The Executive Director of the Center for Analysis of Economic Reforms and Communication (CAERC), Vusal Gasimli, held a press conference about the major social reforms implemented in 2019 under the leadership of President Ilham Aliyev. Presenting the video prepared by CAERC about these reforms, he noted that Azerbaijan’s social policy aims to ensure a decent standard of living for the population and that these reforms were carried out in conditions of low inflation and a stable national currency.

He stated:
“The social reform package includes increasing the minimum wage, minimum pension, as well as different allowances and benefits. It also covers important measures such as the repayment and restructuring of problematic and overdue loans. In total, the social reform package affected 4.2 million people and required 3.9 billion manats of financial resources.”

During 2019, the minimum wage in Azerbaijan was increased by 93%, from 130 manats to 250 manats. This increase happened in two stages. The first rise came with the Presidential Order dated February 8, 2019, raising the minimum wage from 130 to 180 manats and covering around 600,000 people. The second rise was based on the Order dated June 18, raising the minimum wage to 250 manats and covering nearly 350,000 people in the private sector and about 600,000 employees in the public sector. Today, the minimum wage in Azerbaijan is 40% higher than the national subsistence minimum. As a result, the minimum monthly wage increased from 130 to 250 manats. This rise will also push up the country’s average monthly wage, which is expected to grow by around 15% by the end of the year, reaching approximately 625 manats.

If calculated according to purchasing power parity (PPP), the minimum wage in Azerbaijan is higher than in the CIS countries, Georgia and Ukraine. PPP shows how much local currency is needed to buy the same basket of goods that 1 US dollar would buy in the United States. According to World Bank data for 2018, this figure for Azerbaijan is 0.42 manats. This means that a product costing 1 dollar in the US can be bought for 0.42 manats (0.25 US dollars) in Azerbaijan. Therefore, comparing wages only in nominal US dollars does not show the real situation. Since PPP differs across countries, the same amount of money buys different amounts of goods in each country. This directly affects people’s living standards and social welfare. Because of this, international comparisons must use the “international dollar” indicator calculated by PPP.

When measured in international dollars, Azerbaijan ranks second among CIS countries with a minimum wage equivalent to 595 international dollars. In other words, a person in Azerbaijan who receives the minimum wage has the same purchasing power as someone in the US earning 595 US dollars. Compared to other CIS countries, Azerbaijan’s PPP-adjusted minimum wage is 2.1 times higher than in Armenia, 1.6 times higher than in Kazakhstan, and 1.4 times higher than in Georgia and Russia.