Prime Minister Nikol Pashinian rebuked on Monday a member of his cabinet affiliated with the Armenian Revolutionary Federation (Dashnaktsutyun) for objecting to an unpopular reform of Armenia’s pension system which he believes must be completed this year.
The new Western-backed system, which the former Armenian government started introducing in January 2014, is to 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 former government said that the previous mechanism for retirement benefits is not sustainable because of the country’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 reform in April 2014. In response, the government enacted a law that allowed people working for private entities to opt out of the new system until July 2018. Officials say some 200,000 workers are already covered by it.
Pashinian raised questions about the future of the reform when he appointed one of the leaders of the 2014 protests, Mane Tandilian, as minister for labor and social affairs last month. Tandilian said later in May that the reform should remain optional for private sector employees for at least one more year.
Pashinian defended the reform, however, when he presented the new government’s policy program to the parliament last week. But he made a major concession to Armenians affected by it. A bill approved by his cabinet would cut the pension tax rate from 5 percent to 2.5 percent.
Armenia -- Nikol Pashinian (L) and Artsvik Minasian.
Minister for Economic Development Artsvik Minasian openly opposed the bill during a cabinet meeting in Yerevan. “I am against this mandatory pension system, while realizing that today’s solution is a forced one,” Minasian told Pashinian.
“I don’t want to criticize the decision which is being made,” he said at the same time.
A visibly irritated Pashinian responded by saying that all ministers must share “collective responsibility” for government decisions. “Those who don’t shoulder this responsibility are not with us,” he warned bluntly. “I want us to make this clear.”
Minasian assured the premier that he will comply with any decision approved by fellow ministers.
Pashinian remained unimpressed. “It could not be otherwise,” he told Minasian. “You are thereby not doing anyone a favor.”
Minasian is one of the two ministers representing Dashnaktsutyun in the new government. The party, which was also represented in former President Serzh Sarkisian’s government, cut an effective power-sharing deal with Pashinian after he swept to power in a nationwide wave of mass protests a month ago.