Current situation

The sustainable and lasting development of society is possible only when economic policies aimed at macroeconomic stability combines social policy that ensures high welfare of people. But the current view on the notion of well-being in Azerbaijan is largely shaped by material factors. Currently, poverty measurement in the country based on a monetary approach, as well as expenditures, the alignment to people's basic minimum consumption needs, is also a clear demonstration of this. This approach is called poverty measurement based on an “absolute” approach. Nevertheless, poverty, in the broadest sense, welfare is not only whether a person is able to meet his or her physiological needs. 

Every year the government approves the average cost of a basket for food, non-food goods and services (the subsistence minimum) based on the minimum physiological standards. Official statistics, on the other hand, annually check a selected number of households and take into account people whose income is below the subsistence level and considered poor. The statistical indicator from the survey is declared as the absolute poverty line across the nation at each year-end.

The extent to which the structure of minimum consumer baskets applied in terms of meeting people's minimum physical and physiological needs is scientifically justified can be judged by the fact that all stakeholders (trade unions, civil society institutions, think tanks, etc.) remain a major challenge in the process of developing such norms. But the more important point is the change in the formal approach to measuring wellbeing.

What to change? 

It is essential to strategically change the approach to the term "well-being". Because if access to necessary educational, medical, cultural, housing and communal services is insufficient to ensure the spiritual development and needs of people, it is also impossible to form an objective and clear political position on actual standards of well-being in the country. Political polemics concerning the concept of "well-being" and proposed policy mechanisms should be based on a comprehensive measure.

The measurement of the term “well-being" through indicators of spiritual development along with the material factor reflects the political essence of the value that any political force claiming power attaches to "human capital".

Changing the existing legal mechanisms, statistical methods and tools for measuring well-being should also be one of the major objectives.

How to change it? 

First of all, it is necessary to radically change the methods of poverty measurement and poverty alleviation in the country. At this time, two mechanisms shall be applied in relation to each other:

The level of relative poverty shall be determined according to the median income level. For this purpose, the national average income shall be calculated by the official statistics and families whose per capita income falls below 60% of the average income shall be automatically referred to the poor. 

In parallel, it is envisaged to calculate a multidimensional poverty indicator and to refer to this indicator when making social policy decisions. This is a non-monetary poverty measurement, measuring not only the financial situation of people, but also their social deprivation and social exclusion. For example, if children without material deprivation, surrounded by all kinds of material goods on a well-organized profitable farm in a remote village, do not have access to education, health and cultural services, this situation means social deprivation.

The real level of welfare in the country can be accurately determined precisely on the basis of such a comprehensive measurement, the government's social policy goals can take into account the real needs of society's development. For this purpose, it is important, first of all, to form a legal framework that allows measuring poverty on the basis of non-monetary methods. Methodological documents, approved on the basis of official government resolutions, shall define indicators measuring both material and social deprivation and continuously measure the true scale of poverty in the country throughout the year (at least once a quarter).

The implementation of this mechanism also requires a fundamental change in the current institutional system.

Changes are needed in two directions below:

1.    The statistics office should be completely free from the influence and interference of political power. It should not have any levers of political influence that would hinder objective and reliable poverty measurement. This requires, first and foremost, sustaining accountability and awareness about the results of poverty measurement in society. At the same time, all necessary statistical data should be available to the public, so that various "think tanks", independent institutions of civil society can make the office release more reliable and objective statistical data, by conducting alternative measurements and studies.

2. A more important step is the need to calculate poverty separately for different social groups and regions based on the measurement of material and social deprivation. For example, it is necessary to measure "child poverty", "poverty of the elderly", and "poverty of the working poor". All regions across the country, rural and urban poverty for each region shall be taken into account. Quarterly reports containing data on the poverty rate calculated by social groups and geographical factors shall be disclosed to the public.