President of the Republic of Azerbaijan Ilham Aliyev has received Minister of Labor and Social Protection of Population Sahil Babayev.

Touching upon the social reforms underway in Azerbaijan, President Ilham Aliyev said:

- Reforms in the social sphere are continuing this year. These are very large-scale reforms and they ultimately represent important steps aimed at improving the well-being of Azerbaijani citizens. In particular, the well-being of more than 4 million Azerbaijani citizens was improved and a very large social package was implemented last year. This shows again that the government of Azerbaijan is always next to its citizens, and the improvement of the social status of those of our citizens whose material capabilities are still limited is in the spotlight.

Further steps are being taken and will continue to be taken in this direction this year. Pensions have been increased. This also shows that the serious social package implemented last year is our conscious choice. I am sure that the social situation of our citizens will improve every year. please report on the work done in connection with pension provision, in particular starting from 1 January of this year.

Minister Sahil Babayev: Thank you, dear Mr. President. As you have mentioned, pensions were an important direction of the broad social reforms package implemented last year. The 72-percent increase in the minimum pension resulted in a serious increase in the pensions of 660,000 people, Azerbaijan is first in the CIS in terms of the purchasing power of the minimum pension. In addition, due to the increase in salaries, the pensions of 90,000 of our pensioners who received pensions on special conditions have increased by an average of 31 percent, which generally contributed to the coverage of 750,000 people by last year's package.

On the other hand, as a continuation of socially oriented reforms this year, according to an executive order you signed, all pensions have been indexed at 16.6 percent. As a result, the average monthly pension among all pensions in Azerbaijan amounted to 300 manats. As far as the age-based pensions are concerned, we plan to bring the average monthly pension to 350 manats. And this, of course, is the result and success of the large-scale social reforms carried out under your leadership and on your initiative in the last two to three years.

In general, the financial value of your recent reforms constitutes 560 million manats. So this year, due to indexation, our pensioners will receive an additional 560 million manats. If we take into account last year’s reforms – their total annual financial value amounted to about 450 million manats – then, as a result of the decisions made over the year, our pensioners are being paid more than a billion manats. These funds are fully repaid by the State Social Protection Fund and do not create an additional burden on the budget.

As a result of the reforms, serious recovery also occurred in the State Social Protection Fund itself. For the first time, 320 million manats allocated for pensions and financed under state obligations was returned to the state budget – 150 million manats as part of the budget adjustment in the middle of the year and 170 million manats at the end of the year. Following the removal of unjustified and fictitious appointments, additional 200 million manats were saved in the State Social Protection Fund for being channeled into pension reforms this year. In other words, a total difference of 520 million manats have formed, which is very important from the point of view of improving the pension system. Another significant indicator is that whereas the funds allocated from the state budget to the Pension Fund to finance state obligations amounted to 38 percent of its revenues at the end of 2017, in 2020 this figure dropped to 29 percent. Thus, significant progress has been made in reducing budgetary dependence by ensuring the independence of the Pension Fund.

President Ilham Aliyev: These are very good indicators, and this work should be continued. I believe that Azerbaijan’s first place in the CIS in terms of the purchasing power of the pension is a great achievement. Of course, as our economic opportunities expand, we will spend these funds primarily on social issues.

Regarding targeted social assistance, I instructed you to expand its scope. There has been a recovery in the economic sphere in recent years, there is economic growth, including the industrial production – industrial production in the non-oil sector has increased by almost 15 percent. New jobs are being created and new opportunities for our citizens are emerging. Despite this, I asked you to provide state support to those who are still in need of state support and to increase the number of such people. What is the dynamics in this area and how is my instruction being implemented?

Sahil Babayev: Mr. President, in accordance with yet another initiative of yours we significantly expanded the mechanism of targeted social assistance last year. whereas at the beginning of 2019, this program covered 40,000 families, by the end of the year the number of such families reached 72,000. In other words, serious growth was achieved during the year – by about 60-70 percent. On the other hand, using the funds allocated from the state budget for this year, we plan to cover 85,000-90,000 families with targeted social assistance, which means an expansion of the targeted social assistance program by another 20 percent. Along with this, your instruction was to soften the criteria and provide support to the population in this direction. Last year, steps were taken in a number of areas and simplifications were applied in connection with land ownership. As a result of this reform alone, an additional 7,000 families were included in the targeted social assistance program. Proposals on increasing the limit of utility costs were prepared for the current year too, and they are being discussed by the government. As a result of the changes introduced to the legislation by the new parliament, we will ensure that 85,000-90,000 families are covered by the targeted social assistance program.

At the same time, a serious increase in the need criterion during the year – by more than 10 percent, from 143 to 160 manats – allowed us the opportunity to increase the amount of targeted social assistance. Whereas in 2018 the amount of targeted social assistance was 160 manats, last year it reached 200 manats. According to forecasts for the current year, this figure will be approximately 215-220 manats. This means that those receiving targeted social assistance on a monthly basis will be provided with such an amount.

President Ilham Aliyev: This is a big contribution to the budget of every family. If each family receives 215 manats from the state, then, of course, the social security of these families will improve.

At the beginning of the year, I ordered to build more homes for martyr families and war veterans this year. We improve the social security of these citizens every year. Last year, 934 families were provided with homes. I ordered to increase their number, and this year there are plans to provide homes to 1,500 families. How are things going in this direction and what has been done in two months?

Sahil Babayev: You are absolutely right, Mr. President. Last year, 934 apartments and individual houses were provided. Of these, 300 are individual houses and 634 are apartments. This program covers 25 districts of the republic. On your instruction, the program has been further expanded this year – it now covers 1,500 apartments and individual houses. The program provides for 700 apartments and 800 individual houses in 52 districts. All inventory work has already been completed and procurements have been announced. This year, all citizens standing in line in the main cities of the republic with the exception of Ganja will be provided with apartments and houses. There are 170 people in line in Ganja, and 100 of them will receive houses and apartments this year. Under the program of individual homes, families of martyrs and disabled war veterans will be provided with 800 individual homes in 52 districts. As a result of the implementation of the program for the current year, the number of people who have been in line since 2014 will reduce to 1,500. In this regard, you ordered to complete this work as soon as possible.

President Ilham Aliyev: Very good! If we move at this pace, we will provide houses and apartments to all people of this category in 2021-2022.

What work is being done in connection with self-employment? I had ordered to expand the scope of this program. At the same time, we engaged the World Bank in this issue. This issue was discussed at a meeting I had with the Executive Director of the World Bank in Davos. The World Bank will provide us with financial support and consulting services.

You reported to me that the needs were fairly high. About 50,000 applications have been received. I ordered to cover at least 10,000 people with this program this year. Of course, the ministry developed and provided criteria related to program coverage. People underwent trainings. But the key thing is that after citizens have been involved, self-employment should be monitored because according to international experience, approximately 50 percent of the citizens covered by the self-employment program can effectively use this opportunity. For example, there are cases when people provided with livestock in districts and rural areas sell this livestock in the market, thus showing lack of responsibility. The main goal is for people to be able to support themselves with the help of the funds provided. If people treat the funds provided by the state like this, then this is unacceptable. Next time such people should not be given any support. They should also be deprived of targeted social assistance. After all, the state is showing goodwill and people should be responsible. There are many people who would want to be covered by the self-employment program, and a selection is carried out among them based on certain criteria. If those covered by this program act like that, then, of course, the most stringent measures must be adopted. What has been done in this direction this year and what remains to be done before the end of the year?

Sahil Babayev: Dear Mr. President, the self-employment program aroused a great deal of interest among the population. There are many citizens interested in taking part in the self-employment program. You noted that about 50,000 applications have been received. This is why we prioritized this process in order to give preference to persons with disabilities, martyr families, internally displaced persons, people with a martyr or a disabled person in the family. Whereas in 2017 this program covered 1,500 families, the figure reached 7,000 in 2018 and 10,000 families in 2019. For the current year, we have set a target of 11,000 families.

We have also involved international organizations in the program. The discussions held with the World Bank after your relevant meeting and instruction have successfully completed. The draft agreement has already been finalized and will be submitted for approval by the World Bank Board of Directors at the end of March. Taking into consideration the procedures of the World Bank, we believe that the agreement will be signed before May or June. Despite this, we continue the preparatory work. A project implementation team has already been formed and preparatory measures have begun. This year, we plan to finance at least 1,000 families under the World Bank project. Starting next year, the World Bank project will finance 5,000 families.

We are working with the UN Development Program to organize the self-employment of 500 families. They have already passed all the trainings and will be provided with assets starting this year. The new experience and the new approach of the United Nations Development Program will be applied to our other projects. At the same time, within the framework of the Social Gardens project, together with the “Regional Development” Public Association of the Heydar Aliyev Foundation, we finance 250 families through a self-employment program every year. Every year, gardens were established on an area of approximately one hectare for 250 families to ensure their constant profitability.

Of course, the most important direction in the implementation of this program is its sustainability and effectiveness. We have outlined a monitoring program in this connection. Monitoring is carried out in a quarterly basis. At the end of the first year, we try to actively conduct monitoring, because the monitoring of the first year shows a fairly high result – above 85-90 percent. But for a more accurate and realistic assessment of effectiveness, monitoring of the second year is important. We have created an electronic portal to ensure transparency. It contains video and photo material of each person along with the asset received and documents regarding the quality of the asset. Videos will also be posted there of the results of each monitoring with explanations. Of course, appropriate measures will be taken in relation to persons not taking adequate steps in connection with these assets.

Another step towards enhancing the sustainability of the self-employment program was the further improvement of its distribution. Whereas in the first year considerable interest was shown specifically in agriculture and livestock – 82 percent of our portfolio was related to agriculture, this year it is dropping to 67 percent. Currently, production and service sectors have also become heavily involved in this work. And this is very important in terms of employment, development of small and micro-businesses in cities.

We also have great success stories. For example, the goat-breeding farm established in 2018 has expanded significantly and 10 additional employees have been employed. There are small pastry shops that have seriously expanded. So we have achieved some success. But, as you noted, there are failures and facts of abuse too, and we will fight those.

President Ilham Aliyev: Very good! We must organize this work so that the rationality ratio reaches the highest level.

My instructions related to unofficial employment are being followed. I am regularly updated about this. I am told that employment contracts have been signed with more than 300,000 people lately. So this work has been legalized. Of course, very serious monitoring should be carried out here. You have been given appropriate instructions in this regard. At the same time, systemic institutional measures are envisaged to narrow the scope of unofficial employment. Of course, awareness plays a special role in this. I have repeatedly told our citizens that if an entrepreneur offers them to work like that, they shouldn’t agree and immediately inform relevant local and central executive authorities. Because if they work unofficially, they will lose both their pension and social insurance tomorrow, especially since a phased application of the compulsory health insurance will begin in the country this year. I am told that this issue was launched this year and is receiving tremendous support. There is a great interest in it both in the pilot cities and on the part of the population. Therefore, people should reject such offers themselves. But sometimes they find themselves in a hopeless situation and have to agree to the illegal offers of entrepreneurs and work informally.

Therefore, public awareness activities should be expanded. Strict sanctions and fines should be applied in relation to the entrepreneurs who have unofficial workforce. At the same time, I ordered that no-one should work for more than eight hours in Azerbaijan. People are being exploited and have to agree because they are in a hopeless situation. Therefore, there should be very active communication between citizens and the ministry. You should carry out monitoring using your own capabilities and always maintain contact with citizens through hot lines or other communication media. I know that work in this direction is under way. I wonder what progress has been made in this regard.

Sahil Babayev: Mr. President, fight against unofficial employment is one of the main areas of our activity. As part of the various decrees and orders you have signed, the most serious incentives have been created to reduce unofficial employment. For example, tax benefits are applied. Administrative measures have been strengthened. The positive dynamics of these measures was seriously manifested last year. In one year alone, the number of employment contracts in the private sector increased by 100,000. In addition, growth in the public sector amounted to an additional 53,000. As a result of these very serious measures, the salary fund increased by 42 percent. This means a 42-percent legalization in the salary fund. This is a great support for the economy, pensions and social security, and for reduction of the shadow economy. Positive dynamics is still there. According to statistics as of today, I can say that growth in the number of employment contracts between 1 January and today amounted to 19,400.

President Ilham Aliyev: Additionally?

Sahil Babayev: Yes, additionally. There is also a 5-percent increase in the salary fund. Mr. President, if this positive dynamics in the private sector continues, it will bring a major economic effect. At the same time, social security of citizens will increase.

In order to improve awareness in this direction, numerous videos have been made and many press releases have been published. Banners have been posted in various places of the city. Last year, more than 50 events were held, and the program for the current year envisages the organization of more than 100 events. Employers and trade union representatives will be invited from various districts and regions and serious awareness work will be conducted with them. At the same time, our call center operates at maximum capacity. Last year, we received 280,000 calls. We expect the call center to receive more than 400,000 calls this year. First of all, we provide detailed explanations in connection with appeals and complaints. We issue warnings to employers in connection with violations and apply fines to those who ignore our warnings.

Mr. President, let me report to you that after your decrees and orders on increasing the minimum wage, the wages of more than 300,000 people remained the same for one month. We conducted serious awareness work among them, sent electronic warnings and informed about fines. As a result, the figure of 300,000 quickly dropped to 50,000 people. Thus, relevant amendments were made in the employment contracts of 250,000 people. This work will be carried out regularly and continuously. Of course, strict measures will be taken against employers ignoring our warnings and not taking them into account.

President Ilham Aliyev: Very good! We will continue to attach special importance to this issue. We must make sure that our initiative is maximally realized and unofficial employment drops to the lowest level. I believe that we will achieve this as a result of comprehensive measures.

The construction of DOST centers is planned this year as well. Last year we opened two such centers. I personally participated in their opening. One of these centers has been operating since May last year. How many applications have been received? What is the approval rating? When and how many centers are to be built this year? Please update me on that.

Sahil Babayev: Mr. President, the first center, which has been in operation since May, and the second center, which has been in operation since December, have received a total of 81,000 applications to date. The level of popular satisfaction is 95.8 percent. The DOST agency, the DOST mechanism which you introduced by relevant decrees and orders is proving successful. People are very pleased with this mechanism. We are receiving requests from all our districts to expand this network as soon as possible. With your support, work is under way on eight new centers. One of them will be ready for opening in the coming days. Two of the eight centers will be set up in Baku and others in Absheron, Sumgayit, Guba, Barda, Sheki and Sabirabad. There are also plans to open vocational training centers in regional DOST centers. These centers will provide vocational training for unemployed citizens seeking work. The first DOST Center began to operate with 90 services. With your support, the number of services was first increased to 126 and then to 132. We believe that as new employment services are added, this mechanism will achieve even better results not only in terms of social security but also in terms of employment and labor relations. The call center is also integrated into DOST centers. This is why we have achieved serious growth there, as it has become one of the most popular call centers in Azerbaijan in a short time.

President Ilham Aliyev: Very good! This program has indeed become a turning point in this area. I believe that the improvement of the services provided in this area is revolutionary in nature. Of course, the level of popular satisfaction is also high. This is why I asked about the approval rating. Of course, 95 percent is a very high result for a newly-created service. I believe that as these centers become regional, their functions expand and the number of services increase, this will contribute to a further increase in the level and effectiveness of the services provided to citizens. Thus, Azerbaijan will initiate an intellectual product in this area as well. Just as “ASAN xidmət” centers are our intellectual brand and countries are already using this experience, I believe that there will come a time when other countries will introduce a system based on the services provided at DOST centers. We are ready to work with any partner in this direction. If you receive requests from other countries on this issue, of course, you can provide relevant information on the basis of consultations.

There is another very serious issue. As a result of the sharp drop in the oil price, we have significantly reduced state investment, of course. As a result, the unemployment rate has risen. This is natural. The state deploys all available mechanisms to keep the unemployment low. If we see that work is reducing somewhere in the private sector, then, of course, the state should immediately act on my instruction. Since 2015-2016, paid public jobs were created on my orders. The main reason for creating these jobs was to provide employment to the unemployed. According to my instructions, the number of people covered by this program increased every year. According to the latest data, it was necessary to create 38,000 paid jobs. Tens of millions of manats are provided for in the state budget for this purpose. I ordered to exercise strict control over this issue. In particular, the signals coming from the regions led to the introduction of this control, of course, because sometimes wages were not paid to people, payment cards were illegally seized and appropriated by the heads of executive authority, etc. These signals were seriously investigated and severe penalties were applied to those who committed these and other similar crimes. I warned representatives of all local executive authorities. Some of them have been brought to book. As a result of the special operations carried out, their crimes were fully proven. Of course, the investigation is currently under way, there will be a trial, but video images show everything quite clearly. These disgraceful images, disgraceful behavior is a huge stain for us. I trusted these people. I appointed them to these posts and gave numerous instructions and recommendations. The most important of them were to work in good faith, not to take bribes, not to be rude to citizens, not to be arrogant, support citizens, go out to villages and be in touch with the people. But what do we see instead? We see that, contrary to all our instructions, some unworthy heads of the executive authority discredit both themselves and our government. Their dishonorable actions became the object of public condemnation. They robbed state property, harassed entrepreneurs, got bribes from them, took money for every appointment, received monthly bribes from school principals, hospitals – this is shameful and they will be held accountable for these crimes. We are creating conditions for the unemployed to earn money. This is a small amount at the level of the minimum wage. The minimum wage has now increased, so these people get more. But in some cases this money is appropriated. I was informed about the crime in Neftchala district that he forced people to work like slaves, servants in his household – 73 people who were provided with paid work. What is this? Who is he – a nobleman, a bay, a khan? Our whole country hates him for his disgraceful acts today, for the disgraceful acts of people like him. Let everyone know that this will not end there. When the first incident happened, they did not make the right conclusions, then the second one occurred, they did not learn the lesson either. How many more people need to be arrested for them to abandon the dirty deeds. This process will be continued, and let this be a lesson for all. Therefore, even more stringent measures will be taken in relation to these shameful facts.

I instructed your ministry to do very serious monitoring and accounting. I also know that when you started applying this accounting, you faced great resistance from local executive authorities. Provocations were committed against you and dirty campaigns were launched in the media. We know perfectly well who ordered this campaign. There is no room for them among us. Therefore, the ministry should take full control of all this work. What is the current situation like? How many thousand of citizens were provided with these jobs this year and what is the control mechanism?

Sahil Babayev: Dear Mr. President. You are absolutely right. The provision of jobs for 38,000 people is a great support for our citizens both in terms of reducing unemployment and in terms of employment. At the same time, the attraction of additional labor resources in our regions provides support in addressing many problems. In this regard, 38,000 people were engaged through the DOST center.

On your instruction, we have introduced monitoring. As a result, a total of 9,000 violations were revealed during the year. We notified both local executive authorities and relevant agencies, and eliminated them. In total, instead of 38,000 appointments, a total of 47,000 were made. True, some of them are associated with certain objective reasons – people found another job and applied there, but the vast majority is associated with the identification of violations as a result of monitoring. In addition, in order to ensure transparency, a list of people involved in community service for each district has been published on the Internet portal. We have repeatedly appealed both to the media and public to show that there is transparency and public oversight. We asked them to inform us about every negative fact, so that work continues on the basis of this. After the decisive steps you have taken, significant progress was made. We really see a very positive trend in a whole number of directions. Sometimes the cleaning process is fraught with certain difficulties, but it goes to the end. At the same time, we are trying to ensure sustainability so that people do not stay on the sidelines because it can take a lot of time to dismiss 38,000 people in December and sign labor contracts with 38,000 people in January. This can lead to the loss of a monthly salary. Therefore, we have ensured sustainability. I would like to emphasize that the new heads of executive authority you appointed have carried out serious monitoring and inventory. Unfair conditions have been removed from the lists presented to us.