Artashes Khurshudyan
    	
Social Security Policy in Armenia.

1. Analysis of the situation.

     Marketing relations aren’t finally ingrained in the economics of the Republic of Armenia  which brings to inefficient operation and management in different branches and spheres, insufficient rates in economic development (especially in industry), slow rise of national and state budget incomes, as result of which state budget is strongly limited and necessary conditions for leading active policy in social security are not created. Moreover, if the process of passing to marketing relations in industrial branches and management began in 1992 and has been developing up to now, in the sphere of security the previous system has collapsed, but the new one is still to be constructed. As a result of a very passive social security policy, social tension in the republic has grown still more. 
    During the transitional period the standard of living in the republic fell to a very low degree, polarization of the society took place and the majority of the population became improvised. The pensioners, old people and single people are in more unfavorable conditions. The living conditions of intelligentsia, parentless children (orphans), invalids have abruptly deteriorated. The living conditions of refugees and people in the zone of disaster are far from being satisfactory. Unemployment rates are growing, more than 50% of the population are indigent. The increasing incidence of poverty among children is particularly worrying as a deprived upbringing may reduce their chances of achieving a better standard of living in their adult life. Poor include not just children, pensioners, single mothers, refugees, and the unemployed-groups that are also strongly represented among the poor in many market economies.
    Inmost transition economies, a significant proportion of the poor consists of workers on low incomes. In Armenia, for instance, 80 percent of all workers earn a wage that is below the subsistence level defined by UN. 
    In the process of constructing a sovereign, democratic, social, legal state it still more important to realize a correct policy of social security, the basis of which is the gradual rise of the standard of living. 

2. The sphere of work and employment. 
 
Description  of the sphere.			 			
    According to the data of the Board of Statistics, State Register and Analysis of the Republic of Armenia the number of employed people in the economics of republic in 1999 was 800.000, including those working on peasant farms 252.000. 
    In the sphere of employment, state policy has been passive, employment service has been registering chiefly the citizens seeking jobs, part of them has obtained unemployment status and has been granted allowances. 
    Republican and regional unemployment programs haven’t been worked out either, precise information concerning migration of manpower is missing, vacant working places haven’t been calculated and occupied, mechanisms of encouragement of middle and small business haven’t been worked out. The high incidence of poverty among workers in Armenia highlights the importance of education for escaping from poverty. Wage differentials between skilled and unskilled workers have tended to increase during the transition, and individuals with secondary and university education tend to be less represented among the poor than individuals with primary or vocational education.   But   there are no necessary bases for respecializing and requalifying the unemployed, the creation of new working places remains on paper, no mechanisms have been worked out to restrain from mass dismissals in privatized enterprises and working places in such enterprises hasn’t been fixed. 

The strategy of the sphere.
The strategic problems of the sphere of employment and work are:                 
a)	Regulation of employment of economically active part of the population:
b)	Legal regulation of labor relations.
To lead an active policy in the sphere of employment, it is necessary to mark out the tactics. The tactics includes the realization of the following measures:   
a)	Working out and realization of regional and republican programs of unemployment on the basis of the analysis and prediction of labor market.
b)	Financial aid to the unemployed for founding their own business. 
c)	Working out mechanisms for encouraging small enterprises and small business the goal of the middle class.
d)	Working out programs of employing and respecialyzing women, young people and invalids who are incompatible in the labor market.

3.Sphere of problems of refugees and migration of population.			     
Description of the sphere.
     Since 1988 about 500.000 refugees from Azerbaijan, Abkhazia and Chechnia have been deported. Since then the government has done everything possible to meet their minimal demands. Nevertheless, a lot of social-economic problems and problems of citizenship are still unsolved. Particularly, the problems of exact distribution of refugees, that of housing, acquiring new professions, integration to social-economic life, passportization and granting citizenship haven’t been solved yet. Migration of the population are not controlled up to this day, there are no laws regulating these processes. Since 1991 emigration has been activated. About 700.000 citizens have left the republic as a result of opening the “iron curtain” and because of economic difficulties in the republic. 
     Very little has been done to restore the zone of disaster and to return the inhabitants to their native places.
      As a result of poor management of migrations of the population and incorrect demographic policy an enormous gulf has appeared in the levels of social economic development between the regions of Armenia and Yerevan.

The strategy of the sphere. 
     The strategic problems in the sphere of refugees and migration of the population are:
a)	Working out legislation concerning the problems of refugees.
b)	Regulation  of the problems of citizenship, housing and employment of refugees.
c)	Working out the management system of migration of the population. 
The solution of above mentioned strategic problems assumes the realization of a series of technical measures during 2000-2001.
The tactics for 2001-2002 assumes the following measures:  
a)	To work out a law of RA “About migration of the population”. The policy led in the sphere of migration of the population is connected with demographic policy and ensues together with the latter from the policy of economic(including regional) law should differentiate between migration according to its direction (internal and outer), reasons(natural, political, economic and social), and organization(voluntary when the decision is made by migrants themselves, compulsory when, by means of  infringing upon citizens rights migration is forced, and by applying violence when even weapons may be used). In this law and other legislative acts not only the rights and obligations of different kinds of migrants should be marked very accurately, but also the state bodies managing migration, social guarantees. 
b)	Realization of complex measures securing integration of refugees to social life (including the teaching of Armenian, acquaintance with national traditions and ceremonies).
c)	Working out Appropriate programs to organize the voluntary return of the citizens emigrated from the republic at the expense of the state. 

4. Sphere of social aid.

Description of the sphere. 
    In the republic the old people, invalids, orphans, single people, indigents, women, homeless children, etc need social aid.
    The average wages, pensions, allowances in the republic are far from being satisfactory and can’t meet the minimal demands of the people. Thanks to latent employment, material support to the relatives living in the RA from other countries, as well as humanitarian aid, social shocks haven’t been recorded long time in the republic. The social services, functioning in the republic since 1993 have been busy with distribution of humanitarian aid and didn’t manage to become real social services. 
    Nothing has been done in medico-social, psycho-pedagogical, restoring and social-domestic spheres.
    Nothing has been done to prevent and eliminate child homelessness and begging. Up to now there isn’t a single (united) restoring system for invalids. 

Strategy of the sphere.
    The strategic problems of the sphere of social aid are:
a)	Working out mechanisms to determine the most indigent families and to find them out. 
b)	Realization of social aid addressed to indigent families: passage from the system of privileges to the system pecuniary aid.
c)	Transference of the axis of social work to the communities, improvement of management of regional services and work, qualified and timely presentation of social services.
 
5. Provisions of the strategy of pension security in the Republic of Armenia.

    The present situation of the pension security system and improvement requirements.
The root socio-political and economic changes taken place in the Republic of Armenia have created new conditions in all spheres of life and have set the imperative for these spheres to follow them.  This is also reflected in the system of pension security where the existing situation imposes to make essential changes for the system improvement.
The present situation of the pensioner security system is conditioned by a number of reasons:
•	Demographic changes
•	Decrease in the volumes of production, employment reduction
•	Decrease of specific gravity of salaries in the structure of the population incomes
•	Existence of black economy
•	Non-insured burdensome of the pensioner security system
•	Imperfect mechanisms of collection of the social insurance mandatory payments (hereinafter social payments).
•	Absence of the social justice principle in the base of pension’s calculation

The demographic changes had great impact on the RA pensioner security system.  The latest immigrants to Armenia were mostly people of the pensioner age or of about that age immigrated to Armenia, and the emigrants were mainly people of workable age.  These occurrences changed the sexual and age homogeneity: the special gravity of people of 60 and more increased considerably which raised social burdensome of the population of workable age and created new difficulties for the pensioner security system
The present average pension in the republic (about 4000 drams) does not satisfy even the minimum of the pensioner’s needs.
The changes in the structure of the population’s incomes have great impact on the formation of the pensioner resources.  The cost of the labor in the republic employment market is too low, which brings to decrease of salary size in the structure of population’s financial incomes.  Along with the decrease of the special gravity of salary among incomes, there has increased the share of incomes of such a social nature (humanitarian aid, money transfers from relatives, charity and other) from which no social payments are paid.

One of the factors having negative influence on the RA pensioner security system is the presence of black economy.  This limits greatly possibility for the RA social insurance state fund (hereinafter fund) to collect the social payments which causes non-sufficiency of financial resources.  This is also conditioned by the long-term debts of social insurers to the fund.

Summarizing this we can conclude that the RA pensions security system needs serious improvement.  It is necessary that this system comply with the changes taking place in our society and that it corresponds to the insurance principles, which is conditioned by presence of various types of ownership, and by personal responsibility of each citizen in the issue of ensuring the elderly.  

In spite of all positive changes taken place, the situation with the pension’s security still remains tight, as the changes in the pension security system are much slower than the dynamics of the social and economic life of the republic.

The ideology of pension’s reforms undoubtedly belongs to the symbols of building a social state.  It is necessary to establish totally new institutions of pension security which will take into account changes in the economic and social conditions of the population, diversity of organizational and legal and working activity forms, the expected average length of life, presence of various social dangers.

Objectives and principles of improvement of the pension security system
   The main objectives of improvement of the pension system are:

•	fulfillment of the right for social security of each citizen for the elderly, veterans, loss of the only family supporter and other cases approved by the RA Constitution,
•	compliance of the pension security system with the RA changing economic conditions,
•	increase of efficiency of the use and re-allocation of the resources directed to the pension payment,

For implementation of the objectives mentioned, the following principles should be put on the basis of pension system improvement:

•	combination of principles of social equality and social impartiality,
•	distinguishing the responsibilities of the system participants,
•	provision of social concord of generations, economic branches, areas and among different organizations,

The present strategy suggests starting changes in this area with improvement of the current system.  This assumes investment of such norms and provisions into the pension’s legislation, which will increase efficiency of utilizing the resources provided to the pension security.

The ways of improvement of the pension security system are as follows:
1.	transition from the state budget for financing the costs non-related to the payment of work (insurance) pensions, what will enable for the population to clearly distinguish between the pension insurance and pension security in the system of social protection 
2.	pension assignment for disability to people having professional disease is regulated by approval of the RA Law on “Mandatory insurance from bad accidents during production and professional diseases” provided by the RA Law on Social Insurance 
3.	regulation of the systems of pension security with privileged conditions and long-term service 
4.	development of special measures for expanding the circle of people making social payments and through this increasing the calculation base of mandatory social security payments,
5.	investment of the individual (personalized) registration system, which will enable to calculate each individual contribution in the pension system,
6.	to provide financial stability of the pension system gradual transmission to the pension’s general system from the common distribution system inputting accumulation mechanisms in the pension insurance system,
7.	improvement of the pension security management system and clarification of the legal status of the fund.