Azerbaijan about to adopt Compulsory Unemployment Insurance Act

/By Azernews/

By Amina Nazarli

The bill on Compulsory Unemployment Insurance Act in Azerbaijan can enter into force soon.

Labor Minister Salim Muslimov said on April 14 document has been submitted to the relevant enforcement authorities for approval, noting that unemployment insurance will be different from the unemployment benefit.

Unemployment insurance will allow unemployed person to get insurance payments over a certain period of time, which are carried out by contributions, made by the same person during his/her official work.

Currently, unemployment benefit is one of the way to ensure social protection of the jobless people in Azerbaijan.

This type of insurance, used in many countries around the world, is aimed at ensuring citizens benefit from the insurance companies in case of job loss.

While concluding a contract, the amount of monthly salary, length of service, the sector in which he/she is engaged, the potential risk of job loss and other factors are taken into account.

Specialists claim that this type of insurance is important for Azerbaijan as a new insurance product.

Muslimov also stressed that there is no need to transfer fees from payments on compulsory state social insurance to the Taxes Ministry.

He said that there is no much difference, which structure is engaged in the collection of these payments, as in any case they should be transferred to the budget of the State Social Protection Fund (SSPF) of the Labor Ministry.

“Each country has its own way to control the process. Today, given the lack of on-site inspections by the social security authorities, the collection of these payments process is quite easy. Someone may raise this issue, but the process is determined in accordance with the presidential decree. Currently the executive authority on this issue acts under the SSPF of the Ministry,” the minister said.

Muslimov explained that taxes for compulsory social insurance are not taxes, since, these charges are used for specific purposes unlike taxes.

“As you know, taxes are not directed to specific goals initially. They are designed to replenish the country's budget. Every year, within the budget process, they define to which spheres to target these revenues in the future. Social benefits have a specific purpose -- they are planned to cover potential insurance cases, which is controlled by the SSPF budget.

Muslimov also touched upon the unification of audits of tax and social payments, saying that he does not see the need to unite them.

This proposal was made by managing partner of Deloitte Azerbaijan company Nuran Karimov during the meeting of the American Chamber of Commerce members in Azerbaijan (AmCham) with President Ilham Aliyev.

“Since last October, the SSPF did not carry out on-site inspections for correct calculation and timely payment of social contributions. Currently, only the desk audits are conducted to control the payment process. This process is performed in the normal mode,” he said.

Starting last November, the government suspended business control for two years, excluding tax audits and check ups related to ensuring the life and health safety, as well as state and economic security, but these control measures also should be carried out in a restricted mode.

To reduce the number of possible violations, Azerbaijani President has approved the list of special inspections, which may take place during a two-year moratorium: quality control of medicine, compliance with hygiene standards (Health Ministry); phytosanitary and veterinary supervision (Agriculture Ministry); control of legality of connection and use of gas, water, electric and thermal networks; audit of insurers, reinsurers and other participants in the insurance market (Finance Ministry); verification of credit institutions and their subsidiaries (the Central Bank); and verification of radiation safety, quality engineering and construction projects by the Emergency Situations Ministry.

The verification may be conducted only with the consent of the Economy Ministry and with the participation of its representatives, designed to implement the protection of entrepreneurs’ interests.