Cause of record number of jobs in Armenia: expert opinion
Record number of jobs in Armenia
He also said that compared to May 2018, when his “revolutionary” government came to power, the number of jobs had increased by 143,000. Pashinyan regards them as new jobs, but warns that it is not known how many are really new, and how many already existed but have been made official.
According to economist Narek Karapetyan, three factors have led to this — economic recovery, the relocation of thousands of people and organizations from Russia to Armenia, and making unofficial jobs official.
About new jobs in Armenia, the need to increase the productivity of companies, and expert assessment of the situation.
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“In a way, we are modest”
During a discussion in parliament, Pashinyan stated that believes that his government modestly avoids overstating its success, while in other countries of the world in a similar situation a more assertive statement would have been made: “In four years and four months, the government created 143,000 new jobs.”
“And we say that the methodology is unknown, we do not know how many jobs have been created, how many have come out of the shadows. But even if they came out of the shadows, these jobs did not exist,” Pashinyan said.
According to the prime minister, the following factors had a significant impact on the increase in the number of jobs:
- creation of opportunities, favorable conditions for business,
- fighting under the table work,
- tax reforms.
“I must also say that the exceptional changes that have taken place in relations between the government and business have played a cardinal role,” Pashinyan emphasized.
The wage fund increased, average salary increased
Earlier, during a government meeting, Pashinyan said that the wage fund had increased by 73% compared to 2018. He presented growth figures for the last year as well:
“In September 2022, all salaries paid to all employees increased by 33 billion 430 million drams [almost $86 million], or 23.5% compared to September 2021. I think this is a very important indicator for the year.”
According to the Prime Minister, over the past year the average salary paid to one employee had increased by 35,769 drams ($91), or 16.4%, and compared to 2018, by 80,077 drams ($205), or 46.1%. .
“The numbers are very important and impressive, and I hope that we will continue to grow at the same pace,” Pashinyan said.
“Need to worry about performance”
The Minister of Economy of Armenia believes that although talking about unemployment is important, it is also critical to work on business productivity. According to Vahan Kerobyan, Armenia has a long way to go to reach the index of developed countries.
“In 2021, every working citizen of Armenia contributed only $7 per hour to GDP. This is about seven-eight times less than the average of the OECD countries (Organization for Economic Cooperation and Development). And there are countries with a productivity of more than $100,” he said.
According to Kerobyan, increasing the productivity of companies will indirectly lead to more jobs, as these organizations will need more employees to face increased competition and production volumes.
Speaking of the record number of registered jobs, he said that there had never been such a growth rate before. This was possible, in his opinion, due to the fact that new companies were created and the number of states increased. He says that the decline occurred only in the retail sector, while growth was recorded in almost all areas. The Minister focused on the indicators in the field of high technologies:
“The greatest growth is observed in the sphere of high technologies. There were 16,000 employees at the beginning of the year, and now there are 24,500. We are talking about both foreigners who moved to Armenia and locals.”
Economist and expert of the Amberd research center Narek Karapetyan named three factors that created a positive effect on the number of employees:
- economic recovery, the formation of growth trends on a sustainable basis,
- relocation from Russia to Armenia of people and organizations (due to the war in Ukraine),
- official registration of under the table work
Karapetyan recalled that according to the government’s fiscal policy, an equivalent income tax rate is set, which “approaches and equals the income tax rate.”
“Under these conditions, organizations have no particular motivation to underestimate wages, hide employees, because additional savings on the balance sheet will be reflected in profits, and there will be no difference in tax payments.”
Karapetyan also says that the most impressive figures are in the high-tech sector. According to statistics, the number of people receiving salaries of 2 million drams ($5,130) or more has increased by about 4,000 since the beginning of the year. In addition to the high-tech sector, this rate if pay is received by top managers of some organizations.
“The average salary of non-resident workers who moved to the Armenian economy since the beginning of the year is 1 million drams ($2,570). We are talking about more than 10,000 people. This provides high tax revenues, this is a reward that means stable income and consumption of services,” the Karapetyan emphasized.
According to Karapetyan, in the short term,the impact of productivity growth in companies will be negative. He believes that the Minister of Economy Vahan Kerobyan, referring to this issue, had in mind long-term trends.
“When the productivity of the economy improves, we become more competitive in global and regional markets. We manage to create more demand for our products, secure markets, increase volumes and, thanks to the multiplier effect, and increase the number of employees through increased production volumes.”
Karapetyan finds it difficult to say what measures can be taken to keep non-resident employees in Armenia. He says that the issue is competition between the countries of the region:
“The business environment and living conditions in Armenia are favorable, but if the Russians prefer another country, decide to move, then they have found better conditions. It is unlikely that any measures can change the situation.”
Record number of jobs in Armenia