Request to the Prime Minister regarding to the rise of “sticker fees”.

Request to the Prime Minister regarding to the rise of “sticker fees”.

USLGPSEA wrote a letter to the Prime Minister of the Republic of Armenia, that without any discussions with social partners, the Government and Parliament urgently adopted amendments to the law, which increased the “sticker fees” which paid to the Servicemen’s Insurance Trust Fund.

Below is the text of the letter sent to the Prime Minister.

2020 On October 5, 2012, a tripartite collective agreement was signed between the Prime Minister of the Republic of Armenia Nikol Pashinyan, the Republican Association of Employers of the Confederation of Trade Unions of Armenia. The collective agreement is the most important tool of social partnership defined by the conventions of the UN’s International Labor Organization and the national legislation of the Republic of Armenia. The agreement, in particular, stipulates that:

The parties agree that the draft of bills and other legislative acts in regard of labor law և rights, important for employers and employees, with exception of the drafts requiring urgent decision-making, shall be submitted to the opinion of the Republican Tripartite Commission, before the draft will be made into a law.

Nevertheless, without any discussions with the social partners, violating the Agreement signed by them, the Cabinet of Ministers, on December 22, hastily issued a decision to approve draft amendments to the “Act on Compensation for Damages Caused to the Life or Health of Soldiers during the Homeland Defense”. The only few days later the Parliament passed the Amendments to the Act. 

The law provides for significant changes for employees, putting an additional financial burden on them, but despite that, it was not discussed with the social partners under the National Collective Agreement. Moreover, the law was not even properly presented for the public discussion․ On November 5, 2020, a completely different version of the draft amendment was posted on the “e-draft” public discussion portal, where it was proposed to set a 3000 drams “sticker fee”.

However, significantly different version of draft was approved by Cabinet of Mininsters’ decision. In particular, “sticker fees” with “regressive” rates have been set, targeting mostly middle- and low-income employees.

Thus, one of the most important laws concerning the whole working people and there families, which significantly affects their working and social conditions, was adopted not only without public discussionm but also ignoring social partners, disregarding the social dialogue and violating the National Collective Agreement, in almost discreet and urgent manner. This is a significant setback for democratic processes.

On November 18, Prime Minister Nikol Pashinyan presented a 20-point roadmap for overcoming the post-war crisis, the 14th point of which considers holding regular thematic consultations with the representatives of the Armenian political and civil community. We urge you to adhere to the principles of social dialogue and democracy, as defined by the National Collective Agreement, as well as the roadmap adopted by the Prime Minister, and to discuss them in detail with the social partners before adopting labour-relating legislation. We consider it necessary to review the above-mentioned law in order to avoid negative consequences.

There is no doubt that no injured soldier or his family member should be left without compensation, but it is the state that, as an employer, should be responsible and insure its soldiers’ security. Workers should not be held responsible for wars at their own expense. Employees should not be constantly blamed for all the failures of the state. Even without that, about 1/3 of the state budget is formed from the income tax paid by the employees, and it is the responsibility of the state to manage the internal revenues more efficiently and responsibly in order to ensure the necessary public spending.

The need for public spending has become more necessary in recent years, especially by 2020. However, instead of systemic solutions, the state tries to fill the gap of public expenditures through separate, independent or even private funds and crowdfunding accounts created for each problem individually: the Servicemen’s Insurance Fund, the Hayastan All-Armenian Fund, the bank account for assitiance of COVID-19 Prevention and Overcoming etc. Moreover, at the same time, in 2019, the flat-rate taxation was introduced, which significantly reduced the income tax for individuals and reduced the corporate profit tax.

If the state budget is not enough to cover the necessary public expenses, there might not have been a need to reduce the income tax and corporate tax rates and introduce flat-rate system. In addition, it is necessary to put some social commitents on the private sector and employers, otherwise it looks like the burden of the state is placed only on the shoulders of employees. The need to impose social responsibility on employers has been confirmed by the international experience of the vast majority of countries in the world, and there is no need for “discovering America”.

Instead of improving and consolidating internal revenues so that the needs of the state and society (including pensions, military, health, and other types of insurance) are met through the public budget, government services, as well as through social responsibilities imposed on employers, on the contrary, the internal revenues are reduced, while the public expenditures and liabilities are outsourced to the “funds”.

We believe, that having 30% poverty, workers-poors and one of the highest unemployment rates in the world, no universal health coverege system և about 130 thousands dram of deposable median income (220 euros), it is inacceptable to handover social security programs out of the “state area” into the “funds area”. According to the Constitution of the Republic of Armenia, the Republic of Armenia is a welfare state, and any country with a social orientation implements social security programs using proper public spending and at the same time impose a social responsibility on the private sector.

We suggest holding discussions with social partners to revise the above-mentioned law. For example, to cover the insurance for injured/killed servicemen, you might want to:

  • Review the corporate tax rates for the business sector, and invest a fracture of the of it to provide the insurance of servicemen
  • Review the flat-rate taxation system
  • Develop a policy to bring social security programs back from the “foundations/fund” business to the state business
  • Reduce tax exemptions to private sector, which are being issued at almost every week

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