How did the pandemic era shed light on hidden unemployment?

Crises are not the end of life. It is a case of intensification of recession elements in the sectors. The crisis is the process of detonating "mines" that have laid the foundations of an economy over time. Or it may be the case of a sudden collapse of the economy. But everyone has a lesson from crises. The real unemployment, which has left deep traces in our (economists’) alternative thinking, was more remembered by coming out from the shadows to the light.

190 AZN state assistance was provided to the unemployed. It covered 200,000 people across the country. 70 million AZN (for two months - April and May) has been allocated for this purpose. Later, growing social discontent also showed that this number does not show the number of real unemployed people in the country. Later, this number was increased to 600,000 people. This is not the end. And finally, it turned out that 1,250,000 unemployed people applied to the Ministry of Labor and Social Protection of the Population. This fact proves that there are at least this much unemployed people in the country. This means that the previous official unemployment data, which ranged from 30,000 to 50,000, was a lie. However, the official data contained completely different figures. According to official data, in 2018, the number of people officially registered as unemployed in the employment services was 20,088. The number of people receiving unemployment benefits was 1,117 people. [1] The government's approach to unemployment is based on one criterion: those who have not formally applied to the Ministry of Labor and Social Protection of the Population (MLSPP) are not considered unemployed. Apparently, this is due to the fact that according to the current legislation, who has no income and no job but is ready to start work and is officially registered as unemployed by applying to the relevant government agencies is considered an able-bodied person. If you have not officially applied to the relevant official government agencies, then no one will recognize you as unemployed. Official appeals to the MLSPP regarding COVID-19 showed that there were at least this much unemployed people in the country. Because not only the current contractual obligations but also the past employment contracts of such applicants are opened in the archive.

The previous official unemployment status did not reflect reality because, at that time, desperate citizens were not interested in applying to official government agencies. Now there is a social support package of 190 AZN, which could formalize the actual unemployment. They did not pay for it to low-income social groups. However, in Georgia, which has no natural resource revenues, not only the unemployed but also retirees have the opportunity to benefit from such financial support programs.

In addition to the fact that the state's protection of the unemployed with domestic resources is symbolic, it has even attracted financial resources from international financial institutions for this purpose. The World Bank and the Government of Azerbaijan have signed a loan agreement on the "Employment Support Project", which provides for cooperation with the World Bank in expanding the self-employment program in our country. The World Bank provided a $ 150 million loan to Azerbaijan for this purpose; it signed a contract with a return of $ 100 million in 14 years and $ 50 million in 11.5 years. [2] On the one hand, we do not use foreign exchange reserves to reduce the effects of the pandemic. On the one hand, we distort the statistics of the actual unemployed and provide financial support to as few citizens as possible. On the other hand, although we have our own resources, we are borrowing from the World Bank for this purpose.

According to another report, the number of the economically active population in the country in 2018 amounted to 5 million 133 thousand people, of which 4 million 879 thousand people were employed. [3] This means that there were only 254,000 unemployed people in the country. Based on such doubtful information, the Ministry of Labor and Social Protection of the Population has planned to provide assistance to 200,000 unemployed people in the country due to COVID-19. Although the Azerbaijani government knew that the official unemployment statistics were inaccurate due to the lack of official appeals in our country, it still continued to make calculations based on these figures. However, according to official government data, 19.1% of the able-bodied population or 1.2 million people do not participate in the labor market.

Let's look at the matter from another angle. According to the famous Okun’s law, a 1% reduction in unemployment should result in 2.5% economic growth, or if there is 2.5% economic growth, then unemployment has decreased by 1%. It is possible that by the end of the year, economic growth will end not only with stagnation but also with a recession, but the unemployment rate will not increase. This would be an Azerbaijani paradox.

“Blowing air with a moral pump on the unemployed and destitute people” can have the opposite effect. We know from history that the employment factor is not only a macroeconomic indicator but also a factor that carries political cataclysms. Political power must first accept the problem and organize its discussion for society. The principle of "whatever happens" is a thought that often leads to lies, inhumanity, and irrational behavior in order to achieve results. In this sense, it is a more sincere way to explain it in a very calm way, when the goals of achieving any positive results in the economy are not achievable. There is a pandemic, the engine of the economy is not working, and so on.

Otherwise, the predicted "paradise" painting and optimistic scenarios may provoke methodological speculation by the authorities to obtain that figure. It is absolutely necessary to avoid it. Just as increases in numbers do not improve our lives in an instant, decreases do not turn our lives into hell in an instant. As in our lives, quality indicators appear like the average of a continuous process in the economy. In this sense, the economy does not like political maximalism!

Mənbələr:

[1]https://azstat.org/statHtml/statHtml.do?orgId=994&tblId=DT_AB_011&vw_cd=MT_ATITLE&list_id=&scrId=&seqNo=&language=az&obj_var_id=&conn_path=I2&path

[2] http://sosial.gov.az/post_352108 

[3]https://azstat.org/statHtml/statHtml.do?orgId=994&tblId=DT_AB_003&vw_cd=MT_ATITLE&list_id=&scrId=&seqNo=&language=az&obj_var_id=&conn_p