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Azerbaijan Table of Contents


Social Welfare

The traditional extended family provides an unofficial support system for family members who are elderly or who are full-time students. The official social safety net nominally ensures at least a subsistence income to all citizens, continuing the practice of the Soviet era. Stated benefits include old-age, disability, and survivor pensions; additional allowances for births and supported family members; sick and maternity leave; temporary disability and unemployment compensation for workers; food subsidies; and tax exemptions for designated social groups. Most of these benefits are financed by extrabudgetary funds; in 1992 more than 4.2 million rubles were transferred from the budget to the State Pension Fund, however.

The actual effect of the social welfare system has differed greatly from its stated goals. During the late Soviet period, Azerbaijanis complained that their social benefits ranked near the bottom among the Soviet republics. The economic dislocations that followed independence eroded those benefits even further. In December 1993, the government estimated that 80 percent of the Azerbaijani population was living below the poverty level, even though about 15 percent of the gross domestic product ( GDP--see Glossary) was spent on social security benefits.

The minimum monthly wage is set by presidential decree, but several increases in the minimum wage in 1992-93 failed to keep pace with the high rate of inflation. Retirement pensions, based on years of service and average earnings, also fell behind the cost of living in that period.

In the postcommunist era, government price controls have also been used to ease the transition from the centrally planned economy. In 1992 subsidies were introduced to keep prices low for such items as bread, meat, butter, sugar, cooking oil, local transportation, housing, and medical care (see table 9; table 10, Appendix). At that point, the price-support safety net was expected to absorb at least 7 percent of the projected national budget. At the end of 1993, major increases in bread and fuel prices heightened social tensions and triggered riots because compensation to poor people, students, and refugees was considered inadequate.

Data as of March 1994