24.06.2014.Baku – Today this idea was noted in discussions of the Round Table in the National Confederation of Entrepreneurs (Employers’) Organizations of Azerbaijan Republic attended by leaders and representatives of business organizations as well as independent experts and representatives of NGOs.
The Round Table on the theme of “Application problems of labor contracts in Azerbaijan and ways to solve them” was organized by the Support for Economic Initiatives Public Union (SEI) and the Entrepreneurship Development Foundation (EDF) within the framework of the project “Micro-Enterprise Support” implemented with the financial support of USAID.
Welcoming participants of the round table, Mr. Sabit Bagirov - chairman of the EDF informed participants about the objectives of the “Micro-Enterprise Support Project”, events and researches conducted within the framework of the project. He said that the last year, the research was conducted on the theme of “Regulatory Mechanisms of the application of labor contracts in Azerbaijan: Problems and Ways to Improve” within the framework of the project and they developed a series of recommendations for the solution of these problems. These recommendations were sent to the President of the Republic of Azerbaijan and sent to the relevant governmental bodies. Mr. Sabit Bagirov noted that recently, some measures were taken to solve the existing problems in this field and in the creation of the electronic registration system of labor contracts. Mr. Sabit Bagirov talked about the purpose of the organization of round tables and asked participants to share their experience in facing problems in this field and as well as their ideas of solutions to problems raised in the report. It was noted that researches and proposals will be improved taking into account the recommendations of participants and updated recommendations will be submitted to the government.
Thereafter, Mr. Rovshan Agayev – the author of the research, the economist made his presentation on the theme of “Regulatory Mechanisms of the application of labor contracts in Azerbaijan: Problems and Ways to Improve”. The reporter started his speech talking about application issues of the electronic registration system of labor contracts and he mentioned that the largest contribution in this field could be the raise the level of legalization in the sphere of labor relations. He noted that rules of electronic registration of labor contracts were approved by the Resolution No. 183 of the Cabinet of Ministers on June 6, 2014, according to the Decree of the President of Azerbaijan published on February 3, 2014, regarding the application of amendments made to the Labor Code on December 27, 2013. Thereafter, registration of signing contracts, making amendments and termination of contracts will be provided in electronic form in the electronic system of the Ministry of Labour and Social Protection of Population of the Republic of Azerbaijan. For this purpose, labor contract notification based on existing working conditions and information will be included in the electronic information system by the employer. The inclusion of the contract notice will be via the "e-government" portal.
Then, Mr. R. Agayev informed the current conditions in the field of official registration of labor relations and he noted that the size of the officially registered workforce still does not exceed 35% of the total employed population. "Our investigations have shown that only 10 percent of workers employed in the private sector were registered as employees." Only 2.5 percent of the workers employed in the agricultural sector and 35-40 percent of workers employed in construction, trade, public catering, and transport sector have labor contracts. For comparison, Mr. R. Agayev noted that, in Greece and Italy, 17-20 percent of the workforce does not have a labor contract, for the following countries the figures are: Austria, the Netherlands, Great Britain, and Germany 1.5-4 percent, Estonia and the Czech Republic 9-10 percent, Lithuania, Latvia and Hungary 15-18 percent, Romania and Bulgaria 20-22 percent, Egypt and Tunis 50-55 percent, Mexico and Brazil 55-60 percent, Kenya and Chad 70-75 percent, Indonesia and India 80-83 percent.
Despite the fact that the legislation includes significantly high fines for businesses and their officials for avoiding official registration of labor contracts (for example, according to the Code of Administrative Offences, if employment without any labor contract is revealed, officials in charge must pay a fine in the amount of 3000 up to 5000 manats, legal entities they represent must pay a fine in the amount of 20 000 to 25 000 manats), even, despite the fact, that inspection activities of government agencies are expanding in recent years, it is not possible to solve the problem for now.
The expert considers it to be necessary for the government of the Republic of Azerbaijan to carry out measurements in 4 directions in order to prevent unregistered employment and promote labor contracts:
• First and foremost, it is necessary to alleviate the financial burden on employers regarding employees - currently the tax burden on employers for employment is 29.1 percent and it’s even higher than a number of European countries It is suggested that the current social insurance burden on entrepreneurs be decreased from 22% to 15%;
• Secondly, to increase the efficiency of government bodies that oversee the implementation of labor contracts, increase the efficiency of inspections provided by labor inspectorates and find out more effective forms of cooperation among the institutions responsible for the implementation of the contracts;
• Third, administrative sanctions associated with the absence of labor contracts must be tightened. In many countries, sanctions are not limited with the application of monetary penalties in a case of the absence of labor contracts, it also includes imprisonment of the employer, prohibition for enterprises to access tenders, as well as the termination of the license when the license is the case;
• Finally, one of the necessary directions is the strengthening of the
educational and promotional activities related to the application of labor contracts.
In the event, Mr. Samir Asadov – the representative of AISTIB (Azerbaijan International Society of Turkish Industrialists and Businessmen), Ms. Rubaba Murshudova – the head of “Granit QP” Ltd., Arif Najimov – the candidate for a degree of Azerbaijan University of Architecture and Construction, Mr. Farid Abbasli - the representative Economic Research Training Centre, Ms. Shafayat Gorchuyeva – the representative of “Probion” Ltd. and expressed their opinions on the issues.
The report: “Regulatory Mechanisms of the application of labor contracts in Azerbaijan: Problems and Ways to Improve". Author: Rovshan Agayev
