Tuesday, 14 April 2009
RA Prime Minister Tigran Sargsyan attended a conference entitled “The social impact of the global economic crisis in Armenia” in Erebuni-Plaza hotel complex, co-hosted by the RA Ministry of Labor and Social Affairs, the local offices of the United Nations, the World Bank and the IMF.
The conference has the objective of discussing the expected effect of the global crisis with a view to finding ways for mitigating its impact on vulnerable population in Armenia.
RA Prime Minister Tigran Sargsyan’s Opening Address to Conference Participants
“The Social Impact of the Global Economic Crisis on Armenia”
“Dear colleagues, today’s meeting is devoted to an extremely important theme, namely which way the global economic crisis affects social problems and what social influences it may carry along. More than once the government of Republic of Armenia issued statements on social problems. Our anti-crisis program as presented to the National Assembly last November, also comprised an answer to this question. Social problems are of paramount importance to my government, and our actions will be aimed at protecting the vulnerable. Our statements are meant to ensure that welfare spending is prioritized and protected irrespective of financial development scenarios. This concerns not only those 114 thousand vulnerable households which are entitled to social benefits, but also the social system in a broad sense. This is why we had to reconsider our budgetary policy for the year 2009 by operating quarterly shifts in spending items. The purpose was to allow for those risks noticed in the first quarter of 2009 in terms of revenue collection and generate such financial environment which, on the one hand would protect social expenditures and, on the other hand, would prevent us from accumulating further debts. We will finance other items from the budget based on actual revenue level. This means we have switched over to a quarterly budget planning policy with a special focus placed on welfare spending. What will social affaires be like in Armenia this year? It is not a secret that it firstly hits vulnerable households. The most important index by which we estimate this problem is the rate of unemployment. Looking at the rate of unemployment, we can realize which way economic growth affects the welfare system and, quite naturally, we should henceforth keep close watch on this index. The rationale behind our actions and the anti-crisis program is to possibly mitigate the impact of the crisis on job cutbacks. We have received a first blow from mining industry where about 6 thousand workers are employed and quite reasonably we started our anti-crisis action by holding consultations with the investors of this sphere. Extremely high pricing levels were applicable in mining industry during the past few years. With highest pricing levels ever, investments rushed into this sector and doing business proved to be quite profitable in mining industry. Our consultations have shown that there is still some potential to be used: the actual return on investments and the profit margin of investors made it possible for them to refrain from canceling jobs in these enterprises. Wages kept on being partly paid even to such staff as were temporarily idle. The consultations led to an agreement on cutback waiver in 5 of our top enterprises until this summer, which is supposed to considerably ease the State’s social burden.
A primary assistance was rendered to the plant in Kadjaran which is the largest one to be able to cope with the current difficulties and get the equipment needed for implementation of the 2009 program. Moreover, about 200 affiliates of this plant will manage to stay afloat during this period.
As a result, we have managed to decide not only the problem of economic growth, but also a serious social problem. It is understood that in pursuit of the anti-crisis program, the Operative Staff should attach great importance to those enterprises which are seen as system-building and which influence the social situation in the regions and in Syunik marz, for instance. A second area for study was situation with remittances. It is not a secret that the density of individual transfers is extremely high in the Republic of Armenia and any reduction in their level may seriously affect the population’s welfare status. Here, we should strengthen monitoring and reveal such households as may have social problems due to decreased level of remittances. Jointly with the World Bank, we are discussing now how to render the system of social benefits more targeted, what criteria changes may be operated to reveal actually poor families and no misuse is allowed in this area. According to experts, notwithstanding the fact that thanks to our inspections and checks we manage to reveal interesting cases with people applying various methodologies to be eligible for social benefits, notwithstanding, in general the introduced system enables us to identify the actually vulnerable households. Certainly, we have estimations as for the possible increase in the number of these families due to worsened economic indices. The World Bank-supported programs allow for this factor and our actions will bear a pronounced social vector.
We have foreseen about AMD 700 million in the State budget for public work funding purposes. Here too, we face serious problems because the ministry-conducted surveys have shown that these means are spent inefficiently in municipalities. At the latest cabinet session, we decided to change the logic of the system in order to enhance spending effectiveness. This is crucial because we expect to be able to use part of the World Bank-support for the replenishment of these funds enabling that public work allocations are higher of what was planned initially. The logic of changes consists in that municipalities, marz governors should give us sufficient notice of planned works, which must be clear and measurable in order we can provide a follow-up monitoring for these activities. Another problem of top concern to us is the ecological situation. Garbage collection is extremely poor all over the country. It can be addressed through the system of public works. I think our population will be able to judge on the results whether our ongoing efforts have been successful or not. The system of public health services is of utmost importance, and expenditures in this sphere should be sufficiently high for the vulnerable to be protected first of all. With reference to education: the latest ministerial committee session examined a new approach ensuring greater access to free graduate education for teenagers from poor families or those students unable to settle the tuition due to deteriorated financial position. This problem is under close consideration now and I think it would be worthwhile looking at the possibility of radically changing the higher education funding scheme in 2009 to privilege first of all students from vulnerable households.
In conclusion, I wish to put forward another important thesis: social issues especially amid deteriorating economic situation are of top importance in terms of ensuring social cohesion and increasing the country’s economic immunity. I hope today’s debates will be useful to the Government. Also, I would like to note that populism in this case is extremely dangerous as there may show up political figures trying to speculate on the aforementioned objective difficulties for political considerations. This has nothing to do with our drive for addressing the population’s social problems.
Thanking the organizers of this event for their initiative, I am convinced that the discussions and the ideas formulated here will be useful to my government in developing social programs.
Thank you.”
