The reforms carried out by Azerbaijan in the labor market attract the attention of experts worldwide. The results of reforms in the tax system, which started in 2019 and are based on the incentive mechanism in the labor market, were also highly valued by Harvard University experts. The “Growth Lab” Center of the university analyzed the results of the reforms implemented in the labor market within the framework of the diagnostic evaluation project on the economy of our country and showed the success story of Azerbaijan as a positive example in this regard. As a result of the reforms carried out by the State Tax Service under the Ministry of Economy, significant progress has been made in the direction of legalizing labor relations in Azerbaijan. The government simplified the procedures, made it possible for businesses to carry out legalization more easily and reduce costs (https://www.taxes.gov.az/az/page/salary).
Let’s note that the results of the reform positive changes are observed in all main indicators. Thanks to the incentives applied in the tax legislation, a significant – 32.1 percent increase in the number of official employment contracts was achieved, conditions were created for “whitening” of wages, payments for mandatory state social insurance fees increased by 2.2 times in 5 years, the income of social funds increased, social funds from the budget the financial burden allocated to the financing of funds has decreased, and the reforms have had a positive effect on the revival of the economic cycle as a whole, “entrepreneur-entrepreneur” in the non-oil sector and led to the growth of “entrepreneur-consumer” transactions.
Harvard experts believe that this is a good example of how incentives can be effective for the legalization of businesses. By implementing the right policy, it is possible to achieve significant progress in the field of legalization, and other countries facing the same problems should study Azerbaijan’s approach as a potential model.
Information about the analyzes conducted in this regard is posted on the social network accounts of the “Growth Lab” Center.
https://www.facebook.com/100094629804741/posts/426776873819969/?mibextid=WC7FNe&rdid=pxWXSYQqkpgn1vA6
https://x.com/HarvardGrwthLab/status/1864804904923234548
Out in the labor market of Azerbaijan The video prepared by the “Growth Lab” Center of Harvard University on the analysis of reforms:
https://bit.ly/4f0qg6N