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Minimum Math: Wages raise would not improve the purchasing power of
citizens amid the ongoing rise of prices
ECONOMY | 07.06.13 | 15:29
Photo: www.gov.am
By JULIA HAKOBYAN
ArmeniaNow Deputy Editor
The Armenian government's decision to raise the minimum wage by 30
percent may fall short of covering expected cost of living increases
brought on by gas tariff hike and related expenses.
On June 6 the Armenian government approved a draft law on increasing
the minimum wage by 10,000 drams ($24) from current 35,000 (about $84)
to 45,000 drams (about $108). As Artem Asatryan, Armenia's Minister of
Labor and Social Issues said, the 45,000 drams is the minimum salary
that is above the poverty threshold, which is set by law for workers
without qualifications.
According to Prime Minister Tigran Sargsyan the government plans to
make a considerable raise in the minimum wage before 2017 and the next
increase will be in January 2014.
The minimum wage was last raised in Armenia at the beginning of this
year - from 32,500 drams (about $78) to 35,000 drams (about $84).In
January-March this year, the average monthly wage in the country was
140,000 dram ( $340), an increase of 3.8 percent compared to the same
period last year.
Still, the wage increase does not improve living standards, as the
rise in prices outstrips the growth of wages and salaries that remain
still very low are not capable of providing a decent living.
Only within the past year, the price for bread was increase by 10
percent, the prices for dairy products rose by 7 percent, and a four
percent increase in the price of meat was observed since May 2012.
According to Confederation of Trade Unions of Armenia, the country
lacks a system of aligning the minimum wage in accordance with the
conventions of the International Labour Organization. The minimum wage
is set arbitrarily, based on the capabilities of the budget, while the
size of the minimum consumer budget should be taken as a base while
determining the level of poverty.
(At Thursday's cabinet meeting the government said that an additional
6 billion drams (about $14.5 million) will be required from the state
budget to support the minimum wage increase from July, however the
government did not specify where from it intends to take an additional
sum to raise the minimum wage.)
According to economist Vardan Bostanjyan, raising the minimum wage to
$108 will not relieve people's social burden, taking into account the
cost of living in Armenia. At a press conference on July 6 Bostanjyan
said that the minimum wage should be $200-$250 and should be
acceptable in the context of increasing prices.
In addition to the rise in prices, unemployment remains widespread in
Armenia. According to official data, the unemployment rate in Armenia
was reduced to 9% and makes 61,000, but the actual number of
unemployed is much higher than the number of officially registered. (
for example, rural residents are considered employed if they own
land). Besides, some experts say that the number of unemployed reduced
due to the increased rate of migration and in reality, in the labor
market there is a continued mismatch between demand and supply.
According to Anna Arshakyan, Á social worker at "Anahit", employment
agency, most people who apply to them look for a job with a salary
higher than minimum wage and those who ask for the $100 wage job only
want a part-time job.
"People may agree to a $100 wage if the work place is close to their
home and they won't need to pay for transportation, or will have lunch
at home. In all other cases, people who apply to our agency, search
for a job of at least with $200."
citizens amid the ongoing rise of prices
ECONOMY | 07.06.13 | 15:29
Photo: www.gov.am
By JULIA HAKOBYAN
ArmeniaNow Deputy Editor
The Armenian government's decision to raise the minimum wage by 30
percent may fall short of covering expected cost of living increases
brought on by gas tariff hike and related expenses.
On June 6 the Armenian government approved a draft law on increasing
the minimum wage by 10,000 drams ($24) from current 35,000 (about $84)
to 45,000 drams (about $108). As Artem Asatryan, Armenia's Minister of
Labor and Social Issues said, the 45,000 drams is the minimum salary
that is above the poverty threshold, which is set by law for workers
without qualifications.
According to Prime Minister Tigran Sargsyan the government plans to
make a considerable raise in the minimum wage before 2017 and the next
increase will be in January 2014.
The minimum wage was last raised in Armenia at the beginning of this
year - from 32,500 drams (about $78) to 35,000 drams (about $84).In
January-March this year, the average monthly wage in the country was
140,000 dram ( $340), an increase of 3.8 percent compared to the same
period last year.
Still, the wage increase does not improve living standards, as the
rise in prices outstrips the growth of wages and salaries that remain
still very low are not capable of providing a decent living.
Only within the past year, the price for bread was increase by 10
percent, the prices for dairy products rose by 7 percent, and a four
percent increase in the price of meat was observed since May 2012.
According to Confederation of Trade Unions of Armenia, the country
lacks a system of aligning the minimum wage in accordance with the
conventions of the International Labour Organization. The minimum wage
is set arbitrarily, based on the capabilities of the budget, while the
size of the minimum consumer budget should be taken as a base while
determining the level of poverty.
(At Thursday's cabinet meeting the government said that an additional
6 billion drams (about $14.5 million) will be required from the state
budget to support the minimum wage increase from July, however the
government did not specify where from it intends to take an additional
sum to raise the minimum wage.)
According to economist Vardan Bostanjyan, raising the minimum wage to
$108 will not relieve people's social burden, taking into account the
cost of living in Armenia. At a press conference on July 6 Bostanjyan
said that the minimum wage should be $200-$250 and should be
acceptable in the context of increasing prices.
In addition to the rise in prices, unemployment remains widespread in
Armenia. According to official data, the unemployment rate in Armenia
was reduced to 9% and makes 61,000, but the actual number of
unemployed is much higher than the number of officially registered. (
for example, rural residents are considered employed if they own
land). Besides, some experts say that the number of unemployed reduced
due to the increased rate of migration and in reality, in the labor
market there is a continued mismatch between demand and supply.
According to Anna Arshakyan, Á social worker at "Anahit", employment
agency, most people who apply to them look for a job with a salary
higher than minimum wage and those who ask for the $100 wage job only
want a part-time job.
"People may agree to a $100 wage if the work place is close to their
home and they won't need to pay for transportation, or will have lunch
at home. In all other cases, people who apply to our agency, search
for a job of at least with $200."