NEGATIVE EFFECTS OF INFLATION ON INCOME OF EMPLOYEES IN THE REPUBLIC OF ARMENIA

The high level of inflation that has persisted for a long time in the Republic of Armenia has a negative impact on the standard of living of workers, as their incomes are significantly reduced, while expenses are increasing.

Inflation primarily hits the socially unprotected segments of the population, in the group of which a large share of the consumer basket is food.

According to the Statistical Committee of the Republic of Armenia for 2021 (Social View and Poverty of Armenia, 2022) among the consumer expenditures of the population, food expenditures account for 47.1%, for services - 27.9%. Therefore, the bulk of the population's income is spent on food and services, for which a high level of inflation has been recorded.

In January-December 2022 compared to January-December 2021 in the Republic of Armenia inflation was recorded at the level of 8.6%. Prices for food and non-alcoholic beverages increased by 13%, and in December 2022 compared to December 2021. - by 10%, in particular, the price of bread went up by 14.3%, flour by 7.6%, cheese and cottage cheese by 19.4%, butter by 4%, pasta by 24.5%, beef by 25, 3%, fruits by 10.9%, vegetables by 2.1%. Egg prices in December 2022 compared to December 2021 decreased by 6.2%, sunflower oil - by 4.2%.

Prices for services in December 2022 increased by 7.2% compared to the same month last year.

Consumer price index in 2022 percentage change each month compared to the corresponding month of the previous year

I

II

III

IV

V

VI

VII

VIII

IX

X

XI

  7.1%

6.5%

7.4%

8.4%

9.0%

 10.3%

9.3%

9.1%

9.9%

9.5%

8.8%

The highest consumer price index in January-December 2022 was recorded in June - 10.3%.

Rising prices for consumer goods and services lead to a decrease in real wages.

In 13 out of 19 sectors of the republic's economy, the average monthly nominal wage is lower than the average monthly nominal wage in the republic, which is 247,989 drams.

         

 

Average monthly nominal wages by institutional industries economy and types of economic activity,

2022 November

(Statistical Committee of the Republic of Armenia "Socio-economic

situation of the Republic of Armenia in January-November 2022”)

 

  Total

  dram

 

 %, 2022г. / 2021г.

 

  Total

247 989

122.6

Agriculture, forestry and fisheries

146 019

109.6

Mining and quarrying

447 927

103.4

Manufacturing industry

196 935

112.5

 Supply of electricity, gas, steam and conditioned air

241 356

105.7

 Water supply, sewerage, waste treatment and recovery of secondary raw materials

182 311

104.7

Construction

248 195

118.0

 Wholesale and retail trade, car and motorcycle repair

171 137

114.7

Transportation and warehousing

248 329

115.5

Organization of accommodation and catering

126 876

118.9

Information and communication

816 535

144.2

of which - information technology

988 630

138.5

Financial and insurance activities

704 094

169.9

Operations with real estate

165 983

114.1

Professional, scientific and technical activities

255 151

133.3

of which – research and development

206 473

130.8

Administrative and support activities

169 305

123.0

Public administration and defense, compulsory social security

324 699

113.1

  Education

136 205

106.6

Public health and social services

216 460

94.6

  Culture, entertainment and recreation

199 160

109.1

of which – culture and art

139 624

105.7

Provision of other types of services

 141 740

117.6

 

 

 

In November 2022, an increase in the average monthly nominal wage by 22.6% was recorded compared to November 2021, while a decrease in the average monthly nominal wage was recorded in the Health and Social Services industry. In some sectors, the growth of average wages was below the inflation rate registered in the republic - 8.8%, therefore, real wages decreased in the following sectors: mining and development of deposits, supply of electricity, gas, steam and good quality air, water supply, water supply , sewerage, waste management and recycling, education, culture and art.

The lowest average monthly nominal wage was recorded in Gegharkunik region, which, as of the third quarter of 2022 amounted to 128,663 drams.

The highest average monthly nominal wage was registered in Syunik region - 276,580 drams.

The average monthly nominal wage in Yerevan was 271,443 drams.

Raising wages in the republic does not contribute to raising the standard of living of the population and reducing poverty, since in the case of basic necessities, especially food, inflation significantly exceeds the growth of average wages.

According to the RA Statistical Committee, in 2020 the poverty rate in Armenia was estimated at 27%, which increased by 0.6% compared to 2019, and in 2021 it amounted to 26.5%, having decreased by 0.5 percentage points compared to the previous year, and the extreme poverty rate was 1.5 percent, registering an increase of 0.7 percent compared to 2020.

The poverty rate in Yerevan was estimated at 15.9% and in rural areas at 33.0%.

The highest poverty rate was recorded in the Gegharkunik region - 49.1%, and the lowest poverty rate in the Syunik region - 2.8%.

Among the poor there are also working people who, even if they have a job, are not able to provide for the minimum needs of themselves and their family members.

 

 

      Poverty Level

 

Poor   %

Extremly

poor

2017г.

25.7

1.4

2018г.

23.5

1.0

2019г.

26.4

1.4

2020г.

27.0

0.7

2021г.

26.5

1.5

 

In order to reduce the level of poverty, reduce the ratio between the minimum and average wages, as well as improve the living standards of the population, in accordance with the RA Law on Amendments to the Law "On the Minimum Monthly Wage" in the Republic of Armenia from January 1, 2023. the minimum monthly wage is set at 75,000 drams instead of 68,000 drams.

An increase in the minimum wage is welcome, but in reality, with a high level of inflation, its purchasing power is reduced.

In 58 out of 99 countries surveyed by the International Labor Organization (Belgium, France, Portugal, Bulgaria, Czech Republic, Hungary, Poland, Ireland, Finland, Japan, etc.), inflation and cost of living are taken into account when calculating the minimum wage.

There is no concept of “cost of living” in the Republic of Armenia.

According to the information report of the RA Statistical Committee "Socio-economic situation of the Republic of Armenia in January-December 2022." the cost of the minimum consumer basket, calculated according to the methodology of the Ministry of Health of the Republic of Armenia in 2022 at the average current prices of the third quarter, amounted to 76,459.2 drams, which is higher than the minimum wage.

The cost of the minimum consumer basket, calculated according to the methodology of the World Bank in 2022. in average current prices of the III quarter amounted to 58,586.7 drams.

The minimum consumer baskets calculated by both methods are not approved by any legislative act.

In order to reduce poverty, improve the living standards of workers and their families, as well as ensure decent work in the country, it is necessary to adopt the wage indexation procedure, which is defined by Article 182 of the  Labor Code  of the Republic of Armenia (adopted in 2004).

Last news

The ILO has formally agreed on a definition for a living wage – an essential part of the New Social Contract – to reshape the global economy to serve the interests of working people.

The agreement, reached in February during a tripartite meeting of experts on wage policies, was endorsed by the ILO’s Governing Body at its session on 13 …
29/03/2024

TRADE UNION SPORTS - 2024

On March 7-10, the Confederation of Trade Unions of Armenia organized a trade union and sports event “Trade Union Sports 2024” in Tsaghkadzor, durin…
26/03/2024

On March 14, 2024, the 4th meeting of the EU-Armenia Civil Society Platform took place in Yerevan.

The meeting was attended by EU Ambassador to Armenia Vasilis Maragos, Advisor to the Deputy Prime Minister Karen Nazaryan, and Head of the European Department o…
19/03/2024

The President of the Confederation of Trade Unions of Armenia was in the studio of the program “Good Morning”

From March 7 to 10, the Confederation of Trade Unions of Armenia organized a trade union sports event in Tsakhkadzor, during which competitions were held in fiv…
18/03/2024

Visit of the President of the Confederation of Trade Unions of Armenia to the Hadrut Children and Youth Creative Center

President of the Confederation of Trade Unions of Armenia Elen Manaseryan and representative of the Artsakh trade union Ara Ghagramanyan visited the Hadrut Chil…
14/03/2024
Videos
Social partners
International partners