For any country, an important component of its national well-being is ensuring the working capacity of the population. Since the problem of unemployment is one of the most common in Azerbaijan, it is relevant to consider it in the country. The experience of developed countries shows that small and medium-sized enterprises play an important role in providing employment. Therefore, it is relevant to consider the current state of this type of business in the country and identify the degree of its influence on the level of employment. The main methods that were used during the study were analysis, induction, modelling, forecasting. Thus, it was shown that there is a direct interdependence between the state of small and medium-sized enterprises and the level of employment, which indicates the need for the development of this type of business to solve problems related to the labour market. In addition, some difficulties were presented that hinder the qualitative development of this type of business. Among them are problems in legislation, difficulties with financing, institutional imperfection. In addition, the authors propose some methods of solving them, in particular, the introduction of changes in monetary policy, ensuring state financing of small and medium-sized enterprises, changing legislation. The study makes a certain contribution to the development of the theory of economic analysis (highlighting the impact of small and medium-sized businesses on employment in Azerbaijan).

Highlights

• The article aims to analyze the current state of small and medium-sized enterprises (SMEs) in Azerbaijan, examine their influence on employment levels, identify challenges hindering their development, and propose solutions, highlighting the importance of SMEs for employment and contributing to the theory of economic analysis.