General developments of labor market in Armenia
By Eliza Matevosyan
Economist
The creation of mechanisms aimed at the development of the labor market, the implementation of effective policies, and reforms are important prerequisites for achieving economic success in Armenia. They also promote the development, stability, expansion, and effective use of its labor potential.
The basis of this claim is the latest available data, mainly for 2022 since the summary indicators of the labor market for 2023 have not been published yet.
In light of the double-digit economic growth of 12.6% registered in 2022 in Armenia, positive developments were also observed in the labor market: the unemployment rate decreased, while employment and wages rose.
Thus, the average monthly number of officially registered unemployed people decreased by 12.4% in 2022, compared to the same period last year, totaling 53,420 people. In 2022, the unemployment rate decreased by 2% to reach 13.5%, compared to 2021, and the number of unemployed decreased by 11.3%, counting up to 176,600 people. On the other hand, during the observed period, the number of hired workers increased by 5.4%, to which contributed both the formation of new organizations (the number of organizations increased by 11.2% for the given period, employing 61,386 people), as well as an increase in the number of tourists and labor migrants, especially in the IT sector, arriving in the Republic of Armenia (RA).
To characterize the labor market, it is important to refer to study salaries and their trends in a given country, which is a key characteristic that illuminates the social security of that country. According to 2022 figures, the average monthly nominal salary in RA was 235,576 Armenian dram (AMD) (equaling $541). This showed a 15.5% increase compared to the previous year, mainly due to a 19% increase in the wages paid by Armenia’s private sector and a 4.3% increase in the wages paid by its public sector.
The growth of wages is mainly owing to the growth of salaries in the fields of
Information technologies,
Wholesale and retail trade,
And financial and insurance
activities.
Against the inflation of 8.6%, the real salary increased by 6.3% in Armenia. It is noteworthy that in 2022, compared to the previous year, the levels of average monthly nominal wages increased in all provinces of Armenia, except Lori Province. However, the growth rate was particularly significant in Tavush Province by 41.1% and in Yerevan by 23.1%.
However, attention should be paid to the fact that the salary level in Tavush Province was inferior to four other provinces in absolute terms during the mentioned period. On the other hand, the highest salary level was in Syunik Province, which exceeded the rate registered in the capital by more than 58%, amounting to 427,040 AMD.
It is extremely important for the well-being of society to constantly focus on the study of labor market issues, raising them, as well as taking and implementing measures aimed at their regulation. In this context, it is particularly important to note that one of the urgent and outstanding problems of Armenia’s labor market continues to be the uneven development of the labor market by territorial units (by RA provinces and Yerevan), particularly, the concentration of jobs and labor in the capital.
In 2022, about 36% of the labor force was concentrated in Yerevan, instead of the 29.6% registered in the previous year. It should also be noted that in 2022, more than 61% of the labor force was allocated to Yerevan and other cities. Furthermore, about 35% of the total employed people belong to Yerevan.
Attention should be paid to the fact that despite such a concentration of labor resources, Yerevan is also the leader in terms of the share of unemployed people, which was about 44% in 2022. It is noteworthy that provinces with a large share of labor resources are also distinguished by a large share of unemployment.
On the other hand, from the point of view of studying the distribution of labor resources, it is extremely important to take into account the population density indicator. Here, it should be noted that the level of urbanization in Armenia continues to be quite high, as a result of which the population density has increased to 1 per square mile. Thus, the capital is the most densely populated area as of 2022: about 64% of the total population was concentrated in Yerevan, while the indicator stood at 9% in the most populated province.
An integral part of the labor market study is the observation of labor migration, as well as the ethnic composition of the labor market in the country, since they have a direct impact on the composition and structure of labor resources, as well as the professional quality of the workforce. Therefore, it should be noted that people from Armenia mainly go to Russia, Belarus, Kazakhstan, and other CIS countries as well as some European countries for work. And people come to work in Armenia mainly from India, Iran, and Ukraine. Recently, there has been a sharp increase in the inflow of citizens from India, Iran, and Russia to Armenia.
To sum up, we can state that the features and problems of the Armenian labor market are mainly as follows: Firstly, the geographical location of the territorial units and socio-economic features reveal disparities in development and, secondly, both the labor market and economic development are mainly concentrated in Yerevan. Along with all the above-mentioned, the study and analysis of the main indicators characterizing the labor market show that currently, there are positive trends in the Armenian labor market. These positive trends are also reflected in a decrease in the unemployment rate and an increase in employment in the country.