In the industrial sector, employers often do not pay required taxes for their workers.
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The average salary of a brick factory’s worker is 1,500 somoni (about $140), and the company is required to pay social tax (25%). However, in case of non-payment of this type of tax from 20 employees’ salaries, the pension fund (The Agency of Social Insurance and Pension under the Government of the Republic of Tajikistan officially) does not receive 7,500 somoni. In addition, the employee must pay 13% and 1% taxes at own expense, which makes a large contribution to the state budget and pension fund, and the amount of the employee’s future pension becomes more clear.
Our investigation in a number of brick factories in some Regions of Republican Subordination showed high level of off-the-books employment and that employers are trying to recruit people who need no documentation of their employment.
The consequences of employers’ actions include delayed payment of pensions, delayed payment of disability benefits, non-payment of health benefits, family benefits, maternity benefits, death benefits and many other problems.
According to the Ministry of Industry and New Technologies of the Republic of Tajikistan, by 2019, 130 brick factories were registered in Tajikistan, most of which are located in the cities and districts of Hisor, Vahdat and Rudaki. There are 21 brick factories in Rudaki district, 17 in the city of Hisor and 9 in Vahdat.
During the journalistic investigation we observed that in a number of brick factories in the Rudaki and Hisor districts, most workers were hired without the necessary documents and employment record books, and the factories’ owners did not pay social taxes for them.
To prove this, we conducted an experiment. Our colleague Shohin Saidov went to several brick factories searching for a job. In two factories, he worked for several days without identification documents.
According to the plan, Shohin Saidov began working as the employee of the Sangi Daryo LLC (located in Sharora jamoat of the city of Hisor) on July 24-25, 2019. On July 23, he went to the company searching for job. The enterprise is owned by Chinese citizen Lo Ban; his translator (Tajik citizen) said they had a vacancy.
On July 24, at 6 AM, Saidov came to work after the employer’s request. At the time of the hiring, Saidov was not asked to provide any identification documents or employment record book. The company employed about 30 people; 50% of them were school students. During the conversation, students said they worked in such enterprises during the summer break to earn money for school clothing. None of them was hired officially. They worked on a daily basis and earned from 50 to 60 somoni per day. Along with minors, several other people with one or more years of work experience in the company confirmed that they work on a daily basis without documents (unofficially) or piecework.
Saidov said that his job was to seal the door of the brickkiln, where the raw brick were put, with a broken brick or clay. His work lasted two days, and he earned 50 somoni for each working day. On the second workday, he came to work at 7 AM, for which he was reprimanded, since he had to start work at 6 AM and stay there until 6 PM.
At this enterprise, each employee receives one and a half of flatbread for lunch. People who live near the enterprise go home for lunch from 12 PM till 2 PM. Other workers ate only flatbread with water. At the end of the day, the translator of the enterprise, the young man named Naim, paid the workers for the daily work.
At Chilu LLC in Hisor, workers are also hired without any documents. The interpreter at Chilu LLC Ismatullo told us that no documents are required for hiring. The employees of this enterprise receive 55 somoni per day paid at the end of each month, and 5 somoni from their salary per day are withheld for bread.
Work begins at 6 AM and should be completed by 6 PM. Time for lunch is from 12 PM to 2 PM.
At “Abubakr 88” LLC, which is also called “Valijon’s factory”, employees are hired with the copy of a passport and receive 55 somoni per day.
At a press conference on July 21, 2019, Dilmurod Davlatzoda, Director of the Agency of Social Insurance and Pension under the Government of Tajikistan, stated that there was a problem of off-the-books employment at brick factories and noted that there was a problem of non-payment of social taxes by private enterprises. “In previous years, it was difficult to determine the amount of the pension. Only two years of work experience were considered. Now, the rules have changed: the new procedure has been introduced, according to which the pension is determined by the volume of work, work experience and contributions to the fund. In fact, we will monitor the enterprises (brick factories) you mentioned. We will not only investigate, but also discuss it.”
Nurullo Mahmadullozoda, Deputy Minister of Labour, Migration and Employment, told us: “The rights of workers are violated in brick factories. However, the Labour Control Service cannot visit industrial facilities due to the declared moratorium. This is not a solution to the problem. The hotline is working (235 03 84). If you file a complaint or you have observed such a situation, you should provide accurate facts and data. We will take administrative measures against employers who violate the rights of workers. We know that there are many such enterprises in Rudaki and Hisor districts. We will add them to our plan and follow up on the solution of this problem,” Mahmadullozoda added.
Farrukh Khamralizoda, Chairman of the State Committee on Investments and State Property Management, commented on the problem: “The declared moratorium provides for some exceptions which allow to conduct inspections. If the complaint is related to health damage or a threat to national security, then the relevant authorities will inspect only those indicated issues. There are many factors in informal employment. Some local entrepreneurs work illegally. Partially, their activity is legal, and the other part is illegal.”
Payrav Jumazoda, Deputy Head of the State Supervision Service in the sphere of Labour, Migration and Employment explained at a press conference that during the first six months of 2019, the Service carried out 19 raids and inspections related to off-the-books employment. Inspections were carried out in Firdavsi, Sino, Tursunzoda, Hisor, Kushoniyon, Isfara, Konibodom and Asht districts, and identified 194 illegal workers. Responsible persons were fined. Kholmurod Khasanov, Chief accountant of Mavji Bahr LLC (located in Hisor), said the company was founded in 2009 by a Chinese citizen. The production capacity of the factory is 5 million bricks per year, but the factory has been operating seasonally for 6 months and produces 2-2.5 million bricks. In July, August and September, production capacity reaches 80 thousand bricks per day. The number of workers is 40, 4 of whom are specialists from China and others are Tajik citizens. Tajik citizens receive piece rate pay and earn between 1,000 and 1,500 somoni. Sunday is a day off. Everyone has employment record books and social tax is paid. The compensation is paid in case of accidents.
However, according to the Agency of Social Insurance and Pension under the Government of the Republic of Tajikistan, during nine months, Mavji Bahr LLC paid social taxes only from salaries of 17 employees.
Another brick factory in Hisor informed us that more than 20 people work at this plant officially. However, the data of the the Agency of Social Insurance and Pension show different statistics.
According to Zafar Kamolov, the Chief accountant of Impex Industry LLC in Hisor, their company has been producing bricks for eight years. On average, during the six-month season from May to October, the plant produces 1.5 million bricks. It should be noted that the plant produces about 200-300 thousand bricks daily. The factory employs 22 people, they all work on the basis of an employment contract, and the factory informs the social security service of Hisor about them. Employees are provided with three meals a day, and their salary ranges from 1800 to 2000 somoni, depending on the amount of produced bricks.
According to the Agency of Social Insurance and Pension, Impex Industry LLC in Hisor paid social tax only from 5 employees’ salaries during the first nine months of 2019.
According to Anvar Gulatov, the Head of the Department of Industry, Construction and Communications of the executive body of Hisor, currently, 15 brick factories work in Hisor, which employ 457 people on a contract basis. In the first half of 2019, these enterprises produced more than 17 million bricks, which is 17% higher than the figures for the previous year. Working conditions are good, they are provided with food and work on the basis of an employment contract.
Firuz Davlatzoda, Head of the Department of Industry, Construction and Communications of Rudaki district, told in a telephone interview that there are 22 brick factories in the Rudaki district and during the first six months of 2019 they produced more than three million bricks. The total revenue of these enterprises is more than 14 million somoni. It should be noted that as of July 1, 2019, 1,600 people were employed at these enterprises on the basis of employment contracts and all of them pay taxes. There are cases when companies hire some people for several days without signing an employment contract.
Lawyer Gulchehra Kholmatova says that in accordance with Article 59 of the Tax Code of Tajikistan, social payments of employees are mandatory regardless of the availability of funds in bank accounts and other property of the taxpayer. In the case of hiring an employee on a piece-rate or day-to-day basis, the employer must pay the employee’s social taxes. The lawyer added that, according to the requirements of the Labour Code (Article 67), the average length of working time at enterprises should not exceed 40 hours per week.
Shukurjon Zukhurov, former speaker of the Majlisi Namoyandagon (the Lower Chamber of the Tajik Parliament), on November 22, 2019, during a discussion of the law “On the State Budget of the Republic of Tajikistan for 2020 and Its Forecast for 2021-2022”, stated that currently, most private enterprises pay workers in cash [with no tax deduction – Tr.]. “The reports indicate the salary of 1,000 somoni to evade social tax, while the employee earned 2,000 somoni. The employee is at a loss, but he takes the money and signs a statement that his salary is a thousand somoni to provide for his family. It is easy to detect such cases. The Labour Control Service should consider these cases. If observed closely, it can be seen that people will demand to abandon such payment methods and receive as much money as they earned. Since the company pays social tax at its own expense, it covers it”, added Shukurjon Zukhurov.
Ilhomuddin Ibragimov, a professor at Tajik National University, described the non-payment or evasion of social taxes in brick factories as follows:
In case of underdeclaration the employees’ wages, the company reduces the source of tax (tax base), which leads to the tax payments reduction. The main reason is the high rate of taxes. The Doing Business international ranking, held annually by the World Bank, also confirms this; it indicated that in 2018 the tax burden in the Republic of Tajikistan was 67.5%. According to statistics, in 2014-2017, more than 530 thousand entrepreneurs declared themselves bankrupt.
This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project. The opinions expressed in the article do not reflect the position of the editorial or donor.