The lump sum assistance of 190 AZN must be restored

Quarantine in Azerbaijan has been tightened again and extended until August 1. One of the main questions in society now is whether the government will pay the poor and entrepreneurs in the next quarantine period.

The negative effects of the COVID-19 pandemic are mostly on the poor. According to observations, 1 in 5 of the employed population in Azerbaijan is self-employed and needs a daily income. In this case, those who can go out to meet the needs of food and medicine only by SMS in the strict quarantine regime can not work for earning money. So in such conditions, their social situation deteriorates sharply. Because those who do not have savings, on the contrary, those who have credit debts face a serious livelihood problem due to depletion of resources after being deprived of daily earnings. Those who got out of the situation with a monthly and lump sum payment of 190 AZN in April-May may find themselves in a more difficult situation after the re-tightening of the quarantine regime in June and July. Therefore, the lump sum payment of 190 AZN must be restored.

A survey conducted among those who received lump sum assistance of 190 AZN in April showed that 43.4 percent had no income at all. This means that they will not be able to meet even their minimum needs once the lump sum payment is over. On the other hand, 90 percent of those who received lump sum assistance of 190 AZN say that with the assistance paid to them, it is possible to meet their needs for a maximum of two weeks. Such that 42.5 percent of respondents who took part in the survey said that the one-time monthly assistance met their needs within 1 week, 25 percent within 2 weeks, and 22.5 percent within 3-5 days. As for meeting the needs, 65.9% of the respondents said that the assistance they received was spent only on food, and 21.2% on food and utilities. When it was asked what they would do after the assistance was over, 44.4 percent of respondents said they would look for a job, and 45.4 percent said they had no plans.

55.06% of respondents said that this is the first time that they received social benefits, which means that these people have lost their jobs and earnings due to the pandemic. The fact that 77.9% of respondents were registered as unemployed only when they applied for a lump sum assistance of 190 AZN shows that unemployment has increased 4-5 times as a result of the pandemic. Such that as of April 1, 2020, the number of unemployed registered in the employment services was 100.8 thousand people, of which 36.9% were women. The average monthly amount of unemployment insurance payment was 309.0 AZN. However, this was paid only to 510 people.

According to the survey, 77.9% of the 600,000 people who received a one-time allowance of 190 AZN received unemployment status, while it is estimated that their number increased to 450,000-500,000. It should also be taken into account that even among those who have received the status of officially unemployed, there are some who could not receive a payment of 190 AZN for various reasons. They were denied payment because they had property, a car, and in some cases, a plot of land. Therefore, the increase in the number of unemployed may be greater in April and May. Unfortunately, the State Statistical Committee (SSC) has removed the unemployment rate from its monthly statistics. Such that the last official statement on the number of unemployed in the official publications of the SSC was published in the January-March bulletin on April 1.

The table below presents the state of unemployment before the start of the 190 AZN lump sum payment.

Table 1. The official unemployment rate in Azerbaijan in the first four months of 2020

Source: State Statistical Committee

As can be seen from the table, the number of people receiving unemployment benefits is very low compared to the number of unemployed. Such that this ratio was 0.66 percent in January 2020, 0.62 percent in February, 0.55 percent in March, and 0.50 percent in April. As can be seen, the number of people receiving unemployment benefits has decreased compared to the increase in the number of unemployed in the first four months of this year, and therefore the dynamics are negative.

As for the small number of people insured against unemployment, according to the Law of the Republic of Azerbaijan on Unemployment Insurance, which came into force on January 1, 2018, insured persons whose employment relations have been terminated as a result of the liquidation of a state body or legal entity or the reduction of the number of employees or staff and registered as unemployed in employment centers shall be entitled to receive unemployment insurance benefits. This means that not all those registered as unemployed are paid unemployment insurance premiums. I think that relevant amendments should be made to this article of the Law on Unemployment Insurance, and unemployment insurance premiums should be recognized for all unemployed.

At the same time, I believe that one of the most important links in the organization of social protection during the pandemic is the care of children from vulnerable groups. I would like to note with regret that in this regard, there are no separate and special programs in Azerbaijan. Only within general programs (targeted social assistance, etc.), there are people among families with a large number of children who benefit from this. This makes it difficult to pursue targeted policies that target children during pandemics. In addition, IDPs, disabled people, and migrants from vulnerable groups were not able to benefit from the 190 AZN special lump sum assistance program. They were deprived of the right to apply for 190 AZN for receiving monthly benefits. Therefore, there is a need to restore the 190 AZN assistance program. However, this time the one-time assistance program should be available not only to those who have received it before but also to those who have received the status of unemployed in recent months, as well as those who receive social benefits.

Finally,  the government should extend the payment of a certain part of the salary of employees and provide financial support to individual (micro) entrepreneurs operating in areas affected by the pandemic.

Gubad Ibadoglu