THE MONOPOLISTIC ECONOMIC STRUCTURE OF ARMENIA
Vestnik Kavkaza, Russia
Aug 29 2013
29 August 2013 - 2:47pm
Susanna Petrosyan, Yerevan, exclusively to VK
The issue of social security of the citizens of Armenia to the
background of the constantly rising prices, including for essential
goods and services, remains one of the most pressing social problems.
Since July 1, the minimum monthly wage increased to 45,000 drams
(about $100) instead of a little more than 35,000. According to the
Minister of Labour, Artem Asatryan, the government has set the target
in the first place to gradually solve the problem of the working
poor citizens. The Minister also expressed the hope that raising the
minimum wage by 10,000 drams ( $25 ) will have a positive impact on
the welfare of the population.
However, 45,000 drams still fall short of the minimum subsistence
level. The size of the latter, according to the National Statistical
Service, in the first quarter of 2013 increased by 6.3 % (compared with
fourth quarter of the previous year), reaching in the end of March 55
347.3 dram. But given the increase since July 7 in payments for gas
and electricity, it is becoming clear that raising the minimum wage by
10,000 could hardly qualitatively affect the welfare of the poor. Even
with the average salary, which is about 145,000 drams ($ 350), with an
increase in tariffs for gas and electricity, the citizens , especially
in winter, will find themselves in a very difficult situation , not
to mention lower wages . Indeed, in addition to payment of utilities,
the public need to eat, dress, ride on transport, pay for school...
The government plans to consider raising pensions, benefits and
salaries of civil servants in 2014. According to official data, in
the country there are about half a million pensioners, the average
pension is 29,800 drams ($ 72). It is difficult to say to what extent
the possible upcoming increase in pensions, allowances and salaries
compensates for the increased expenses. Some experts believe that
the measures taken by the government do not cover the rising costs
of citizens, a clear confirmation of which has become the poverty
rate markedly increased in recent years and the continuing migration.
The reason lies in the structure of the Armenian economy, which is
dominated by monopolies, excluding real competition, and this fact
implies rising prices. In the government's program for 2013-2017 among
the main results expected from the activities of the Cabinet there
are reduction of poverty to 10.8 % , doubling of the minimum wage ,
providing 140-percent ratio of the minimum wage level / poverty rate ,
increasing the average pension to the level of at least 125 % of the
poverty threshold.
However, the state does not have sufficient financial resources for
the preparation and implementation of real social programs because of
the low level of tax collection. In the state budget for 2013 this
figure is projected at 21.88 %. According to the IMF, about 35 % of
Armenia's economy is in the shade, and, according to other sources,
this figure is closer to 50 %. Experts argue that the level of the
"shadow" is equal to the state budget of Armenia, and the existing
tax system jeopardizes the small and medium-sized businesses, while
large taxpayers do not pay all the taxes.
Armenia's economy is becoming weaker. Instead of stimulating the
development of small and medium-sized businesses, the government
is doing everything to protect the interests of large monopolistic
enterprises and banks, encouraging emigration. In particular, since
the beginning of this year, a tax on turnover, which is beneficial
only to enterprises with high profits, has come into force. Low-income
businesses are forced to close.
According to the chairman of the Union of Employers of Armenia,
Gagik Makaryan, a 3.5 % tax on turnover adopted since the beginning
of this year causes resentment among the small and medium business .
According to the former prime minister, the deputy from the opposition
bloc of Armenian National Congress, Grant Bagratya , the Armenian
government is taking steps opposite to its promises to fight against
monopolies , and as a result of its policy large monopolies only
strengthen their position. "It is impossible to stop migration in
a state that is not going to spend money and where the oligarchs
are not going to invest their earnings in the economy. Our hope is
that people will leave the country to earn money and sent it home,
so that the Central Bank does not have any problems with the course
. Armenia depends on the currency like an addict depending on drugs",
Bagratyan said.
Thus, under the current system of monopolies in Armenia there are
no conditions for the implementation of real social programs, since
rising prices due to the lack of true competition neutralize any
social benefits, converting them to zero.
http://vestnikkavkaza.net/articles/economy/44466.html
From: A. Papazian