Hourly Wage: "They Can Earn Higher Salaries." "It Seems Problematic"

In Azerbaijan, it is planned to calculate wages on an hourly basis instead of monthly. At the same time, according to officials' statements, salary increases are expected next year. So far, there is no official information on how much wages will increase. However, experts say that the transition to hourly wages in Azerbaijan appears very difficult and could lead to cases of abuse.

Currently, the minimum wage in Azerbaijan is 345 manats. Calculations show that individuals working eight hours a day in a five-day workweek and receiving the minimum wage earn 2 manats 15 qapik per hour, while those working a six-day week earn 1 manat 79 qapik per hour. For comparison, the legally set minimum hourly wage in Germany is €12.41 (23.62 manats). In France, this figure is €11.52 (21.92 manats) with a 35-hour workweek. In Japan, the minimum hourly wage is ¥6 (10.2 manats), and in the USA, it is $7.25 (12.32 manats).

Next year, social expenditures in the state budget are expected to increase by 14 percent. The Cabinet of Ministers has stated that in 2025, expenditures for social protection and social security in the state budget will be 4 billion 998 million manats, which is 607 million manats more than this year's expenses. It is emphasized that the increase in wages and social payments in 2025 will affect more than 2 million citizens.

The Ministry of Labor and Social Protection of the Population, through Turan, stated that since 2018, four packages of social reforms have been implemented in Azerbaijan, covering 4 million citizens: “Within these packages, more than 7 billion manats have been spent to improve the social welfare of citizens.”

The ministry noted that, following the instructions of the head of state Ilham Aliyev, next year there will also be increases in the minimum wage and minimum pensions: “Proposals regarding this will be submitted by November 1. Discussions will continue within the framework of next year's budget documents and the financial burden will be calculated.”

Regarding the transition to hourly wages, a representative from the institution stated that discussions on the implementation of hourly wages are ongoing: “Extensive information will be provided to the public regarding the outcome.”

Vüqar Bayramov, a member of the National Assembly's Labor and Social Policy Committee, stated that the increase percentage of the minimum wage next year will be announced on November 1.

According to the deputy, the increase will not only ensure increases in the minimum wage but also in wages across all levels of the unified pay scale. The increase will affect at least 600,000 citizens' salaries: “In sectors financed from the state budget, the monthly tariff salaries of employees are also increased in accordance with the changes in the minimum wage amount. The wages of our citizens working in various sectors of the economy and who are not state employees are financed from the state budget based on a unified pay scale. The expected increase in the minimum wage will lead to increases across almost all salary levels indicated in the unified pay scale. In this case, whether the wage is below or above the minimum level is not of particular importance.”

V. Bayramov noted that salary increases are also expected in the private sector: “The increase in the minimum wage applies to all employees receiving the minimum wage in all sectors, regardless of the type of ownership. Thus, the expected increases also apply to the private sector. That is, no sector can pay salaries below the minimum wage. Only the increases will apply to those currently receiving the minimum wage in the private sector.”

According to him, the change in the minimum wage is mandatory in the private sector only for those receiving the minimum level of salaries: “Employees earning higher salaries have their wages determined by the decision of the respective business entity. However, the expected increase in the minimum wage, taking into account the level of inflation, is recommended to lead to higher salary increases in the private sector as well.”

A committee member commenting on the transition to hourly wages stated that in several developed countries, an hourly wage system is applied: “In this context, similar mechanisms are being discussed for implementation in Azerbaijan.”

According to the deputy, if such a transition occurs, citizens can earn higher wages and their labor rights will be better protected: “Because hourly wages allow the employee to work in several places. At the same time, if the worker works overtime and on weekends or holidays, it will be possible to implement special payments at higher rates.”

Economist Natiq Jafarli, chairman of the Republican Alternative (REAL) Party, told Radio Azadlıq that transitioning to hourly wages seems very difficult in Azerbaijan's current economic model: “Many legislative acts would need to be changed as well. Since the main workplaces in Azerbaijan are state organizations and salaries are paid from the state budget, it is very difficult to switch to an hourly payment system there. The largest category of budget-paid salaries consists of teachers, more than 200,000 of them. They are already teaching by the hour, how would you switch them to a salary system based on hours? It seems problematic.”

Regarding the private sector, according to the expert, another problem will emerge entirely: “In the private sector, contracts will be concluded based on the lowest hourly rate. Holidays and rest days will not be taken into account. This will lead to certain problems.”

N. Jafarli believes that even if the hourly wage system is adopted in the country, the state should have various criteria: “For example, the daily working hours should not be less than 4 hours, and the payment per hour should not be below a certain amount. With these barriers, it is possible to protect the rights of employees to some extent.”

Regarding the increase in the minimum wage, according to the economist's estimate, looking at the budget parameters, a serious increase does not seem likely: “A maximum increase of around 10 percent may occur. Another problem for us is that the increase in salaries and pensions does not parallel the abundance of goods and products in the market. The volume of goods and products remains the same, and as salaries increase, this only increases inflationary pressures.”