Social Reforms in Armenia

The Hrayr Maroukhian Foundation with the support of the Friedrich Ebert Foundation will prepare a study entitled, “Social Reforms in Armenia.” The purpose of this study will be to present an alternative vision for social security in the country by developing feasible, financially sustainable policy options in the following four policy areas:

a) Housing b) Unemployment c) Health

Each policy study area will have a Working Group of experts with a Team Leader. At the end of the study, the Hrayr Maroukhian Foundation will publish the final paper and present it to government officials, political parties, academics, non-governmental organizations and foundations and international organizations at a conference in November 2011 in Yerevan.

a) Housing Issues and the Prospects for Securing Social Housing in Armenia

Research Objectives and Goals

The objective of the research stems from a number of inter-connected problems Armenia is currently facing – economic, social, environmental, demographic, and from the necessity of resolving issues in urban planning and of disproportionate development of the regions and communities.

Presently, the housing problem is one of the most critical issues in Armenia. The absence of affordable, quality and well-managed housing has brought forth social and economic problems in Armenia. Among those problems, the following must be underscored – an aging population, the percentage of young families, overcrowded and old residential complexes, rise in out-migration (work-related and permanent), the low quality of social and public services, and the deterioration of the municipal housing economy.

The unprecedented increase of construction in the housing market of recent years in the Republic of Armenia has not been able to address or resolve housing issues for low or middle income families.

The urgency of the problem is conditioned by the absence of any state policy in Armenia of guaranteeing/securing social housing. In recent years, the state’s housing policy has been limited to only certain groups – homeless population from the earthquake zone (Spitak, 1988), military and academic staff whose housing issues have only been partially resolved.

This study is important because the government has not expressed readiness to develop a strategy for housing guarantees/provisions.

The goal of the proposed study is to implement the populations’ constitutional right to the improvement of their housing conditions; to secure affordable and quality housing to Armenia’s low and middle income families with their appropriate services; to create significant conditions to deflect the critical demographic situation in the country; to guarantee the security and long-term development of housing eco-systems including designing harmonic living spaces; to overcome the disproportionate development in the regions and finally to support regional development.

The research will give Armenia alternative approaches for organizing social housing mechanisms including rental units, cooperatives, and sales. Securing social housing will make it affordable for low and middle income families to rent or even purchase housing, realize state investments, include local population in building activities, and production of locally produced construction material.

As a result of the study, the Republic of Armenia will have a model upon which to resolve issues of housing and the securing of social housing for the population. The proposed policy will have several important results.

Addressing the serious issue of housing will have an impact on encouraging marriages and the birthrate. It will help decrease out migration and will provide better opportunities for migration to the country. It will help in the solidification of human capital and will be one of the prerequisites for significant development in the country.

b) Employment Sector Reform in the Republic of Armenia

Following the collapse of the Soviet Union, Armenia came face to face with critical social and economic problems. As a result of shifts to the political, social and economic systems, problems such as unemployment and poverty emerged – phenomena which hereto for were unheard of in Armenia. The high levels of unemployment and poverty became a reality for a large swath of Armenian society.

Following independence the social-economic and political changes naturally had an effect on the population’s demographic which witnessed falling birth rates (compared to 1990) and out-migration, which left their mark on the make-up of society.

The other important characteristic of the labor market, which basically occupies a key place among the indicators of social economic phenomena, refers to the levels and structure of unemployment. Not only did the demand of the labor market shrink during the transition years, but the demand of the labor force was subjected to significant changes. This resulted in a disparity of supply and demand in the labor force, which in turn resulted in the emerging and deepening of structural unemployment.

The transition years also had an effect on the education system, which resulted in an imbalance between the labor force and the capacity and ability of the educational system to supply the labor market with the required specialists. This also presents as one of the main reasons for the disconnect between the supply and demand of the labor market.

One of the features characterizing the labor market is that the decline in jobs and the rise of unemployment do not correspond with macroeconomic trends. The analysis of economic indicators according to official statistics is that economic growth has been secured in Armenia not because of a rise in the level of employment but because of a rise in productivity. On the other hand however, economic growth was reflected not so much because of a rise in employment levels but because of a rise in income indexes.

In general, there is a great imbalance today in the labor market in terms of supply and demand, high levels of unemployment and shadow employment, and an unregulated out-migration of the labor force. This massive labor migration will have a long-term impact on the labor supply and in turn, on economic, social and demographic developments in general.

Taking into consideration the social and economic situation and trends in Armenia and utilizing international experience in labor/employment policies, it is imperative to design a multifaceted strategic policy for employment reforms.

As a result of the study, the report will include a model for a new development strategy for the proposed policy on employment, including principles, fundamental issues, direction and priorities of related agencies, corresponding legislation, organizational and institutional reforms, serves and their delivery mechanisms, and the expected social economic results of the potential beneficiaries of those services, their monitoring and evaluation systems, information assurance system, cooperation within the framework of social partnership and the fundamental mechanism in employment services sector and implementation of key measures.

c) Health Care System Development Strategy in Armenia in Short and Long Term Perspectives

Although there has been a more than 15 year period of health care sphere reforms and a permanent increase of state budget allocation for health care in Armenia, the system still needs significant improvement.

In conditions of decentralization and privatization of the health system, government regulative and management tools are very weak and there is an absence of quality assurance and control mechanisms.

State budget medical services (hospitals and outpatient care) financing system is not guaranteed free of charge access to those services. Taking into consideration the fact that a huge part of the population has low incomes and vulnerable groups of the population meet financial barriers in getting medical aid and services.

Preventative medical services need to dominate in terms of provision of medical care. Secondary and tertiary services are weak in terms of usage of modern medical equipment and technologies (diagnostic and treatments).

In addition, healthy lifestyles and public health education is in a very low stage. Specialized care dominates vs. prevention.

Objectives of the strategy:

Health care system belongs to the social sphere of countries. That is why a government takes responsibility to develop and to implement a socially oriented health policy and to ensure provision of accessible and free-of-charge medical services equally to all groups in society.

The main objective of this strategy is to implement basic principles of social equity and solidarity in the health care sector. Government takes responsibility for transparency of its policy and for guaranteeing the implementation of its policy in the sector.

Development of the system in terms of provision of accessible and high qualified medical services and the health sector services’ consumption (utilization) ideology and mechanism must be improved in terms of guaranteeing basic social principles.

The strategy aimed to be implemented for ten years and is distinguished in two phases: short term for upcoming five years and long term for the next five years.