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Azerbaijan 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
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