Azernews.Az

By Sabina Idayatova

Sustainable economic development increases employment opportunities available in the fast-growing and competitive Azerbaijani economy, but there is also illegal employment. In accordance with the orders issued by the president, the government has been stepping up control over the issue.

"The State Labor Inspection Service at the Ministry of Labor and Social Protection achieved conclusion of employment contracts with 31,000 workers in the last three months," Minister Fizuli Alakbarov said in October.

"Along with administrative measures, public awareness work has been carried out, as well as control over conclusion of labor contracts strengthened with the purpose of eliminating instances of illegal employment," the minister said.

According to Alakbarov, in order to improve the quality of the domestic labor market, as well as with the aim of generation of skilled workforce in accordance with international standards, work is underway to establish the Agency for Development of Labor Safety.

The main focus in the country`s labor market is the fight against illegal employment cases. Working illegally or without an employment contract harmfully affects the worker himself, and also often causes tax evasion, depriving the state budget of large amounts of funds.

Fines imposed on employers not signing contracts with their employees have increased. According to the Labor Code of Azerbaijan, every employer must register employment history for a new employee.

It is worth mentioning that the number of employed people in the country as of September 1, 2012 was over 4.63 million in the country of 9.3 million people, but only 1,381,000 of them had contracts with the employer.

The main problem related to illegal work is the lack of proper retirement benefits in the future. The Ministry of Taxes detected more than 5,000 employees working without employment contracts in the first half of this year and imposed fines on employers.

According to the latest data from the State Statistics Committee, the average monthly salary of Azerbaijani employees for January-July 2012 amounted to 386 manats ($492), which is 8.4 percent more than in the same period of 2011.

In an effort to eliminate illegal employment, the ministries of labor and taxes, jointly with the State Social Protection Fund, have been working on changes to the Labor Code and Code of Administrative Offences. The Labor Inspection Service has made 960 workers sign employment contracts this year.

Agreement to work illegally or without signing an employment contract arises from different factors: unemployment, fear of losing the job, social or financial distress, the need to support the family; attempts by some employers to avoid tax payments, which is a concern of the private sector; etc.

Studies have shown that in some cases, the main reason of failure to sign employment contracts or specifying low wages is that employees do not know their rights in-depth and cannot protect them. Employees should be active in the process of legalization of wages and conclusion of contracts with employees in order to ensure the protection of their social rights.

The State Social Protection Fund also calls on people to be interested in timely and full payment of the state social insurance.

Another main cause of illegal work is an attempt to evade social payments while signing contracts and not to pay taxes. Some enterprises operating in private agriculture, construction, catering, transportation and other sectors use double accounting and evade taxes. Furthermore, without any formalities it is easy for employers to hire or dismiss employees whenever they want.

According to experts, it is necessary to strengthen public control and efforts in order to achieve improvement in this sphere.

Since Azerbaijan's gaining independence from the Soviet Union, the proportion of working people in the country has changed both in terms of internal and external migration flows. Recent economic growth, rapid development of both the oil and non-oil sector as well as huge investment opportunities attract foreigners to Azerbaijan.

According to Arzu Rahimov, former head of the State Migration Service, regulation of migration processes and ensuring transparency are the main goals in this sphere.

"Foreign nationals who want to work in Azerbaijan are required to register at their place of residence and obtain a work permit. Work permits are issued by the Ministry of Labor and Social Protection. Heads of representative offices and branches of foreign legal entities are not required to obtain a work permit in Azerbaijan," Rahimov said in an interview with Impact magazine.

According to the legal migration procedure, employers must apply to the State Migration Service to obtain work permits for foreigners and stateless persons who want to engage in paid labor activity in Azerbaijan. The tax defined for such labor activity is 1,000 manats ($1,273).

"The foreigners arriving in and working in the Republic of Azerbaijan need to obtain cards for lawful temporary residence and engaging in labor activity. If the validity period of the card is expired and the foreigner hasn't completed his or her work, he or she has to apply to the State Migration Service for extension of the period of temporary residence card and work permit indicating the purpose of extension. For this purpose, the foreigner must submit a letter from the organization citing the reasons," Rahimov noted.

Foreign employees and their illegal work raise a number of issues, such as competition with local employees, loss of national revenue resulting from non-payment of taxes and social security contributions and problems relating to the living conditions and legal protection.

So, solving the problem of illegal employment could eliminate many social problems, ranging from tax evasion to healthy competition on the labor market of Azerbaijan.