Government Still Mulling Response To University Brain Drain
The Armenian government has still not acted to stop scores of young specialists from leaving state-run universities and research institutes because of a controversial pension reform implemented by it.
The new system requires workers born after 1973 to earn most of their future pensions by contributing sums equivalent to 10 percent of their gross wages to private pension funds until their retirement. The reform, initially introduced in January, met with fierce resistance from many affected Armenians, most of them employed by private firms, and was effectively blocked by the Constitutional Court in April.
The government responded by making the reform mandatory only for 65,000 or so public sector employees. A government bill approved by parliament in June allowed people working for private entities not to be covered by the new retirement plan until July 2017.
The vast majority of private sector employees are believed to have opted for the three-year deferment. But those of them who also have part-time public sector jobs are denied such a choice, with tax authorities also making the sizable deductions from their wages paid by private employers.
Among them are young academics and scientists. Several dozen of them have quit state-run universities and research centers that are part of the Armenian National Academy of Sciences to avoid the extra tax.
Yerevan State University (YSU), the largest in the country, alone has lost 33 such scholars to date. Officials there fear that dozens of others will follow suits soon.
At least 9 lecturers aged 40 and younger have quit the State Engineering University of Armenia (SEUA). Its rector, Hovannes Tokmajian, said on Thursday that the outflow is undermining the SEUA’s “strategic plan” to hire more young staff with the aim of boosting its educational standards.
Tokmajian and other state university chiefs already conveyed their serious concerns to the government last month. Prime Minister Hovik Abrahamian responded by instructing the Finance Ministry to consider proposing amendments to a law regulating the contentious pension reform.
A ministry spokesperson told RFE/RL’s Armenian service (Azatutyun.am) that the issue is still “in a discussion phase.” Science and Education Minister Armen Ashotian, who shares the university concerns, said he too is awaiting government action on the brain drain.
Ashotian and the university rectors proposed recently that tax authorities make deductions only from scholars’ wages paid by state institutions.
Government Signals No Letup In Pension Reform Efforts
Հոկտեմբեր 02, 2017
A controversial reform of Armenia’s pension system, which sparked angry street protests three years ago, will be completed as planned next year, Labor and Social Affairs Minister Artem Asatrian said on Monday.
The new Western-backed system, which took effect in January 2014, will gradually cover 270,000 or so Armenian workers born after 1973. It requires them to earn most of their future pensions by contributing sums equivalent to at least 5 percent of their gross wages to private pension funds until their retirement.
The government said that the previous mechanism for retirement benefits based on so-called solidarity of generations is not sustainable because of Armenia’s aging and shrinking population.
The reform met with fierce resistance from many affected workers mostly employed by private firms. Thousands of them demonstrated in Yerevan in early 2014.
Armenia’s Constitutional Court effectively froze the pension reform in April 2014. The government responded by making it mandatory only for around 70,000 or so public sector employees for the time being. A law subsequently enacted by it allowed people working for private entities not to be covered by the new system until July 2018.
Asatrian made clear that the deadline will not be extended next summer despite the risk of renewed anti-government protests. He again called the reform a success, saying that the new system currently covers more than 180,000 workers and most of them work in the private sector.
Mane Tandilian, an opposition parliamentarian who was one of the organizers of the 2014 protests, dismissed the minister’s statements. “I don’t know of a single people happy [with the reform,]” she told RFE/RL’s Armenian service (Azatutyun.am). “I only know many people who were forced to enter the new system and now have many grievances.”
Tandilian said she is planning to draft a bill that would make the retirement plan optional for all affected Armenians.
The employee contributions are made to two private pension funds whose combined assets currently stand at around 80 billion drams ($167.3 million). Asatrian said in July that 70 percent of that money has been invested in Armenian bonds and other securities.