A study of the evolution of labor market policies in Armenia: experience of Shiraki marz

Abstract

Contrary to early predictions, persistent unemployment has emerged as one of the most critical outcomes from socialism in Former Soviet Republics (FSU). High unemployment rates, including a growing proportion of long-term unemployed, represent a serious challenge to social welfare systems and policy makers. This paper analyses labor market developments in Armenia focusing on the unemployment in the republic and the dynamics of the active labor market behavior. Macroeconomic reforms and the output collapse initiated dramatic changes in labor markets. Following decades of stability and near zero level unemployment, demand for labor plummeted. Labor force size contracted, and public sector employment fell substantially. Long term unemployment has been growing steadily, comprises a high share of total unemployment, and is increasingly correlated with deep poverty. Labor markets have become key determinants of the winners and losers in the transition process. Young worker and those close to retirement, have been most impacted by reductions in the demand for labor. Gender is not a key dimension of unemployment in most countries, but more women than men have left the labor force. Job losses, leading to unemployment, or labor force withdrawals, have not only meant loss of wages, but also a range of other benefits previously associated with employment. After the referendum in 1991, The Republic of Armenia has undergone several changes. Market oriented reforms were initiated in 1992, and the transition to a market-oriented economy is in progress, although it has been affected by the conflict in Nagorno-Karabakh. Also the devastation of the 1988 earthquake is still felt in the country. The socio-economic changes of the last decade have led to a high level of unemployment in Armenia. There is a need to develop a comprehensive labor and employment policy supported by an appropriate legal framework. Further, the Department of Labor and Employment within the Ministry of Social Security needs to gain knowledge of international structures and organizational methods of Employment Services.