OMM Newsroom
Azerbaijan’s average monthly wage is nearing 1,200 manats. Data released by the State Statistics Committee show that the average monthly wage across the country reached 1,173 manats in January-August this year, up 7.2% from the same period last year. Against the backdrop of rising household incomes, the country’s leadership is expected to take another social policy measure. Under a relevant instruction from the President, Azerbaijan plans to raise the minimum wage next year. How could the increase affect average monthly wages?
“Operative Information Center-OMM” presents an article on the subject published by the Kaspi newspaper:
“More than 700,000 citizens’ wages will increase”
MP Vugar Bayramov said an increase in the minimum wage would directly affect average monthly wages across the country. He said average monthly wages were also expected to rise next year:
“In practical terms, an increase in the minimum wage will raise the wages of more than 700,000 citizens. This will become one of the main factors driving growth in the average nominal wage. After the minimum wage is raised, the Cabinet of Ministers will decide whether to increase the salaries of people working in government agencies who are not civil servants. That could also lead to higher wages for those employees, whose salaries are above the minimum wage. For this reason, next year’s minimum wage increase is expected to have a direct impact on the average monthly wage.”
“Raising pay for relatively low-wage workers is a priority”
Bayramov said the average monthly wage was projected to reach 1,300 manats in 2027 and 1,600 manats by 2030:
“Wage increases are, of course, very important for citizens’ social protection because they improve their well-being. Raising the pay of citizens who earn relatively low wages is especially a priority. Amendments to the Labour Code signed by the President provide for reviewing the minimum wage at least once a year. This indicates that we will see regular increases in the minimum wage and wages overall.”
“Private-sector wages could also rise”
Economist Asif Ibrahimov also said an increase in the minimum wage next year could push up average monthly wages nationwide:
“The average monthly nominal wage currently stands at 1,173 manats. It could exceed 1,200 manats next year. An increase of about 2.3% would be enough to achieve that. However, the minimum wage is not the only factor affecting average wages. Economic growth, company earnings, new jobs and labour productivity also play important roles. Raising the minimum wage will first increase the incomes of low-wage workers. The impact on the salaries of employees paid under the Unified Tariff Schedule will depend on the decision made. Wages could also rise in the private sector, as companies may be compelled to review other pay levels when workers’ wages increase. But not all companies have the financial capacity to raise wages by the same amount.”
“Prices could rise”
The expert also discussed the risks that could accompany wage increases:
“Production is weak, productivity is low in many sectors, and business costs are high. In these conditions, raising the minimum wage could lead to higher prices, because payroll accounts for a significant share of the cost of goods and services. When employers’ wage costs rise, some of those costs may be passed on to consumers. As a result, citizens may earn more, but the goods and services they buy may also become more expensive. If prices rise faster than wages, people’s real incomes will not increase. This could be especially evident in the prices of food, transport, household services and everyday essentials. The scale of price increases will depend on market competition, production costs and companies’ pricing policies. The European Social Charter also requires attention to this issue. Article 4, paragraph 1, recognizes workers’ right to remuneration sufficient to provide them and their families with a decent standard of living. The European Committee of Social Rights considers a minimum net wage equivalent to 60% of the average net wage an important benchmark. Accordingly, this ratio should also be taken into account when setting the minimum wage in Azerbaijan. The aim is to ensure that workers can use their wages to meet their families’ basic living needs.”
“Market competition must also be strengthened”
The economist said next year’s wage growth would also depend on economic activity, the state budget’s capacity, investment and the development of the non-oil sector:
“If production and services expand and labour productivity improves, there will be a stronger economic foundation for wage growth. Otherwise, companies’ additional costs could push up prices and make it harder to create new jobs. Raising the minimum wage is an important step in protecting the population. But unless the existing problems in our economy are addressed, there remains a significant risk that the increase will be accompanied by higher prices. Along with raising wages, it is necessary to expand production, improve productivity and strengthen market competition. Otherwise, citizens will have more money in their pockets, but rising prices will erode its purchasing power.”
