M. van Klaveren, K.G. Tijdens, M. Hughie-Williams and N.E. Ramos Martin
2.5. Minimum wage and poverty
2.5.1. The statutory minimum wage
Since August 25, 2008, the administratively set minimum wage is 75 new manat (AZN, approximately
USD 91) per month. At that date, by Presidential Decree the minimum wage of 60 new manat was increased
by 25%. Local NGOs reported that this wage was not enough to provide a decent standard of living (US
Dept of State 2010). Indeed, with the average monthly wage for 2008 being AZN 274 (our Table 12, sec-
tion 2.8.2), the minimum wage was just 27% of this average. In the 2000s, the relative value of the mini-
mum wage has been lifted. In early 2003 the minimum wage was less than 12% of the average wage, but its
nominal value was nearly doubled in September 2003 and increased by another 33% in January 2004, while
inflation in 2003 and 2004 was only 9%. Taking into account the (strong but not equivalent) increases of
average wages in real terms, by the end of 2004 the minimum wage was 29% of the average wage (Republic
of Azerbaijan 2005) — a level where it remained since.
The Ministry of Taxes, the Ministry of Labour, and the State Social Protection Fund share responsibil-
ity for enforcing the minimum wage. However, in practice the minimum wage was not effectively enforced.
Due to intervention by trade unions and inspectors, approximately AZN 950,000 (USD 1,100,000) were
paid to workers who filed reports about unpaid salaries from the middle of 2008 until the middle of 2009
(US Dept of State 2010).
2.5.2. Inequality and poverty
For 2005, it was officially estimated that less than 2% of the population of Azerbaijan lived below the
common UN income poverty yardsticks of USD 2 a day and USD 1.25 a day (in PPP terms). According
to most internationally circulating figures the country has succeeded in rapidly bringing down the share
of poor. In 1995, still 15.6% were computed to live below the USD 1.25 a day yardstick, a share that had
decreased to 6.3% in 2001. And while in 1995 68.1% of the population was estimated to live below the
national poverty line, by 2003 this would have decreased to 39.7% and by 2008 this share was estimated at
only 13.2%. The income distribution seems relatively egalitarian. According to the 2003 Household Budget
Survey (HBS), the Gini coefficient (a measure that rates 0 as perfect equality and 100 as perfect inequality)
was equal to 0.275 using income distribution and 0.288 using consumption expenditure -- relatively low
figures in international perspective. Also in 2003, the average income of the richest 20% was 2.9 times more
than that of the poorest 20%. The share in total consumption (expenditure) of the poorest 20% was in 2005
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