Our Analytics 26 july — 15:25

Ilham Aliyev's new reform: Money not for help, but for work (Our research)

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BY ELNUR MAMMADOV, MAMMAD EFENDIYEV, ELDAR ALIYEV, ECONOMICS SECTION

For a long time, the issue of rendering social assistance to the population in the country was solved by the government simply: to obtain it, citizens had only to submit relevant certificates. Billions of petrodollars allowed the government to easily cope with the problem of benefits to the indigent and incapacitated without much difficulty. However, this was immediately taken advantage of by corrupt officials of all ranks, creating a feeder, which even now, at the height of the crisis, cannot be completely closed.

Sensing an easy profit, many citizens rushed to the appropriate district services, attributing to themselves for a certain bribe to local officials various diseases or extreme financial need. In fact, the system of 'universal social consumption' has strengthened in Azerbaijan. Because of the greed of officials, sometimes several members of the same family received various benefits, which not only exacerbated the financial deception of the state, but also led to an increase in social consumption: people avoiding work altogether got out of the habit of work. By and large, entire regions were hooked on the 'oil needle' - the budget provided the life of an entire army of unemployed, many of whom simply did not want to work.

The pernicious trend took on such an obvious scale that President Ilham Aliyev had to be intervene himself.

Several years ago, the newly appointed Minister of Labour and Social Protection of the Population Salim Muslimov, did not hesitate to take up the task set by the head of state. Officials were taken red-handed: dozens were dismissed for illegally issuing certificates and processing documents, and sometimes even tried in courts. Demand to them has grown so much that many have themselves resigned from their income-generating places.

The government managed to rectify the situation to some extent, but falsifications in social consumption are still practiced today. At the same time, against the backdrop of the ongoing economic crisis, the problem of employment of the population and providing benefits to the needy is becoming ever more acute.

This difficult task the head of state decided by implementing a new program of self-employment of the population.

What is self-employment

Let us briefly recall the conceptual component of the new social program for Azerbaijan.

Self-employment, in contrast to hired labour, is a peculiar form of receiving remuneration for one's work directly from customers. Self-employed people are engaged in entrepreneurial activities, not being entrepreneurs in the classical sense of the word, since they do not create a surplus value gratuitously seized, distributing the revenues received within the working group, according to personal labour participation.

The fundamental point that distinguishes the self-employed from the individual entrepreneur or the owner of a company is the absence of hired workers. As soon as a self-employed person takes an assistant on the basis of employment, he/she actually buys labour and appropriates surplus value, hence, passes from personal labour or artel relations to labour exploitation, and is no longer self-employed, acquiring the classic characteristics of an entrepreneur.

And here is the decree of the President

By his decree 'On Additional Measures to Ensure the Self-Employment of the Population' of April 7, 2016, President Ilham Aliyev initiated the introduction of this progressive method of solving the systemic problem in the country. To this end, the Ministry of Labour and Social Protection of Population immediately allocated 6 million manats.

To improve the effectiveness of this idea, at the invitation of the head of state in June 2016, the world-famous economics professor Muhammad Yunus, a Nobel Peace Prize winner for his efforts to create economic and social development, came to the country for consultations.

There are many examples where the execution of some important decrees and orders of the president drags on for years, but the implementation of the provisions of the self-employment program began immediately. The execution is entrusted to the head of the Employment Policy Department of the Ministry Elnura Suleymanova, who has sufficient experience in international organisations and corporations, as well as the head of the State Employment Service Anar Badalbayli, an experienced specialist in employment.

Elnur Suleymanov tells Azeri Daily about the first results

Immediately after moving to active measures, the ministry began preparing independent potential applicants for subsidies among the poor. It's about those, who cannot start implementing projects because of a shortage of primary capital. For people, it became the norm to get hooked on budgetary allowence, although most could earn their daily bread by their labour. It seems there are hands and feet and head in place, but they do not work. And why not provide with work yourself?

6 million manats for business development of households

It is not so simple to identify capable, business-like, initiative ones. Thousands of people in need constantly seek help from local bodies of the State Employment Service. And from them it is necessary to select the most inclined to independent activity, to prepare, to render assistance and only after that to release on the labour market, full of complexities and unexpectedness. This is exactly what 6 million manats allocated by the head of state are intended for.

The system of self-employment, when state funds are channeled from passive models of material social assistance to active measures, is widely used in the US, Germany, Austria, the UK, Singapore and other developed countries. More and more countries, when solving the problem of poverty, use active mechanisms for such assistance.

Well, let's say, why should a rural family be given out a social allowance monthly, when it is better to allocate several cows or a flock of sheep at once, so that the needy family can feed itself. True, for this one-off funds you will need several times more than the monthly amount of benefits, but in the medium term, the proceeds from the growth of calves or lambs, not to mention milk, meat and wool, will pay back the state's expenses. Thus, the state, after issuing to the family several heads of cattle or a flock of sheep, ceases to pay benefits, which ultimately leads to greater savings. And the family, having achieved the increase in the number of livestock, within a year or two is among the well-off peasants. The benefits, as you can see, are double.

The ministry specialists carefully studied foreign experience, projecting the European methodology to the Azerbaijani realities. In order to ensure the implementation of the president's order, a special commission was created, which included representatives of the relevant departments of the Ministry. The internal management of the department was also approved, called 'Requirements for the organisation of self-employment by job seekers and unemployed citizens,' designed to regulate the mechanism for implementing the adopted program.

The whole program was conditionally divided into several stages, each of which required special development and consolidation in practice.

And the ILO is here too

Consultations were held with several international organisations, and the International Labour Organization (ILO) even promised gratuitous support in implementing the program.The Azerbaijani side achieved the involvement of a certified master trainer of the ILO and the application of the methodology developed by this organisation. And the ILO undertook the development of training tools needed in the training process, as well as the provision of salaries for 136 specially trained consultant trainers.

Only after such thorough preparation in the ministry did they begin to train meticulously selected participants in the program. It is also important to note that when selecting participants, special preferences were provided for groups requiring special attention (persons with disabilities, war veterans, martyr families, single mothers, large families) and thus ensured the so-called principle of inclusiveness.

And here, perhaps, the most significant moment of realisation of the conceived comes. In general, it was not difficult for the State Employment Service to select the required number of participants from the total number of registered unemployed and wishing to work. But it was necessary to solve the problem not just on a quantitative basis. First of all, the desire of the potential participant was taken into account for his/her concrete work. One for this was missing a few heads of livestock, the other had to acquire the tools for a tailor or a hairdresser. All this starting property or household is called assets in the ministry. But even if the assets are provided, will the people who start their independent activity have basic conditions, say, for keeping and grazing animals, premises for the same hairdresser? And this had to be taken care of.

But that's not all. Suppose conditions for self-employment are available, but does the person have the skills, knowledge to effectively use them? That is, each participant had to be given at least a minimum of knowledge in the sphere that he/she choses and helped to assimilate the basics of elementary management of his/her business with an understanding of supply and demand, the economy...

In addition, a young entrepreneur should be able to take into account the specifics of his/her region and represent the perspective of one's business. The program participants received this knowledge during a two-month mandatory course called 'Start and develop your business.'

The selection process was, in principle, completed by August of last year, that is, just four months after the president's order. And already in November, the process of defending by each participant of his/her project activity began.

Thousands of citizens with decent work

Someone may be confused by the concepts of 'training', 'defence', but this again shows how seriously the organisers approached the preparatory activities. The trainers scrupulously explained to the participants the philosophy of the program, the problems facing them and ways to overcome them. Then each was instructed to prepare for a detailed substantiation of his/her future case before an authoritative commission, which somewhat resembled the diploma defence of a student.

The scale and seriousness of the work done can be demonstrated in numbers. Of the 1,819 people initially selected, only 1,644 representatives of 84 cities and districts of the country were admitted to defence. In total, business plans of 1,385 participants were considered successful.

As a positive factor, it should be noted that 84% of approved business plans were designed for agriculture, mainly livestock and poultry. Another 9.4% of the winners saw themselves in the sphere of services (beauty salons, hairdressers, computer salons, tailors, car washes and car repair) and only 6.6% in the production sector. Today, to implement the business plans of the applicants, the Ministry has already acquired and transferred the necessary assets to 825 participants from various cities and regions of the country. True, for another year there will be conducted monitoring of the new self-employed, and only after this period, they, if all requirements and norms are met, will receive the ownership of those assets provided by the state.

In the near future, the opportunity for self-realisation will be provided to new participants of the program. Another 1,500 people in need of help will live an independent and well-off life.

Today, President Ilham Aliyev helps them to get on their feet, and tomorrow they will themselves help other entrepreneurs and actively contribute to the development of the country's economy, increasing the incomes of their own families by paying taxes to the treasury, and, in fact, participating in the process of creating an added value, which is also stipulated by the state program. This is the essence of the social innovation of the head of state.

Work to indigent, social benefits only to disabled

The results of the first stage of self-employment for people now provided with social benefits so impressed the government that next year and the following years it is planned to increase the number of people involved in this process from five to ten thousand people annually. But that's not all. Young people have special difficulties, as is known, in the employment. And now it is decided to take a close look at the young, to help them enter into adult life as self-sufficient people. In this regard, the Ministry has developed a new program the implementation of which is planned to begin in September this year.

In short, the Ministry set a new goal - to transform the social consumption system into a system of supporting households, thus encouraging the development of the non-oil sector and realising the main principle of the social state: providing targeted social benefits to only the disabled population of the country.

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