Pensions and Protests: Expected rallies against controversial reform to put more pressure on Armenian government

Pensions and Protests: Expected rallies against controversial reform to put more pressure on Armenian government

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This week Yerevan is likely to see mass protests against the introduction of mandatory accumulation pension fund payments that has caused discontent among many employees in Armenia, including those in well-paid jobs.

Under the controversial provision of the pension law beginning on January 1, 2014, all citizens aged below 40 shall transfer five percent of their monthly salaries to one of several private pension funds in addition to security payments made by their employers.

On December 17, the four parliamentary factions that are not part of the ruling coalition intend to apply to the Constitutional Court and the event is likely to be accompanied with actions of protests.

The law was adopted still in 2011, but its part concerning the mandatory pension fund payments has not entered into force yet. In November, the four non-governing factions of the parliament tried to force the government to delay the enactment of the provision, but the government has remained adamant in its position.

Speaking at the Ministry of Economy late last week President Serzh Sarkisian also backed the introduction of the new system, and did it very emotionally. He said that he felt ashamed before today’s pensioners who receive meager pensions, and, in fact, accused his predecessors, who “did not care about pensions” in due time.

Experts already talk about the governmental crisis in Armenia, which may even lead to the resignation of Prime Minister Tigran Sargsyan’s cabinet. The matter concerns not only the unpopular pension system, over which the opposition parties and civic organizations promise powerful protests closer to the New Year. The matter also concerns the fact that the government has not fulfilled the instruction of President Sargsyan about achieving a 7-percent economic growth.

After appointing the government in April Sargsyan said that it will have to go if it fails to achieve a 7-percent growth. Last week, Finance Minister David Sargsyan said that the statement was “political”, and one yet has to establish why the government could provide only half of the planned growth.

At a meeting at the Ministry of Economy President Sargsyan instructed that those reasons be established before March. As one of the newspapers reported, this way Sargsyan postponed the resignation of the government at least until April.

Thus, the protests over the controversial pension reforms expected this week may aggravate the government crisis, especially if the Constitutional Court deems that the reform is ‘antinational’. Quite a few economists keep talking about the negative experience of the system’s application in other countries that eventually decided to scrap it. Besides, representatives of the middle class in Armenia, in particular professionals in the information technology sector, describe it as a state racketeering, which could lead to the transference of a considerable part of IT businesses abroad and reduction of budget revenues.

If the Constitutional Court decides to proceed with the consideration of the opposition claim regarding the pension reform, it is likely that the introduction of the law will be delayed for the period of consideration. During this period the four political forces – the Armenian Revolutionary Federation (Dashnaktsutyun), the Armenian National Congress , Heritage and even the Prosperous Armenia Party – as well as civic organizations intend to hold more protests. The New Year in the streets – civil activists propose on online social networks. They say they will not allow the government to “rob” them again.