GOVERNMENT SHOULD FIND "GOLDEN MEAN" BETWEEN INTERESTS OF FUTURE PENSIONERS AND GOVERNMENT RISKS

ArmInfo
2010-03-30 15:12:00

ArmInfo’s interview with Hakob Hakobyan, Head of the Parliamentary
Commission for Social Affairs

Mr. Hakobyan, what are the possible risks of the pension system reform?

First, the state budget will envisage as much funds for the pensions
as the additional accumulative funds will collect, in particular, 5%
of the salary of the citizens permanently working in Armenia will
be transferred to the fund. A similar amount will be provided to
the pension fund by the state budget every month. Here are the risks
connected with the reform: first, if we do not guarantee return and
profitability of the amount, we will cause damage to our citizens
proving budgetary funds without guarantees. If we guarantee safety
of those amounts, in 5 or 10 years the budget will prove to be under
additional burden of liabilities, which is dangerous for the country.

In the first case, there is a risk of damaging the government
reputation among the population, whereas in the second case, the
country is endangered.

How will the new system fight shady employment?

One of the ways to fight shady employment is to change the current
pension system based on the basic pension plus working period and to
allocate pensions basing on the amount charged from the salary. If
a citizen agrees with his employer to "cut" his salary to reduce the
5% transfer to the accumulative fund, the government will naturally
provide less to his pension account. One of the positive sides of
the bill is creation of mechanisms that will make citizens declare
their salary.

The problem is in the lack of public confidence in the government,
isn’t it?

The package of relevant bills is currently under discussion. The
principles have not been specified yet. After the first discussion,
both the government and the parliament have arrived at a conclusion
that the package must be guaranteed not to infringe public interests.

What makes the government refuse the current pension system?

The size of pension of the citizens should be conditioned by the
taxes paid by them over their working activity. As we know, the
present system does not take into account the salary size. It is
illogical in some sense, as the paid taxes, which condition the size
of pension, should be the result of the work of citizens. The working
experience was the only way of settlement, but this principle is not
so much effective because of several impartial reasons. If payments
of citizens are not returned in the form of pension, naturally,
citizens will not be interested in making social payments.

Will the pension age grow given the ageing of the population?

No such issue is currently discussed. Increasing of the pension age is
connected not only with increasing in the number of old citizens. The
mechanism of determining the pension age is more complicate and cannot
depend just on the ageing of the population. The problem is settled
through comparison of the physical and mental abilities of people.

How efficiently is the social system of Armenia protected against
misappropriations by officials?

Undoubtedly, there are drawbacks today to be promptly eliminated.

According to the Sustainable Development Program, which replaced the
Strategic Poverty Reduction Program, 85 % of the families registered
in the allowances system rate are among the extremely poor ones. The
authorities should perform a great work to overcome this poverty
level. These problems cannot be solved at once, and it is necessary
to find the right ways. The government developed a sustainable
development program to be able to eliminate the drawbacks in the
system and conduct a targeted social policy.

How to prevent outflow of employable population from Armenia not to
lose the participants in the new pension system?

Last year the government undertook unprecedented measures of support
to small and medium-sized business through lending, which will lead
to creation of new jobs. Those and other measures will create an
effective mechanism of preventing outflow of labor force from Armenia.

Indeed, the country cannot interfere into internal affairs of another
country. For instance, we cannot prevent toughening of conditions of
migration flow in Russia. However, the government is able and must
take measures to prevent outflow of employable population.

How tangible are such measures, in particular, lending to SMEs?

It is difficult to make any assessment now, since capital invested in
the market does not bring fruits at once. I think that the 8 billion
drams growth of tax revenues for Jan-Feb 2010 was a good indicator
of the efficient of the government measures.

But SME lending became possible at the expense of increasing the
country’s foreign debt…

Armenia’s foreign dept totals 46% of GDP. It is a significant amount,
indeed, but not dangerous. I think that if the Armenian government
manages to use the loans that help creating jobs and increasing tax
revenues reasonably, the country’s solvency will considerably grow.

The opposition constantly criticizes the government for the growing
foreign debt. What are the real opportunities of its service?

The opposition, as a political force, expresses its attitude to
the ongoing processes in the country, any action of the country’s
leadership may become an object of criticism. Healthy criticism
ensuring the balance of forces is a normal phenomenon in all countries