Economic Affairs, Vol. 68(Special Issue), pp. 665-671, May 2023 DOI: 10.46852/0424-2513.2s.2023.6 How to cite this article: Aliyev, T., Aliyeva, S. and Aliyev, R. (2023). Te Impact of Small and Medium-Sized Enterprises on the Level of Employment. Econ. Aff., 68(Special Issue): 665-671. Source of Support: None; Confict of Interest: None Review Paper Te Impact of Small and Medium-Sized Enterprises on the Level of Employment Teyyub Aliyev 1* , Shams Aliyeva 2 and Ramil Aliyev 3 1 Department of Industrial Economics, Azerbaijan State Oil and Industry University, Baku, Azerbaijan 2 Department of Management, Azerbaijan State Oil and Industry University, Baku, Azerbaijan 3 Department of Business Environment Regulation and Entrepreneurship Development, Institute of Economics of the Ministry of Science and Education of Azerbaijan, Baku, Azerbaijan *Corresponding author: teyyubaliyev035@gmail.com (ORCID ID: 0000-0002-4623-3999) Received: 23-01-2023 Revised: 31-04-2023 Accepted: 07-05-2023 ABSTRACT 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 infuence 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 difculties were presented that hinder the qualitative development of this type of business. Among them are problems in legislation, difculties with fnancing, institutional imperfection. In addition, the authors propose some methods of solving them, in particular, the introduction of changes in monetary policy, ensuring state fnancing 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 m The article aims to analyze the current state of small and medium-sized enterprises (SMEs) in Azerbaijan, examine their infuence 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. Keywords: Labour Market, Macroeconomics, State Management, Type of Business, Working Capacity In the modern world, one of the main goals of most countries is to increase the employment of the able-bodied population and improve their standard of living in general (Hult et al. 2020; Lohmann et al. 2020). A new solution was found in highly developed countries to achieve this goal, namely the creation of jobs in small and medium-sized enterprises (SMEs) (Albalushi and Naqshbandi, 2022; AL-Tamimi and Jaradat, 2019). Therefore, the analysis of the impact of SME development on the level of employment in diferent countries is currently quite relevant. As part of this work, a study was conducted for Azerbaijan. This is due to the fact that in this country one of the main socio-economic problems