AZE.US
Many people in Azerbaijan have jobs and receive regular salaries, but still do not feel economically secure, economist Farhad Parvizi told Vesti Baku.
He said the problem is not only the level of income. Many families also lack any financial safety cushion. One unexpected expense, an illness, a car repair or an urgent payment can break the entire household budget.
Parvizi said Azerbaijan does not publish a median salary figure, only the average wage. By his approximate estimate, the median monthly salary may be around 600 manats (about $353) before deductions. After taxes, a person may be left with about 500 manats (about $294) a month.
“With today’s food prices, that money can mostly cover only basic needs: food and water,” Parvizi said.
He said real economic security means more than being able to buy food. A person needs confidence that a salary can also cover rent, loans, medical treatment, children’s education and at least a small reserve.
“Many people work, but live without a safety cushion and with debts,” he said. “One unexpected expense, illness or car breakdown, and the whole family economy collapses.”
Parvizi said high property prices also prevent many young people from buying their own apartments. That affects not only personal finances, but also family life.
“It means fewer marriages, more divorces and fewer children,” he said.
He called the near equality between the number of abortions and births a deeply worrying sign, saying it reflects not only demographic pressure but also the condition of society.
‘An Economy Of Fear Cannot Be An Economy Of Innovation’
Asked whether Azerbaijan’s economy has become too punitive, Parvizi said there is such a feeling.
“When the system tells a person ‘pay a fine’ more often than ‘develop, invest and hire people,’ the economy becomes defensive,” he said.
Businesses then think less about growth and more about avoiding mistakes.
“An economy of fear can never be an economy of innovation,” Parvizi said.
He said the core problem is a lack of proper goal-setting. If state agencies think mainly in terms of fulfilling plans rather than growing the economy, the result is formal compliance achieved at the cost of lower economic activity.
Parvizi said budgets can be filled in two ways: by taking more from existing activity or by creating conditions for more activity to emerge.
If pressure on business becomes too heavy, companies either raise prices, move into the shadow economy, close down or stop expanding. In the short term, the budget may gain some revenue. In the long term, the economy loses jobs, investment and trust.
“Almost no country has achieved economic success without trust in society,” he said.
In Azerbaijan, he said, distrust exists at many levels: between citizens and officials, employers and workers, business and the state, and even inside families and social groups.
The fine-based system, he said, only strengthens that attitude.
‘Small Business Becomes A Survivor, Not An Entrepreneur’
Parvizi said unpredictable rules and fear of inspections weaken small business.
“Small business stops being entrepreneurial and becomes a survivor,” he said.
Such businesses avoid hiring extra workers, opening a second location, taking development loans or declaring full turnover. Fear kills scaling.
Without small business, he said, there can be no strong middle class.
But Parvizi also questioned whether the middle class still has the same role it once had. Historically, he said, it emerged from free markets and the industrial revolution. For most of human history, the norm was poverty for the majority and wealth for the aristocracy.
He warned that both the West and the East may be moving back toward that model. Artificial intelligence and robots may take over part of the work once done by the middle class, reducing its previous economic role.
Why Long-Term Planning Is So Difficult
Parvizi said long-term planning requires predictability.
A person takes a mortgage for 20 years. A business invests for 5 to 10 years. A family saves for children’s education.
But when rules, prices, taxes, interest rates and incomes seem unpredictable, people shorten their horizon and focus on surviving until the next month.
He said many economists believe the rule of law is necessary for growth, but equal interpretation and application of the law are even more important.
For the economy, he said, the key is not the harshness of the law, but the predictability of its enforcement.
‘When Hope Disappears, The Economic Problem Becomes Psychological’
Parvizi said no single factor is crushing families. It is the combination.
Prices rise. Loans remain. Rent puts pressure on households. Salaries do not always keep up. But the hardest part, he said, is the feeling that tomorrow may be even more difficult.
“When a family loses hope for improvement, the economic problem becomes psychological,” he said.
He said today’s adults may be the last generation able to say they lived better than their grandparents. The next generation may not have that chance.
Why GDP Growth Does Not Always Reach Ordinary People
Parvizi said GDP is an average temperature for the economy.
It can grow because of large projects, oil, gas, construction or state spending. But ordinary people feel the economy through their refrigerator, bills, salary and ability to save money.
If growth does not turn into income, competition, jobs and affordable housing, people do not feel it.
That is why, he said, Azerbaijan should measure not only the average salary but also the median salary. The median more accurately shows how half of the population lives.
‘First A Consultation And Time To Fix The Problem, Then A Fine’
Asked what three steps could reduce pressure on citizens and businesses, Parvizi named predictability, partnership and simplification.
First, he said, rules should be more predictable, with fewer sudden changes and more transition periods.
Second, the state should move from a culture of punishment to a culture of partnership.
“First a consultation and time to correct the mistake, then a fine,” he said.
Third, laws should be simplified, especially in tax and customs. For small business and legal employment, working transparently should be easier than hiding.
Parvizi said he was not calling for lower taxes or customs duties. Given Azerbaijan’s current geopolitical environment and the need to rebuild Karabakh, he said, it is difficult to speak about low taxes.
But simplifying the tax system is a real area for reform.
“For a relatively small economy, we have a very complicated tax code,” he said. “Because of this, many entrepreneurs do not want to formalize their business because they fear fines.”
How Azerbaijan Could Become A Regional Center
Parvizi said the question should first be rephrased: why does Azerbaijan want to become a regional center of business and ideas?
He asked whether economic growth itself is currently treated as a central goal.
He said the speeches of the economic elite often revolve around stability and reserves. The world, meanwhile, is going through a major transition that happens roughly once every 100 years. In such periods, the economy often moves into the background.
He pointed to neighboring countries, including Turkey and Russia, where economic priorities are often sacrificed to strengthen statehood.
But if Azerbaijan wants to become a real center, he said, transit alone is not enough.
“Transit is when goods pass through you,” Parvizi said. “A center is when people, capital, companies, universities, startups and ideas come to you.”
For that, he said, Azerbaijan needs independent rules of the game, strong courts, protection of property, quality education, digital public services and openness to talent.
“We already have geography,” he said. “Now we need institutional attractiveness.”
He added that the state’s current priority is likely stability and security. That means institutional reforms may move more slowly than business would like.
‘Business Freedom Means Prices, Salaries And Family Confidence’
Parvizi said the link between business freedom and the wallet of an ordinary person is simple.
When it is easy for businesses to operate, more companies appear. When there are more companies, more jobs are created. When there are more jobs, competition for workers grows. When competition for workers grows, salaries rise.
When rules are fair, businesses do not build fear and risk into the price of goods.
“Business freedom and fairness are not abstract words,” Parvizi said. “They mean prices, salaries and a family’s confidence in tomorrow.”
AZE.US