Azerbaijan’s labor market reforms have garnered the attention of global experts. Researchers at Harvard University have praised the outcomes of the 2019 tax system reforms, which introduced incentive mechanisms to enhance the labor market. As part of the diagnostic assessment of Azerbaijan’s economy, Harvard University’s Growth Lab analyzed these reforms and highlighted the country’s achievements as exemplary, the Ministry of Economy told AZERTAC.

According to the experts, the reforms - implemented by the State Tax Service under the Ministry of Economy - have yielded significant progress in legalizing labor relations in Azerbaijan. The government streamlined procedures, enabling businesses to formalize operations with greater ease and reduced costs (https://www.taxes.gov.az/en/page/salary).

Key positive outcomes have been observed across major economic indicators. The incentive-driven tax legislation reforms have led to a 32.1% increase in the number of official employment contracts, promoting transparency in salary practices. Contributions to compulsory state social insurance funds have surged 2.2 times over the past five years, strengthening social fund revenues and reducing the financial burden on the state budget. Overall, these reforms have positively influenced economic activity, fostering growth in both business-to-business and business-to-consumer operations within the non-oil sector.

Harvard experts highlighted Azerbaijan’s success as a compelling example of how well-designed incentives can effectively promote business and labor market formalization. They emphasized that countries facing similar challenges could benefit from analyzing Azerbaijan’s approach as a potential model for fostering legalization and improving market dynamics.

The findings and analysis from Harvard University’s Growth Lab are available on their social media pages.