Statement at the end of visit to Azerbaijan by the United Nations Working Group on Business and Human Rights

Baku, 27 August 2014

Ladies and gentlemen, 
 
In our capacity as members of the United Nations Working Group on Business and Human Rights, we have today ended our ten-day visit to the Republic of Azerbaijan. The objective of our visit was to support efforts of the Government, business enterprises and other stakeholders to prevent and strengthen protection against business-related human rights abuses, in line with our mandate and the UN Guiding Principles on Business and Human Rights.

The Government of Azerbaijan is party to the core international human rights treaties and has issued a standing invitation to UN Special Procedures of the Human Rights Council. We are grateful for its support and facilitation of this mission.

During our visit, we met with Government officials from the Ministries of Foreign Affairs; Internal Affairs; Justice; Labour and Social Protection; Economy and Industry; and Energy. In addition, we held meetings with representatives of the Supreme Court; the State Committee for Family, Women and Children’s Affairs; the State Agency on Procurement; the State Town Building and Architecture Committee; the State Agency for Public Service and Public Innovation; the State Oil Fund; and the State Committee for Property Affairs. We also met with members of Parliament; the Office of the Commissioner for Human Rights (the Ombudsman); the Institute of Human Rights; the Azerbaijan Trade Union Confederation; and the Azerbaijan Republic Chamber of Commerce, as well as representatives from a range of local and international business enterprises; civil society organizations; the media; the diplomatic community and UN agencies in Azerbaijan. We travelled to Ganja city where we met with local public authorities and representatives of civil society and businesses, including workers and managers.  

In our statement today, we would like to outline some initial observations from our visit. Our official mission report to the 29th session of the Human Rights Council in June 2015 will include further observations and recommendations.

General context

Azerbaijan has experienced a period of sustained economic growth over the past decades, driven by increasing revenues from oil and gas production, accounting for 47 per cent of GDP in 2012. The State-owned oil company SOCAR anchors the sector and is supported by several international oil companies with important stakes in the industry. This exemplifies the role of national and international private companies in the economy, the significance of which has increased since the country’s independence in 1991 through a policy of privatization of State-owned enterprises. The country is becoming a regional trading hub and sectors such as telecommunications and construction have experienced a boom.

Economic growth has fuelled the expansion of social assistance and allowed Azerbaijan to significantly reduce the number of people living below the poverty line in less than a decade: from 42.6 per cent in 2005 to 6 per cent in 2012. There has been a significant rise in average wages, yet it is estimated that approximately 40 per cent of the population remain low-wage earners, often working in the informal economy. Other key challenges are regional income disparities, with wage levels in Baku around double that of other parts of the country; and income disparities between genders, with women’s average wages being less than half that of men.

Over the past decade, unemployment has also been greatly reduced. However, youth unemployment, which stood at 29 per cent in 2012, remains a challenge in this country where 42 per cent of the population are below the age of 25.

The Government is aware of and primed to address these challenges, as evidenced by the “Azerbaijan 2020: Look into the Future” Development Concept, which was approved by Presidential Decree in December 2012. Its main policy objectives include:

• Diversifying the economy to reduce the dependence on oil and gas through the development of human capital to lay the foundation for a transition to a “knowledge-based economy”;

• Developing the social sphere, improving the general welfare of the population, including through ensuring access to quality education, healthcare, social security systems, improving labour conditions and creating equal opportunities for women; and

• Deepening democracy, improving the business environment, and ensuring human rights and freedoms and the active status of civil society in public life.

General awareness of business and human rights

In our meeting with the Office of the Commissioner for Human Rights (the Ombudsman) we learned about some of its activities that relate to the business and human rights agenda. However, overall, our meetings with the Government, business enterprises and civil society revealed that awareness of business and human rights issues and the Guiding Principles on Business and Human Rights is very limited. We observed that grievances are addressed largely through the court system and that there is little awareness of the role that non-judicial mechanisms can play to complement and supplement judicial mechanisms.

When asked about country’s most salient business and human rights issues, our interlocutors typically mentioned two areas: (1) the situation facing internally displaced persons (IDPs) as a consequence of the armed conflict in and around the Nagorno-Karabakh region of the Republic of Azerbaijan; and (2) the “right of entrepreneurs” to start and grow a business in the country.

With regard to IDPs, we welcome all efforts to ensure that this group is properly assisted, including special programmes to support their access to housing and economic activities such as those carried out in the city of Ganja.

The concept of the “right of entrepreneurs” is set out in a specific law and referred to in the 2011 National Programme for Action to Raise Effectiveness of the Protection of Human Rights and Freedoms in the Republic of Azerbaijan (Section 2.3). We note that whereas the Guiding Principles on Business and Human Rights focus on the obligations of States and the corporate responsibility of business enterprises to prevent and remedy human rights abuses, the experience of Azerbaijan underlined the relevance of also looking at the protection required by entrepreneurs and small businesses. In particular, it was reported that many people who start businesses may face obstacles relating to “red tape” and corruption, such as arbitrary exclusion from bidding processes in public procurement.

Inclusiveness and participation

Multi-stakeholder approaches involving the Government, business and civil society organizations are particularly important in the area of business and human rights. Such inclusive approaches allow for interests to be balanced and the formulation of well-informed policy that responds more effectively to the needs and concerns both of businesses and of those whose rights may be affected by business activities. In this respect, an independent civil society and media play an important role in promoting transparency and accountability in business operations, particularly where human rights concerns may arise.

We welcome the Government’s policy commitments in the 2020 Development Concept, which underline the importance of greater inclusion of civil society in policy making and promoting freedom of speech and information, including though improving the regulation of information and mass media in line with international standards. We received input from civil society on the progress being made in regard to these commitments. We regret that we were unable to engage with some civil society actors who were recently placed in pre-trial detention. (We note the public statement by fellow UN Special Procedures mandate holders issued on 19 August 2014 specifically on this matter.)

We also note that several civil society organizations have recently experienced difficulties with registration and have had their bank accounts frozen. Consequently these organizations have had to cease their activities. From the information received, the grounds for freezing bank accounts relate to recent amendments to the law “On non-governmental organizations (public associations and foundations)”, the law “On grants” and requirements for registration of grants with the Ministry of Justice.

The Extractive Industries Transparency Initiative (EITI) is an important multi-stakeholder initiative of which Azerbaijan is a founding member. Our discussions with representatives who form part of the civil society mechanism of the EITI reinforced that the EITI process is a greatly valued opportunity to engage in dialogue with the Government and the representatives of the oil and gas sector. Yet we were informed that even some of these organizations are unable to function or now contribute to EITI having had their bank accounts frozen.   

We are encouraged that measures are currently being taken to simplify grant registrations. We would urge the Government to ensure that all procedures pertaining to the process of registration and approval of grants are transparent, avoid any perception of bias, and are conducted in an efficient and timely manner.
  
Tackling corruption and abuse of public position

Corruption is recognized as a serious problem, and the 2020 Development Concept highlights the need to scale up the fight against corruption. The Government has already taken measures to combat corruption and abuse of public position. For example, in 2004 it adopted a Law on Combating Corruption and established a Commission on Combatting Corruption, and in 2005 it ratified the UN Convention against Corruption. The second National Anti-Corruption Plan 2012-2015 also includes new provisions to improve the protection of whistle-blowers in corruption-related cases and limit the immunity of judges accused of corruption. Also, the establishment in 2012 of the Azerbaijan Service and Assessment Network (ASAN) that provides citizens with access to a range of services through a dedicated centre should also help to reduce petty corruption across public administration.

According to information received, corruption is largely linked to monopolies and a lack of transparency in certain sectors of the economy. In some cases there were also irregularities in public   and bidding processes. In this regard, we understand that amendments to the Law on Right to Obtain Information, passed in 2012, together with amendments to the State Law on Registration of Legal Entities and the Law on Commercial Secrets mean that business enterprises are not required to make public information about their registration, ownership and structure. Accordingly, several stakeholders from independent media and civil society alerted us to the difficulty in being able to properly identify certain businesses and their owners in order to monitor compliance with national and international law. We urge businesses in Azerbaijan to act transparently in order to avoid any perception of impropriety and to work with civil society organizations where necessary to assist authorities in exposing cases of corruption.

Corruption is an obstacle to the realisation of all civil, political, economic, social and cultural rights. It is also significantly undermines the promotion of entrepreneurship in the country. The Guiding Principles on Business and Human Rights also highlight how corruption may block access to effective remedies for human rights abuses by business enterprises. For example, the commentary to Guiding Principle 26 clarifies that States should “ensure that the provision of justice is not prevented by corruption of the judicial process, that courts are independent of economic or political pressures from other State agents and from business actors, and that the legitimate and peaceful activities of human rights defenders are not obstructed.”

Protection against abuse in construction projects

The construction sector has undergone a boom in the last decade, as evidenced by large-scale redevelopment in Baku in particular since 2006. This has generated jobs in the construction sector, but also raised concerns about the manner in which expropriations, evictions and demolitions have been carried out. In this regard, we recall the recommendations made to Azerbaijan by the Committee on Economic, Social and Cultural Rights in 2013 (E/C.12/AZE/CO/3) concerning information on cases of forced evictions, unlawful expropriations and demolitions with little or no notice. The State must ensure that any relocation of homes which may be required for the purpose of promoting the general welfare of the population is carried out with prior consultations with affected households and provide for adequate human rights safeguards.

Labour rights

The 2020 Development Concept sets the objective of strengthening efforts to ensure safe and healthy working conditions, including through the preparation of a new State programme. One important challenge is that approximately 10 per cent of the population work in the informal economy and therefore fall outside the protection of the Labour Code. The situation of women in the workplace also requires special attention. It is estimated that only one third of women are in salaried employment and a significant disparity exists between the incomes of men and women. We welcome the Government’s commitment to increase the minimum wage to 60 per cent of the average income and thus address the high number of workers on low incomes.

During our meetings we were able to explore the work of the State Labour Inspectorate Service in monitoring and enforcing laws and regulations concerning occupational health and safety, including through regular on-site visits. We observe that there is a need to further improve the collection of data on occupational health and safety, including through enhanced collaboration between the Ministry of Labour and the State Statistical Committee.

We also explored the situation of trade unions and issues relating to collective bargaining. We note that over 85 per cent of workers belong to one of the approximately 1,600 trade unions in the country. As stipulated in the 1994 Trade Unions Act, a trade union may be set up by a minimum of seven persons, and the Act establishes that trade unions should be able to work without interference and it prohibits discrimination against trade union members. We encourage the Government to continue its efforts to ensure the full independence of trade unions so that they can effectively advocate for workers’ rights.

Collective bargaining is still relatively new in the country, but the number of collective agreements has steadily increased during the past decade from 9,460 in 2001 to 11,890 in 2010. We encourage the Government to support the further development and strengthening of tripartite social dialogue and to ensure that proposals made by social partners are taken into consideration in policy making. 

Investment policies

In meetings with the management of the State Oil Fund we were impressed by the strategic outlook and prudent approach to managing the wealth being generated by oil revenues, particularly in human capital and socio-economic projects for the benefit of future generations.

To reinforce public trust that natural resources are being well managed and for the benefit of all, and avoid any perception that State-owned and controlled companies may be involved in any human rights abuses, we suggest that the corporate governance structure of State Oil Company of Azerbaijan (SOCAR) include greater accountability and transparency to Parliament. For example, lawmakers might be empowered to periodically examine any commercial contracts that are necessary to operationally deliver upon the production sharing agreements (PSAs).

We were encouraged to learn that SOCAR, together with an international partner, is carrying out a social impact study in advance of a planned construction project to mitigate adverse human rights impacts to the community. In some cases, international companies with an understanding of business and human rights that operate in Azerbaijan may offer models of good practice to be considered by other companies.

Strengthening the policy framework and multi-stakeholderism

There was scant reference in our meetings to any relationship between business activities and human rights beyond the protection and strengthening of workers’ rights pursued actively by Government, companies and trade unions. In dialogue with representatives of business, they openly sought advice on how human rights considerations might inform their activities. An opportunity exists for businesses to act as a bridge between Government and civil society by developing, supporting and implementing corporate social responsibility (CSR) activities aligned to national economic and societal goals.

The objective of developing “a strategy and State programme on corporate responsibility” is stated in the 2020 Development Concept. We encourage the Government to realise this objective in close collaboration with businesses and civil society by developing a comprehensive plan that draws on the Guiding Principles on Business and Human Rights. Such a concerted effort would raise awareness of the international human rights framework, provide specific guidance on the corporate responsibility to respect human rights, and include the development of grievance mechanisms for individuals and communities who may be adversely impacted by business activities.

We note the existence of a fledgling UN Global Compact Local Network and we encourage the Government, companies and civil society to engage in this multi-stakeholder platform to advance and benchmark corporate responsibility and sustainability in Azerbaijan.

The National Action Plan and Programme on human rights that has been developed by the Government can be made more robust by explicitly addressing the relationship between business and human rights. It should also draw from experiences of multi-stakeholder dialogue conducted through the EITI, national councils and State committees.

It is our hope that our final report on this visit will spur a process to foster a common understanding across Government, businesses and civil society to realise a national action plan on business and human rights.

Closing

The Working Group has ended its visit, but we will continue to collect information over the coming months as we write our report to be presented to the Human Rights Council in June 2015. It will contain concrete recommendations for the Government and business enterprises, as well as other stakeholders. We hope these will be useful to protect against and address adverse impacts of business activities on human rights, as well as promote and support human rights in Azerbaijan.

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