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2.1. Social Consequences of the Transition Period
Decline in production and deterioration of living standards even below
the critical level for some social groups was a widespread phenomenon
for the CIS countries.
Demographic Situation. In 10 years the reproductive
potential of Armenia's population has dropped by 30-35%. The actual population
number has decreased by 18% from 1988-1998. Official data indicate that
3,820,000 people currently reside in Armenia, however, numerous surveys
of families and households attest that the population amounts only to
3,100,000 people.
In fact, the Ministry of Statistics (MS) presents the estimated number
of the population, without taking into account rather intensive migration
processes, which are hard to reflect statistically. From 1991-1998 approximately
1,100,000 persons left Armenia, 380,000 came back, i.e., the net result
of the migration amounts to 720,000 persons in favor of emigrants (18%
of the RA citizens).1 Even in Nazi Germany, which lost the
war on two fronts in 1939-1945 World War II, the total loss of its population
amounted to about 12%.
The net factor of the population's reproduction decreased by 9%, dropping
from 1,024 to 0,9362 i.e., if in the past, generation-wise
(25 years later), 1000 mothers would yield 1024 mothers, then at present,
1000 mothers would yield only 936. The population of the working-age decreased
by 7%, amounting to 51% of the total population.3 This could
be explained by the fact that 82% of people who emigrated from Armenia
were of working age.
Finally, there is yet another factor which influences demographic reproductive
potential: average life expectancy. According to official data, life expectancy
at present amounts to 74 years; experts count it at between 67-68 years
(in 1988 it was 73 years). Such a discrepancy could be explained by methodological
differences: official statistics calculate mortality tables based on the
official data of the population number, while experts use the actual figures4.
In the second case, age indicators of mortality are 15-20% higher than
the official results. Taking into account that any interpretation of this
factor is open to debate, it would be better to reject it altogether in
the assessment of the demographic potential.
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Table 2.1.* The Ratio of Food Expenditures in MSB
*The author's calculation based on the data of the RoA Ministry
of Statistics, author's own research and other researchers' monitoring
base.
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Consumption Level and Social Stratification. The amount
and structure of consumption are key indicators of the population's living
conditions, standards and quality, differentiated by individual country,
and within a country, by individual groups of the population.
For Armenia, the minimal subsistence budget (MSB) is an unofficially
used indicator that is meant to secure rational consumption patterns,
in the best possible way for those population groups with least financial
resources. In accordance with the current level of consumer prices, the
MSB budget is 66 USD per month; 47% expended on food. The transition period
has seen essential changes in the correlation of these two indicators.
This data indicate that over a short period, the level of the population's
sufficient well-being by the standards of developed countries has changed
its vector towards the level of general poverty by the standards of developing
countries. Nevertheless, the dynamics of the last five years can be considered
somewhat reassuring, as the population's actual consumption has grown
by 60%. As clarification to 1998 data (Table 2.1), it is necessary to
note that the changes in MSB and in the structure of consumption occurred
because about half of education services, 60% of health services and 90%
of housing construction ceased to be free of charge.
To summarize some results, it could be noted that average per capita
incomes amount to 55% of MSB, average salary amounts to about half, the
minimal rates of salaries and pensions make up 8-11%5.
Now that the rate of poverty and impoverishment has stabilized, repeated
monitoring of family consumption patterns indicate that the richest families,
who are within the top 10% income rate in the country, exceed in wealth
by 25-30 times (by decile distribution) those who are among the poorest,
within the lowest 10% of wage earners.
According to expert estimates, the group of well-off families is singled
out from the well-provided group; their percentage does not exceed 5%
of all families, and their average per capita monthly income is about
350 USD.
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Table 2.2.Classification of Families according to Average per
Capita Income
*The author's calculation based on the data of the RoA Ministry
of Statistics, author's own research and other researchers' monitoring
base.
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2.1.1. The Structure and Indicators of the Labor Market
The analyses of the labor market from 1994-1998 reveal a decline in some
of its key indicators. From 1990-1997 the average growth rates of the
population and of the labor force in RA were almost half the average world
rate6. The share of economically active population (EAP) in
the number of total population has sloped down on a year-to-year basis
to 35.6% in 1998. At the same time, the number employed in the industry
sector shrank by 220,000 against 1992. Privatization brought about several
changes in the labor force redistribution. Thus, the share of the employed
in the private sector constituted 66.2% of the total number of those employed
in the economy, whereas it equaled 32.6% for the state sector. To compare,
the figures for 1991 were 30.1% and 67.2%, respectively. The shifts in
various branches of employment, causing the employment rate in industry
and construction to drop and a simultaneous ascent in agriculture and
trade, could be characterized as a quasi-modernization process.
Official statistical data fail to reflect the rate of employment in the
shadow sector of the economy, whilst surveys and experts estimate it to
be around 18% of the EAP.
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Figure 2.1. Dynamics of the Average Annual Rate of Registered
Unemployment (as % of EAP)
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The complicated structure of the labor market is determined by the existence
of its open (formal) and hidden segments. The level of registered unemployment
was 9.3% in 1998 (Figure 2.1). It rose drastically in early 1999 (it was
around 11.1% in May) following the introduction of the family allowance
system, as the status of unemployed is a decisive criterion for the assessment
of a family's degree of vulnerability. Large disparities by regions still
exist, with the highest unemployment rate in the earthquake region (Box
2.1).
Given the continuous slide in demographic indices, a further decline
in workforce supply is expected, especially after 2005 when the number
of young people entering the labor market will be relatively small.
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Box 2.1. The Unemployment Rate in Marzes
As of the end of December 1998, the unemployment rate was particularly
high in the marzes of Shirak (20.6%), Syunik (17.8%), and Lori (14.7%).
By the end of 1998, employment services had registered around 149,000
job seekers. Of them, 134,000 were granted the status of unemployed.
Of the unemployed, 69.4% are women, though their share has relatively
decreased. According to the MS, based on the data from 9,000 enterprises,
about 17% of their employees was on compulsory leave during the
first quarter of 1999. Taking into consideration the results of
recent surveys in a number of enterprises conducted jointly by WB
and MS, the actual unemployment rate may be evaluated in the range
of 26 to 32%7.
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1 Results of migration survey performed by the UN order in
1996, as well as estimates made by the author for 1996-1998.
2 Results of migration behavior of the population performed
by the UN order in 1996.
3See footnote 1.
4 See footnote 2.
5 Data from the RA Ministry of Statistics as well as the author's
own calculation.
6 World Development Report, 1998/1999. The 1998 World
Report
7 Human Development Report. Armenia 97, UNDP, Yerevan, 1997
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