Московский экономический журнал 8/2019 - Московский Экономический Журнал

УДК 331.526

DOI 10.24411/2413-046Х-2019-18031

ПРОБЛЕМЫ ЗАНЯТОСТИ МОЛОДЁЖИ В
РЕСПУБЛИКЕ АРМЕНИЯ

YOUTH EMPLOYMENT ISSUES IN THE REPUBLIC OF ARMENIA

Никогосян Марине Грандиковна, кандидат экономических наук, доцент, Армянский Государственный Экономический Университет (АГЭУ), г. Ереван, Республика Армения

Карапетян Лусине Вааговна, кандидат экономических наук, доцент, Армянский Государственный Экономический Университет (АГЭУ), г. Ереван, Республика Армения

Nikoghosyan M.H., grandmarine@gmail.com

Karapetyan
L.V., l-karapetyan@hotmail.com

Аннотация:
Целью
исследования является изучение проблем занятости молодежи на рынке труда
Республики Армения (РА). С этой целью мы провели социологические опросы среди
3840 респондентов с целью выявления причин высокого уровня безработицы среди
молодежи, а также трудностей с доступом к рынку труда, их отношения к процессу
найма, существующей дискриминации и факторы, влияющие на процесс принятия
решений. Данные, предоставленные Статистическим комитетом РА в 1990-2017 гг., a также уровень экономической
активности, занятости и безработицы среди людей в возрасте 15-29 лет, были
использованы для изучения уровня занятости и безработицы в РА в 2010–2017-х гг.
По результатам нашего исследования, которое было проведено в период с 20 июля 2018
года по 15 августа 2018 год, уровень безработицы среди молодежи составил 11,3%.
30,9% респондентов работают по профессиям, 26,2% из них в основном заняты по
профессии, а 16,8% — имеют рабочие места, которые вообще не соответствуют их
профессии. 66% молодых людей, которые хотят получить доступ к рынку труда, уже
убеждены, что найти работу будет сложно. К сожалению, очень часто молодые люди
в РА, имеющие профессиональное образование, становятся безработными или
работают не по профессии, а также готовы выполнять любую работу для решения
социальных проблем. После Бархатной революции в Армении в 2018 году у молодежи
появились позитивные ожидания и стремления строить свое будущее на своей
родине.

Summary: The aim of the research is to study youth employment issues in the Republic
of Armenia (RA) labor market. For the above-mentioned purpose, we have
conducted sociological surveys among 3840 respondents in order to identify the
reasons for high level of unemployment among young people, as well as the
difficulties to access the labor market, their attitudes towards the hiring
process, existing discrimination, and the factors affecting the decision-making
process. The data provided by the Statistical Committee of the RA in 1990-2017,
as well as the level of economic activity, employment and unemployment among
15-29 years old people, were used to study the level of employment and
unemployment in the RA in 2010-2017. According to the results of our survey that
has been carried out during 20 Jul 2018 – 15 Aug 2018 time period, youth
unemployment rate was 11.3%. 30.9% of respondents work by their professions,
26.2% of them are mostly employed according their profession, and 16.8%- have
jobs, that do not correspond to their profession at all. 66% of young people,
who want to have access to the labor market are already convinced that finding
a job will be difficult. Unfortunately, very often young people in the RA,
having vocational education, become unemployed or are employed to work not
according to their profession, as well as they are ready to do any work to
solve social problems. After Velvet Revolution Armenia in 2018 the youth has
positive expectations and aspirations to build their own future in their own
homeland.

Ключевые
слова: занятость молодежи, рынок труда, безработица, работа.

Keywords: youth employment, labor market, unemployment, job.

Introduction

Social policy is a component of the country’s domestic
policy that is developed by the state with the direct participation of various
political forces and aims to solve the social issues existing in the country.
One of the primary goals of social policy is to create appropriate conditions
for the sustainable growth of the population’s income, which can be achieved
through providing employment, increasing economic activity of the population,
offering assistance to economically inactive population, raising qualification
of labor force, ensuring competition and other means.

There are many problems in the RA labor market,
including high unemployment, low wages, hidden employment, weak development of
labor market infrastructure, weak application of financial leverage in labor
market policy and wage inequality. The above-mentioned problems of the RA labor
market are closely related to the processes taking place in the 1990s. After the
collapse of the USSR, structural changes have resulted in changes in the
structure of employment. Besides, the transition to market relations in the
field of employment and labor resulted in fundamental changes in social and
labor relations, particularly young people found themselves in difficult and
hard situation, as from the social and psychological point of view they were
not ready to face the new labor market demands [1].

The high economic growth in the 2000s did not lead to
a significant expansion of employment as it was driven by productivity growth
and structural changes in the economy. Particularly, the share of the
construction industry grew dramatically, but the employment growth in this area
took place as a result of decrease in employment in the industrial sphere [2]. The
dynamics of the labor market development is conditioned by the general tendency
of economic development and its typical periodic fluctuations.

Literature review

The future of each country is in the hands of modern
youth. Young people are an exceptional resource of the productive power of the
society, as they are not only active, productive, but also fast-learning
productive force, besides they have contemporary mentality and at the same time
they are the most vulnerable age group in the labor market [3]. Over the past
decades, the RA youth labor market has been characterized by negative trends:
the number of hidden unemployment among the youth, as well as its duration
increases. Employment of young people is a complicated and actual issue as the
demand for young workforce is not so high conditioned by the lack of work
experience as well as the lack or complete absence of additional skills.

Groups of reasons
for youth employment impossibility

In general, the following groups of reasons for youth
employment impossibility are singled out [4]:

the
attitude of the employer towards the young specialist,
qualification
level discrepancy to the employer’s requirements (absence of independent
decision-making experience,
lack
of knowledge in market economy,
lack
of practical skills in obtaining a profession),
unreasonable
perceptions of employment and workplace adaptation ways.

It arises in the choice of the future profession, and
in future perspectives of employment and the majority of young people misperceive
the idea of productive work ratings.

The term
«young»

In the professional literature, the term
«young» is interpreted in different ways, typically 14 to 30 years
old people refer to this group [5], 16 to 30 years old people can also be
considered young [6], and according to the UN age grouping, 14-25 age group
[7]. An objective indicator of characterizing the youth age, which is used not
only for theoretical definition of the given concept, but also for carrying out
researches. Some researchers consider 11-25 years old people as young, whereas
some up to 30 [8]. Such groupings are very conventional. Each age group, also
14-15, 16-17, 18-20, 21-24, 25-29, has social-labor adaptation peculiarities.
Research shows that the lower the family income is the higher the family’s
interest is to involve 14-15 years old young people in the labor activities,
and in this case the family itself makes young people leave the study
incomplete [9]. As a result an unqualified specialist enters the labor market.
In this case, the young man’s work prospects are not satisfactory. Thus, the
state should develop programs, which can allow young people to work and study
at the same time.

Conditions to be
regarded as busy in the RA ‎

According to Statistical Committee, people engaged in
the Armenian weekly survey are considered busy in the RA [10], if

• they have
performed hired or non-hired work, no matter the work has been permanent,
temporary or seasonal, occasional or accidental, even if that job was only for
an hour during the surveyed week,

• they have
been temporarily absent from work for various reasons,

• they have
been engaged in household or farming, and the output was intended for full or
partial sale or exclusively for their final consumption, if that product had a
significant share in household consumption.

Types of
employment activities

According to the RA Law on Employment adopted in 2013,
the employment includes the following types of activities not prohibited by the
RA legislation [11]:

• hired labor
activity of employers (including being in the staff reserve of the services
provided by the laws of the Republic of Armenia, except for cases not requiring
remuneration),

• providing
services or performing work under civil law contract,

• private
entrepreneurship and notary activities,

• the activity
of the patent payer,

• compulsory
military service,

• training in
educational institutions, vocational training courses and other forms of
learning.

The socio-economic
essence of employment ‎

Employment is not just any activity; it is also a
process that satisfies personal and public needs [12]. The
socio-economic essence of employment is that it is not only one of the most
important macroeconomic indicators and is not only a source of income, but also
people’s social need to do a public-friendly job with relevant qualification.

Main goals of RA
state employment policy ‎[13]:

to create
conditions for the provision of stable employment, implemented through state
regulation of the economy and social protection of the population;
to ensure the
labor force demand of necessary quantity and quality;
to guarantee
internationally accepted standards of decent work;
effective
realization of the current supply of labor as the component of the economic
policy;
consistent
provision of the conditions, identifying competitiveness in the labor market
ensuring effective
inclusion as a part of the social protection policy.

Conditions to be
regarded as unemployed

According to the current legislation of the Republic
of Armenia, people are considered unemployed (officially registered), if they
are able to work, but are currently unemployed or are looking for a job and are
not eligible for retirement benefits (except for the types of retirees in case
of losing the bread-winner), are registered in the State Employment Service,
are willing to work and have received unemployment status. And according to the
standard definition of the International Labor Organization (ILO), unemployed
are considered to be those, who have at the same time satisfied the following
conditions during the survey period [14]:

• did not have
a job or a lucrative business,

• have been
actively seeking for a job in any way possible during the last four weeks
preceding the observed period,

• were ready to
start working within two weeks.

Annual state
employment programs

State regulation of population employment in the
Republic of Armenia is implemented through annual state employment programs. It
focuses on:

mitigating labor
market tensions;
promoting
sustainable employment and self-employment for unemployed people in the labor
market through active employment programs;
promoting
employers’ involvement in job creation, especially for people with disabilities;
increasing the
level of youth employment, sustainable employment state programs;
integration of
vacancies with qualified specialists;
ensuring effective
and sustainable employment of not competitive groups in the labor market within
the framework of social service provision [15].

The low level of employment opportunities for young
people entering the labor market for the first time, the high level of informal
employment in Armenia, the organization of vocational training at the employer
for young mothers, who are unemployed and unskilled in the labor market are
among the issues highlighted for 2018. The program outlines the provision of
support for unemployed women up to 24 years with higher education, as well as
providing assistance to people on parental leave for under three years old
baby, supporting to organize the child’s care along with the work in case of
returning to work before the child turns two, etc.

Methodology

The primary data collected as a result of both
secondary and sociological surveys were the basis for the survey. Primary data
were collected by e-mail inquiry method, Laikert’s 5-point scale was used in
the questionnaire (1: the least important, 5: the most important): Factor and
cluster analysis methods were used for primary data analysis.

The sample was implemented within the framework of the
youth aged 15-29 (655900 people, according to Statistical Comittee of RA) [16]
and involved 3840 respondents, with 5% sampling error and 95% confidence
interval. 57% of respondents are females, 43% are male, 11.3% of them are
unemployed, 45.6% are employed in different sectors of the economy, 22.9% both
study and work, and 20.2% are busy only with studying. 28.6% of respondents are
married. The average monthly income of employed youth is around $ 302.7). The
secondary sources were collected by statistic reports, websites and articles.
The 2010-2017 time periods was utilized for the economic activity rate and
1990-2025 for employment and unemployment rates.

Result and discussion

Employment
rate in Armenia

In 1990-2017,
the employment rate in Armenia sharply declined from 80.3% to 50.1% (tab. 1).
We considered the age group of 15-29 to study youth employment problems in Armenia
so that we can use secondary data from the Statistical Committee of the
Republic of Armenia publications as well.

From the point of view of studying the labor market in
Armenia, 15-75 is considered the working age [10].

According to Statistical Committee of RA, the
unemployment rate in Armenia was 17.8% or 219 thousand people in 2017, of which
the younger age group had the highest per centage of age, so the age group of
15-19 was-9.1 thousand, in the age group of 20-24 was 37.6 and in the age group
of 25-29 was 31.8 thousand [1].

Level of youth’s
economic activity

The stable
high level of unemployment is a negative signal for being successful in trying
to find your place in the market, which, naturally, directly affects the level
of labor force participation. At the same time, large amounts of labor
migration and cash received from these migrants raise the minimum reservation
wage of their family members remaining in the homeland, in this case they will
agree to work. This also has its negative impact on the level of economic
activity in the labor market. The level of youth’s economic activity,
employment and unemployment in Armenia is presented in Table 2.

Table 2 shows that in 2010-2017, the highest level of
economic activity was registered in the 25-29 age group, with an average of
68.5%. In the 15-19 age group, the average annual economic activity was 14.%.
Moreover, the highest rate was recorded in 2015, 19.4%, which was 6.1 per
centage points higher than in 2014, and by 2017 it dropped by 7%. An average of
20-24 years old age group was 55.3%. In 2010-2017 in the 25-29 age group, the
average employment rate was about 53%, in 20-24 age group — 35.1%, and in 15-19-
8.5%. The highest unemployment rate is registered in the 15-19 age group- 40%
on average, which is conditioned by the fact that in Armenian families the
primary importance is given to education and, in the first years of studying in
the university, young people are mostly busy with studying, while the family
takes care of their expenses. However, the unemployment rate in the 20-24 age
group leaves room for worrying with 37% in 2017, which was only 0.5 percentage
points lower than in 2010. The respective index for 25-29 age group was 22.7
per cent on average.

According to preliminary data, based on our choice (3840
respondents):

11.3% of Armenian
youth are unemployed,
45.6% are employed
in different sectors of the economy,
22.9% both study
and work,
20.1% is only busy
with learning.
29.8% of the
employed youth are engaged in trade, repair, transportation and storage, hotel
and public catering,
25.1% in financial
and insurance companies,
12.7% in public
administration and education,
2.2% self-employed
1.8% are engaged in agriculture and industry,
15.3% are doing
other jobs.
So,
in the 15-19 age group — about 1.5% of the respondents are employed,
in
the 20-24 age group — 61.2%,
in
the 25-29 group — 37.3%.

It is clear that
the youngest 20-24-year-olds constitute the largest percentage of employed
people.

2. Compliance with the specialty

In response
to the question, «Whether the current employment of young people
correspond to their profession,» we have the following: (fig. 1), 30.9% of
questioned working youth work by their profession, 16.8% of them have jobs not
corresponding to their profession, and 26.2% are mostly employed according to
their profession. In case of complete professional discrepancy, young people
are involved mainly in trade, repairs, transportation and storage,
accommodation and public catering.

52% of young people who have professionally not
corresponding jobs are females. This shows that both female and male are
equally opposed to non-professional employment.

3. Opinions about working abroad

Certainly, the difficulty of finding a job
corresponding to their profession makes young people try their luck abroad.
Both employed and unemployed young people gave approximately the same answer to
the question how they feel about working abroad. (fig. 2) It is pleasant to
note that a large number of Armenian young people, even jobless, is not going
to leave the homeland, and this circumstance is conditioned by Velvet
revolution, which took place in 2018. As a result, young people have trust in
the future, positive expectations, and aspirations to work and fulfill their
dreams in their own homeland.

4. Opinion on fairness of the hiring process

The young people were also asked about the fairness of
the hiring process. To understand how the status of a young person influences
his attitude, let us present the degree of confidence of young employed and
unemployed youth (fig. 3).

Figure 3 clearly shows that the difference of the
rates of answers between employed and unemployed respondents is slight
referring to the fairness of hiring, that is, the status of young people’s
enthusiasm does not impact on their opinion on the fairness of employment, in
addition, the confidence index is lower in both cases.

5. Opinion about employment discrimination

As to the reasons, 33.6% of unemployed young people
stated that they did not encounter any discrimination, and 25.5% were convinced
that hiring was possible only through mediation (fig. 4).

66% of young people who want to enter the labor market
are already convinced that finding a job will be difficult and conditioned by
some factors.

6. Factors that influence the decision-making process for applying

We have also recommended young people participating in
the study to classify the organizational factors that influence the
decision-making process for applying for a job so that we can further explore
the motives behind the decision-making process. Cluster analysis has been
carried out for this purpose. Thus, for the study of the structure of the
factors influencing the decision-making on the respondent’s work, they were
asked to assess the following conditions on the scale of the relevant
priorities:

the
size of the organization,
how
long does the organization operate,
the
reputation of the organization,
the
amount of the salary,
the
nature of the work,
working
conditions,
opportunities
for professional growth,
friendly
staff,
protection
of labor rights,
location.

As you can see, there are many variables that
influence the decision-making process of young people, so in order to
effectively organize the analytical work, we have first implemented a factor
analysis that has allowed the large variables to be combined into smaller
groups.

Prior to the
factor analysis, we first checked the validity of our variables by using KMO
and Bartlett testing for the factor analysis, according to which the KMO index
is reaching 1 and Bartlett’s Testing Significance index does not exceed 0.05
(tab. 3).

By bringing out the optimal amount of factors from a large number of variables and considering the nature of reduced variables, we named the new factors, respectively, personal and image (fig. 5). With the help of the program, we can determine the level of their significance in the decision making process for each respondent by making cluster analysis. After analyzing the results of agglomeration, it was appropriate to classify respondents in 4 clusters.

By calculating
the number of respondents in each of the clusters as well as the average values
of the components of the model (tab. 4), we have the following picture:

It should be
noted that, according to the computerized analytical package13 applied, the
components of the factor model range from -2 to +2, the higher the negative
value of the new factor, the more important it is for the respondent and the
higher the positive value, the less it is important for the respondent. Thus,
Figure 6 shows those young people in Armenia have very different approaches to
the importance of these factors. The first cluster shows young people who do
not give importance to the two factors, the third shows young people who give
importance to the two factors, the second cluster those, who give importance
only to the image factor, and the fourth- only to the personal factor. There is
a need to calculate the cluster size and the age structure of its respondents
to understand the attitude of the majority (Figure 7 and Figure 8).

Figure 8 shows that 48% of the respondents are
included in the first cluster. This is the «most favorable» cluster
in which both factor components are not important. The main part here
constitutes of the representatives of 20-24 age group (fig. 9), who mainly
study and the majority of them are not married. In the third cluster, 22% of
the respondents are involved, and they give significance to both personal and
image factors. This cluster includes 55% of the 20-24 age group and 45% of the
25-29 age group respectively. The 20% respondents included in the 4th cluster
emphasize personal factors, with a high percentage of the population aged 20-24
constituting the 74%. For the respondents of the second cluster, the
personality factor has completely subdued its attributes to the image factor.
This «romantic» cluster is the smallest, with 10% of the respondents
involved.

It should be noted that in the second and third
clusters there are no representatives of the 15-19 age group, which indicates
that the image factor still does not affect them, and the personal factor is
not important for the majority of them.

Conclusions

In recent decades the RA has been experiencing a sharp
decline in employment and an increase in the unemployment rate. Therefore,
radical reforms in the state policy in the sphere of labor market regulation
are needed. Namely state aid and the promotion of youth potential are needed.
Unfortunately, very often young people, having vocational education, become
unemployed or are employed to work not according to their profession, as well
as are ready to do any work to solve social problems. According to the survey,
the largest percentage of those employed constitute the 20-24 year-old age
group. In fact, it can be
concluded that the employment rate of young people is higher in their student
years, since they can occupy any position as far as they do not have a
profession, while after graduation, not everyone is able to find a job
according to his/her profession, which explains the low employment of young
people aged 25-29. Moreover, the above-mentioned group is seeking rather for
self-esteem, success and career.

Young people of the age group up to 19 show more
intensive demand for professional knowledge and skills. The results of the
survey also revealed that 42% of the youth surveyed in the RA are interested in
personal factors, namely salary, job conditions, protection of their labor
rights, etc. And only 32% gives importance to image factors — the reputation of
the organization. According to the
results of the survey, 48 per cent of the respondents were indifferent both to personal
and image factors, which indicates that the state should develop and implement
a unique complex of activities that will provide young people with not only
employment guarantees, but will also provide their adaptation to the economic
system of the modern society, will motivate in selecting a profession, and will
further support the job placement appropriate to the qualifications, ensure
internationally accepted standards of decent work. It is also a positive trend
for the RA that 58% of unemployed young people have negative attitude towards
working abroad, that is the confidence in the policy pursued by the state has
been increased. Consequently, the state and the society should not passively
follow the self-fulfillment of the youth labor market, but should develop and
implement a program for effective youth employment regulation, as well as
support and co-operation of state, local self-governing bodies, HEIs and other organizations
for employing young people. One
of the most effective means in the policy pursued by the state is the quota,
which will oblige the employer to include some per centage of young people in
his staff, contributing to the reduction of unemployment rate among young
people.

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