Armenia is a landlocked country in Eastern Europe that saw a steady decrease in poverty after the dissolution of the Soviet Union. However, Armenia was hit quite hard by the recession in 2008, and the economy is still trying to right itself. Many families in Armenia struggle to find work and affordable necessities. The poverty rate in Armenia is 29.8 percent. The main causes of poverty in Armenia are a lack of jobs within the country, a high unemployment rate and a weak agricultural system.
Migration of Workforce
One of the main causes of poverty in Armenia is a lack of jobs. This is demonstrated through the number of workers who emigrate. The majority of men leave the country to earn wages in Russia. Some researchers estimate that almost 14 percent of the Armenian population has emigrated to find employment elsewhere.
In order to combat this problem, Armenia needs to create more job opportunities within the country. Currently, one-fourth of jobs in Armenia are low-paying jobs; thus, Armenia needs to create more middle-income positions. Formal businesses want the government to impose more regulations so that informal employers do not have advantages. If the Armenian government intervened, these businesses could create many more jobs.
Unemployment and poverty in Armenia are closely linked. In 2010, when the head of the household was unemployed there was a 50 percent chance they lived below the poverty line. The reported unemployment rate in Armenia is 16 percent. The average job search is 20 months. Unemployment benefits in Armenia are minimal, so a large percentage of the unemployed do not register. The number of unemployed people in Armenia is estimated to be closer to 30 percent.
There is low labor force participation in Armenia. Around 70 percent of women in Armenia are unemployed and only 55 percent of women who are of working age are active in the economy. One way to solve this aspect of unemployment is for the government to create incentives to encourage women to join the workforce. The Armenian government can also work to remove barriers to working such as transportation or household responsibilities.
Weak Agricultural System
The agricultural system in Armenia does not create enough jobs or affordable food. When the Soviet Union collapsed, Armenia had to replace some of its industrial economy with agriculture to feed its people. The government rapidly created small farms and sold them to citizens. Many of the newly minted farms were created in mountain regions with difficult terrain. Farmers often lack agricultural knowledge. In addition, many of the small farms do not have adequate infrastructures or access to farming technology. Government policy has not bolstered the efficiency of farms; instead, changing regulations and policies have damaged the agricultural sector. If Armenia can develop its agricultural sector through education, infrastructure and policy, the country will be able to produce more of its own food and improve the standard of living.
While over one-quarter of Armenians live in poverty today, this number can be reduced. Creating more attractive jobs within Armenia will encourage citizens to work in their country. In addition, the development of programs to help people join the workforce will help decrease the unemployment rate. Finally, as Armenia improves its agriculture system, the price of food in the country will decrease.
– Sarah Denning