populations in the economy for the first half of 2019 were people working under labour contracts. Majority of employees were employed in large and medium enterprises.³¹
     
157. 
     78.711 thousand persons have got official unemployment status provided by the State Employment Service on November 1, 2019. During last years the share of woman among unemployed persons decreased; for example, it was 36% in 2019 relative to 51.6% in 2005.
     
158. 
     During 2005-2018, average monthly nominal wages and salaries of employees being increased for 4 times made 544.6 manat.
     
159. 
     Number of persons have got official unemployment status by the State Employment Service by the country made 20,1 thousand for the beginning of January 2019. During last years the share of woman among unemployed persons being decreased made 37,2% in 2018 relatively to 51,6% in 2005.
     
160. 
     Educational attainment of the population is one of the most important conditions for an effective labor market. Generally, people seek jobs that closely match their education background and experience. However, in a market economy, a degree is not necessarily a guarantee of employment. Additionally, jobs in a market economy are much more diverse than in a command economy. Furthermore, in general, both wages differ between the private and public sectors and working conditions are not the same in the capital city as in small provincial towns.
     
161. 
     In a globalized world, one of the main factors determining the quality of the labor force is the intellectual potential of a society and its rate of enhancement. In Azerbaijan, the majority of unemployed young people have secondary general education. In terms of both the unemployed and the total labor force, the proportion of people with only primary or no education is very low, and the majority of the labor force has attained or completed secondary education.
     
162. 
     Inactivity and non-participation in the labor force also occur for a variety of reasons, such as continuation of education for youth, housekeeping and childcare responsibilities for women, disabilities or low wages. Education plays a very important role in entering the labor market in the country. Having higher education is significant in increasing the chance of obtaining a job with a good wage. On the other hand, the majority of discouraged workers enter the informal sector. Non-participation is predominant among women, who may be discouraged because of family traditions and the mentality that women should perform housekeeping and childcare responsibilities, while men are the main wage earners in their family. Last but not least, it should be noted that inactivity among youngsters is mainly connected with education, while for elderly people it is connected with retirement.
     

2.