Armenia - Labor Market Dynamics : Volume 1. Overview

Abstract

This study is intended to help Armenian policymakers better understand the main factors behind modest labor market outcomes and to identify policy options to create more and better jobs. The report is based on data from administrative statistics, labor force surveys, and household surveys. The objective of the study is to determine the main factors behind poor labor market outcomes in Armenia: high unemployment of long duration despite rapid economic growth. To do so, it will assess, first, the key characteristics of the demand for labor. These include (a) the impact of macroeconomic policies on job growth; (b) wage flexibility and unit labor costs; (c) cost-of-doing-business factors, including costs, risks, and barriers to competition faced by firms; and (d) employment promotion legislation and labor market institutions. Recommendations are made on policies that can promote an effective and sustainable increased demand for labor; second, the key characteristics of the supply of labor, including the impact of long-term demographic developments and labor migration, and the impact of social benefits on the reallocation of labor. Policy options are analyzed that can support the development of an efficient supply of labor to a modern high-wage market economy; and, third, the mechanisms by which employers and workers are brought into contact with each other, and recommend policies that support efficient and effective labor market institutions. The report consists of two volumes. Volume I provides an overview of the study and summarizes its conclusions. Volume II provides a more technical and detailed analysis of various aspects of labor market transition in Armenia.