Institute for War and Peace Reporting | Giving Voice, Driving Change

Armenia Sinking into Poverty

Nearly 50 per cent of government expenditure goes on welfare payments, which say officials has prevented poverty from reaching catastrophic levels.
By Naira Melkumyan
  • About one-third of Armenia’s population lives below the poverty line. (Photo: Anahit Hayrapetyan)
    About one-third of Armenia’s population lives below the poverty line. (Photo: Anahit Hayrapetyan)
  • Since Armenia became independent in 1991, its economy has remained stagnant, generating few jobs. (Photo: Anahit Hayrapetyan)
    Since Armenia became independent in 1991, its economy has remained stagnant, generating few jobs. (Photo: Anahit Hayrapetyan)
  • Children are statistically more likely to fall below the poverty line. (Photo: Anahit Hayrapetyan)
    Children are statistically more likely to fall below the poverty line. (Photo: Anahit Hayrapetyan)
  • The government has acknowledged that in the current economic climate, it cannot achieve its target of cutting poverty levels by half. (Photo: Anahit Hayrapetyan)
    The government has acknowledged that in the current economic climate, it cannot achieve its target of cutting poverty levels by half. (Photo: Anahit Hayrapetyan)
  • Those with manual or professional skills to sell tend to get up and leave for Russia or other countries. (Photo: Anahit Hayrapetyan)
    Those with manual or professional skills to sell tend to get up and leave for Russia or other countries. (Photo: Anahit Hayrapetyan)
  • Steadily rising prices eat into meagre incomes and tip more people into poverty. (Photo: Anahit Hayrapetyan)
    Steadily rising prices eat into meagre incomes and tip more people into poverty. (Photo: Anahit Hayrapetyan)

Rising numbers of Armenians are living in poverty, and even substantial spending by government has failed to turn the situation around. For many, the only way out is emigration – though that will leave the country without many of its best and brightest, who could assist economic recovery in future.

According to the latest available official statistics, a third of Armenians lived below the poverty line in 2009. Experts say the percentage will have increased last year, and will do so again in 2011, especially with inflation running at nine per cent last year and 12 per cent in February.

“We live from hand to mouth. There’s no work, and my older son has been forced to go and work in a bakery in the capital [Yerevan] to feed his family and myself,” Ophik Boyajyan, a 60-year-old resident of the town of Artik in northwestern Armenia. “He sleeps in the bakery and comes home only once every few months, because there isn’t enough money for the journey.”

Shirak region where Boyajyan lives was devastated by an earthquake in 1988, and has the highest poverty level in the country – 40 per cent in 2009.

Boyajyan said her household, which includes three small children and four adults, never has a monthly income of more than 100,000 drams – under 300 US dollars.

“Our main foodstuffs are flour and sugar. We bake our bread at home because it’s too expensive to buy it. In winter our costs go up – we have to buy fuel to heat the house. But there’s never enough fuel and the children are always falling ill,” she said.

Diana Martirosova of the national statistics agency says the proportion of the population living in poverty increased to 34 per cent in 2009 from 28 per cent the year before. The official poverty line is calculated at an income of 30,920 drams a month – around 85 dollars, while “extreme poverty” is defined as an income of under 17,483 drams.

“The poverty level among children is higher at 38 per cent, while 4.5 per cent of them live in extreme poverty,” Martirosova said.

Leili Moshibi-Jilani, head of the United Nations children’s fund UNICEF in Armenia, said the global financial collapse of 2008 had a very serious impact on families.

“It’s clear that children suffered the most from the economic and financial crisis,” she said.

Arguing that the government’s spending plans for 2011 would not improve the position of poor children, she said that “this situation could have long-term consequences for children, and for the development of the whole country”.

In its current economic strategy, the government pledges to cut the proportion of the population living in poverty to 17.5 per cent, but officials admit this is not feasible. As Economy Minister Tigran Davtyan put it, global economic crisis has “slowed the trend towards a reduction in poverty”.

The economy ministry says 45 per cent of government expenditure goes on welfare payments, and officials say this has prevented poverty from reaching catastrophic levels.

Artak Baghdarasyan, head of the ministry’s policy department, says that without a welfare-oriented budget and measures to combat economic crisis, the number of people living in poverty would have been nearly 50 per cent rather than 34 per cent.

Opposition politicians dispute the government’s figures, saying they understate the true extent of poverty.

“Even the [official] statistics show that more than a third of Armenia is poor. If you bear in mind that the methodology the government uses to assess poverty is disputed… then the reality is that more than half the population is living in poverty,” Ara Nranyan, a member of parliament from the Dashnakutsyun party, said.

Nranyan said the experience of other countries was that welfare benefits were not a solution in themselves. Job creation was key, and benefits must target those unable to work.

Nairuhi Jrbashyan of AVAG Solutions, which researches social and economic issues, says that around 60 per cent of people classed as poor and 40 per cent of those in extreme poverty do not even apply for welfare benefits, for reasons including “distrust of the system, a sense of injustice, or the shame of claiming benefits”.

Spiralling prices create the risk of more and more people falling below the poverty line. In February, fruit and vegetables cost 45 per cent more than they did a year earlier, prompting President Serzh Sargsyan to instruct officials to look at components like retail mark-ups and transport costs with a view to curbing prices .

One of the main pressure-valves preventing worse problems is emigration, mostly to Russia.

According to Jrbashyan, “Emigration has risen 150 per cent from two years ago. More and more people are leaving Armenia in search of work, most of them from rural areas.”

With emigration come remittances, the money people send home from places like Russia. The central bank calculates that money transfers sent to Armenia by labour migrants last year were 37 per cent higher than in 2009.

“All my friends are now in Russia – they all got up and went,” Aram Gharibekyan, a 30-year-old in Yerevan, said. “Periodically, they send money to their parents, who survive on that.”

Gharibekyan has just returned from Russia, and plans to go back if he cannot find work in Armenia.

Others, too, are voting with their feet – among them the skilled professionals who could help the country get back on its feet in future.

For example, Maria Kulidzhanova, a 28-year-old economist, has decided to leave for Canada.

“At one time we considered ourselves to be on an average income, but my husband was forced to leave his job after he wasn’t paid for six months. He managed to find temporary work, but we don’t see a future for our children here,” she said. “The longer it goes on, the worse it gets, so we’ve decided to emigrate.”

Naira Melkumyan is a freelance reporter in Armenia.