Wednesday, June 19 2019 14:23

ArmInfo. On June 20, the Armenian government will consider the legislative initiative of MPs from the My Step faction Varazdat Karapetyan and Babken Tunyan to raise the minimum wage and most likely reject it.

The draft decision on amending the RA Law on the Minimum Monthly Wage, which provides for increasing the minimum wage from the current 55 thousand to 63 thousand drams, representatives of the Cabinet consider it as "requiring additional justification."

According to the substantiation certificate, the authors of the initiative proposed increasing the minimum wage to 63 thousand, as the figure is tied to the cost of the minimum consumption basket (at current average prices for the Q1of 2019), which, according to the Statistical Committee, is AMD 63500. But, since the figure is not static, and is revised on the basis of various indices on a quarterly basis, the executive branch believes that the definition of the minimum wage at the level of 63 thousand drams "requires additional justification."

Nevertheless, it is noted that the issue of increasing the minimum wage is permanently in the center of attention of the Ministry of Labor and Social Affairs. "In order to ensure the consistency of the process of increasing the minimum wage, the government's program for 2019-2023 provides for an assessment of ways to increase the minimum wage until the 3rd decade of 2019 and the development of the draft law" On Amendments to the RA Law "On Minimum Monthly Wages" stated in the justification.

Only after carrying out the relevant work will it be possible to introduce into the circulation the draft decision on increasing the minimum wage. Considering the above, the Government of Armenia proposes at this stage to refrain from discussing the draft and leave the provisions of the law unchanged.

According to the current order, the minimum wage in Armenia is 71400 drams (net of taxes - 55 thousand drams), the base salary is 66140 drams. If the minimum wage is raised to 65 thousand drams, it will be 84400 drams without deducting taxes. As a result, ceteris paribus, the additional expenses of the state treasury for the provision of a salary fund will grow by about 87.1 billion drams. At the same time, these calculations did not take into account the increase in the salaries of teachers and the money allowances for servicemen, which will increase during the current year.

Meanwhile, the authors of the initiative themselves point out that the possible risks will not have a significant negative impact on the Armenian economy, since the expected positive result is much more significant. In particular, raising the minimum wage will solve the most important social problems. The increase in the minimum wage will also lead to an increase in the average salary. The purchasing power of citizens receiving the minimum wage will increase, which, in turn, will lead to an increase in demand and, in consequence, supply. Having the opportunity to pay more, the state apparatus will be able to attract qualified personnel, a competitive environment will be formed. The gap between the salary in the public sector and that earned by private sector workers is also reduced.