Azerbaijan’s workers are always on thin ice

Text by Turkan Bashir, Aziz Karimov,


Twenty nine year old Ali Aliyev started working at Unibank on August 2, 2012. It’s one of Azerbaijan’s largest private banks, and Ali says he did everything to advance in his new career. His hard work paid off; Ali’s salary doubled over the course of a single year. Everything was going well.

But then in February 2015, the value of Azerbaijan’s currency, the manat, plummeted. “During that first [devaluation], two of my colleagues who sat next to me were fired, with the reason that there were no sales and borrowers could not repay their loans. From that moment on, my colleagues and I began to feel the fear of losing our jobs. When will our turn come?”

Ali didn’t have to wait long. On December 21, 2015, Azerbaijan’s Central Bank decided to move the manat to a floating exchange rate. Once more, the manat plummeted against the US dollar; that year, it became the most devalued currency in Europe and the former Soviet Union. The manat has since stabilised, but the economic hardships continue.

First Ali’s wife Nargiz, who worked at the same bank, was fired. The management apologised, but told her that they had no other choice. Ali hoped that the management wouldn’t make both parents in a family jobless, but he was wrong. “My career and my dreams stopped there. It was impossible to find a new job; we were left unemployed and with huge debts to the bank we used to work for.”

Unfortunately, Ali’s story isn’t so remarkable in Azerbaijan today. A recent report from the State Statistical Committee indicates that unemployment in Azerbaijan has risen by 213.2 per cent compared to last year (although the committee stresses that over two million new jobs have been created in Azerbaijan over the past 15 years.) Other figures are just as stark: as of October 1 this year, 74,100 people were officially unemployed, 35.4% of whom were women. In comparison, on the same date last year, 34,760 people were granted the same status. What explains these economic woes in Azerbaijan today, and how are ordinary people dealing with them?

After losing their job, the Aliyevs found some unskilled work. Nargiz became a cashier at a supermarket while Ali worked at a packing factory. It didn’t help them much. “I sold my car,  gave the money to my parents and told them to pay my debt back to the bank. I left the country with my wife,” said Ali in a WhatsApp conversation. Husband and wife eventually moved to Warsaw, Poland, where they have found work.

“I visited Azerbaijan last year and was very disappointed. There were unemployed young people everywhere, strolling around by the teahouses, left empty-handed, and destroyed families,” recalls Ali.


“No to plunder, No to monarchy, No to corruption, No to unemployment, No to exploitation”. This photo was shot on April 14, 2018 at the rally organised by the National Council of Democratic Forces in Baku at Mahsul stadium.

“Don’t detain me, but stop the manat” A poster from the demonstration calls attention to the devaluation of the national currency in Azerbaijan on December 21, 2015, when the Central Bank decided to move the manat to a floating exchange rate.

After the 2015 devaluation, the Azerbaijani manat plummeted against the US dollar; that year, it became the most devalued currency in Europe and the former Soviet Union. The manat has since stabilised, but economic hardships continue.

“Banks kill us” was a slogan used in a rally organized on April 14, 2018 by the National Council of Democratic Forces in Baku at Mahsul stadium. Devaluation was especially painful for people with bank loans since they had to pay back the loans -- fixed in U.S. dollars -- with devalued manats.

The State Statistics Committee said that approximately 67,000 jobs were created in the first nine months of 2015, following the devaluation of the manat. That figure does not reflect the number of jobs that were lost after state and private employers made cutbacks following the devaluation.


These scenes are the consequences of the large scale unemployment which followed the second devaluation of Azerbaijan’s currency. Government agencies and private companies alike started to make cutbacks. The most serious cuts began in the banking sector, where, according to unofficial sources, as many as 5,000 bank employees have since lost their jobs. Furthermore, hundreds have lost their jobs in state-owned enterprises such as Azeriqaz and Azerenergy. Smaller retail businesses have also been badly hit.

Azerbaijan’s government has attempted to paint a rosier picture of the country’s job market. For example, the State Statistical Committee said that after the national currency's devaluation, during the first nine months of 2015, approximately 67,000 permanent jobs were created in the country. Furthermore, president Ilham Aliyev mentioned during a speech at Davos on January 23, 2018 that the country’s unemployment rate is low: “by the end of the year, unemployment in Azerbaijan was at 5 per cent, and poverty at 5.4 per cent. I think this is one of the best results in the world,” said the president.

A report this year by the World Economic Forum states that the unemployment rate is 5.2 per cent across the country. Similarly, according to the State Statistics Committee, the poverty level in Azerbaijan dropped from 49 per cent in 2001 to 4.9 per cent in 2018. However, independent experts believe that the real figures are much larger. When the Fakt Yoxla (Fact Check) platform checked official statistics from different sources after the Davos Forum, they discovered that in 2018, Azerbaijan's unemployment rate was actually closer to 21 per cent.

This situation takes some getting used to for older generations, given that Azerbaijan was part of the Soviet Union for 70 years. People knew that they would eventually find employment after graduation.

Azer Guliyev, a lawyer working for the Oil Workers’ Rights Protection Organisation and a specialist on labour rights, says that the seeds of today’s job insecurity were planted with the collapse of the Soviet system. “The closure of factories, the transition to market relations, as well as the emergence of new technologies all affected unemployment. Staff reduction created a great psychological tension due to fear of losing a job, while on the other hand, the number of unemployed in the country continues to increase,” said Guliyev.

But this wave of unemployment is also a result of global economic patterns, stresses Nijat Garayev, an economic development consultant working for an international organisation in Baku. The volatility of global markets since the crisis of 2008, coupled with deepening income and wealth inequalities and developments in automation have all played a role in increasing job insecurity, explains Garayev.

“These processes have not bypassed Azerbaijan. Since the 1990s, the increasing economic dependency on exports of crude oil and gas have diminished the already uncompetitive Soviet-era industrial and agricultural sectors,” said Garayev. “As the oil sector was skill intensive and employed relatively few people, the majority of the population faced structural unemployment. A lack of quality vocational education contributes to a slow adjustment to this new labour market demand.”


As of October 1 this year, 74,100 people were officially unemployed, 35.4 percent of whom were women.

Azer Guliyev, a specialist on labour rights, says that the seeds of today’s job insecurity were planted with the collapse of the Soviet system. “The closure of factories, the transition to market relations, as well as the emergence of new technologies all affected unemployment.”

A torn “job...” announcement on the side of a building in Baku.

“We’re seeking a computer operator for a health center”. Such announcement for unskilled jobs are a common sight in Baku but do not mean there are really jobs to be had.


Given that, according to official statistics, 55% of Azerbaijanis are employed by the state, this makes a significant part of the population vulnerable to any cutbacks caused by budgetary constraints. Even in the case of a post-oil economy, Garayev added, the growth of more effective, private-led economic initiatives, primarily in agriculture, could lead to further volatility in the labour market over the next 20 years. “This implies that job insecurity will certainly increase resulting in brain drain, redistribution of income, and stress-related health conditions,” concluded the consultant.

This insecurity is compounded by the fact that workers have little recourse when they lose their jobs.

Nadir Gasimov’s story is an illustrative example. Until he was dismissed in December 2017, the 56 year old had worked for a locomotive depot in the city of Ganja since the age of 16. As a result of cutbacks, Gasimov was dismissed in December 2017. He considers it an injustice.

 

“Despite my 40 years of work on the railways, I was fired. When cuts began two years ago, the management kept newcomers and fired longtime experienced employees which created discontent,” he explained.


It can be difficult for most workers, but particularly older workers such as Gasimov, to start from scratch. After all, a major part of the country’s revenue comes from a single industry which employs only a handful of the population. “The non-oil sector is very small and heavily dependent on government support. As it’s not competitive, salaries are not negotiated [...] The weakly functioning trade unions and justice system do not provide sufficient legal protection to keep workers from being exploited, abused, or fired,” explains Garayev.

The country’s weak tradition of independent trade unions give workers little hope of resource. Although Azerbaijan joined the International Labour Organisation in 1992, there is little to suggest that that will change. In January 2018, unemployment benefit was replaced by a new concept of “unemployment insurance,” which is paid to workers who lose their jobs as a result of the liquidation of an enterprise or if they are registered as unemployed with their local employment centre. This essentially means that workers whose contracts expire and are not renewed are not eligible for state support; in a country where the minimum monthly salary is 250 manat ($147) and the average salary is 581 manat ($341) that doesn’t leave many Azerbaijanis with savings to survive on.

So while Garayev argues that the country’s labour code is progressive, he also stresses that it is not strictly adhered to by small enterprises. “Considering the immense share of the shadow economy, the situation is even worse. Having said these, there are positive steps towards transparency and some have started bearing fruits [...] for example, the ministry of taxes and finance have been promoting the formalisation of the labour market, aiming at the protection of employees.” 

Over the past two years, Gasimov, says that he has made multiple appeals to the authorities over his dismissal, which has caused him financial and emotional hardship. Despite his membership in the ruling New Azerbaijan Party (NAP), his voice has gone unheard. “I spent my years, and my health working on the railways, and put my trust in the NAP. But I’m left unemployed; at my age, nobody will hire me anywhere else,” he sighs.


“My career and my dreams stopped there. It was impossible to find a new job; we were left unemployed and with huge debts to the bank we used to work for,” said Ali Aliyev, who lost his job after the manat’s devaluation and left for Poland to work as an unskilled labourer

“Seller, cleaner, master, assistant needed” says job announcement. Job insecurity takes some getting used to for older generations, given that Azerbaijan was part of the Soviet Union for 70 years. People knew that they would eventually find employment after graduation.

A recent report from the State Statistical Committee indicates that unemployment in Azerbaijan has risen by 213.2 per cent compared to last year.

“The volatility of global markets since the crisis of 2008, coupled with deepening income and wealth inequalities and developments in automation, have all played a role in increasing job insecurity,” says Nijat Garayev, economic development consultant.

Job insecurity is compounded by the fact that workers have little recourse when they lose their jobs.



This article was produced as part of the partnership between Chai Khana and Institute for War and Peace Reporting (IWPR).

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