This paper examines unemployment amongst young people in Azerbaijan amd provides recommendations for improving employment prospects of the young.

It finds that unemployment among young people is a pertinent issue in Azerbaijan, where two-thirds of the population are under 35 years of age, accounting for 61 per cent of total unemployment. The underlying causes of this are the processes which affect the supply of and demand for youth labour. These include:

* Demography: although the number of children under ten has been falling, this has yet to work itself through to those entering the labour force

* Education: while the average level of education of new labour market entrants has been falling, quality at every level has also been deteriorating

* Demand for labour: there has been a steady decline in the overall demand for labour

* 'Dutch Disease': distortion of the labour market because of increases in foreign exchange earnings derived from oil.

With these issues in mind, this paper outlines a number of policy interventions which have been suggested to the government of Azerbaijan in their development of a national action plan to tackle youth unemployment. These policies can be categorised as preventative and curative:

* Preventative Policies:

* increasing the demand for labour

* information and counselling - in order to make the market work more efficiently, particularly where structural adjustments are necessary

* education reform - to stop the erosion of education levels and standards and to re-orientate education towards the new skills that are needed in global labour markets today

* national training system - an incentive for employers to provide training for existing and future workers.

* Curative Policies:

* public works programmes - designed with community participation and primarily aimed at disadvantaged young people

* subsidised credit and business start-up support - credit lines for business and to help young entrepreneurs and to support state-owned small enterprises

* skills training - tying pre-employment skills training to employer demand

* wage subsidies - narrow targeting of subsidies with careful monitoring to ensure accountability

* equity and anti-discrimination issues - to be backed up with appropriate legislation

* social business programmes - designed for specific groups of young people with special labour-market problems.

The paper concludes with a number of policy priorities within which the above wider policies can work better and ease the implementation of a national youth employment action plan.