The creation of more jobs, the increase in productivity, and the application of targeted fiscal policy tools are key to reducing poverty and enhancing economic resilience in Armenia, according to a new report from the World Bank group published today.
"Armenia's Economic Pulse: Pursuing Poverty-Reducing Growth with More Impactful Fiscal Policy" concludes that despite significant progress in Armenia's economic growth and poverty reduction, a single shock could be enough to push many families back into poverty. Poverty has decreased to 21.7% in 2024, but about two out of three people in Armenia remain poor or vulnerable. To ensure that economic growth continues to improve people's lives, it is essential to strengthen social protection and create more formal and quality jobs in Armenia.
"Armenia has made significant progress in reducing poverty, but to maintain these gains, better jobs and more effective social protection are needed," says Fabrizio Zarcunen, head of the World Bank office in Armenia. "In the near future, identifying more effective policies that promote formal employment will be a key priority for reducing poverty and ensuring universal well-being".
The semi-annual report consists of two parts: an assessment of recent macroeconomic developments and outlook, and a chapter dedicated to a special theme that examines how the results of fiscal policy and the labor market affect poverty and inequality in Armenia.
The chapter dedicated to the special theme reveals that poverty is concentrated in rural areas and regions such as Shirak, Tavush, and Armavir, and is closely linked to low productivity in agricultural employment, self-employment, and informal work. Although agriculture accounts for about a quarter of total employment, it constitutes a third of all employed poor workers, indicating the disproportionate concentration of poverty among those working in agriculture and the importance of having sufficiently productive work to protect people from poverty.
Formal jobs are important not only for current income but also for future pension security. Over time, as pensions become more directly linked to people's earnings and contributions made during their working life, greater participation in formal employment and contributions to the pension system will be required for long-term sustainability. Currently, only about 40% of the working-age population contributes to the pension system.
The report suggests strengthening both job opportunities and social protection. In the long term, creating more formal and productive jobs through skills-focused investments will be crucial for sustainable poverty reduction. At the same time, improving the effectiveness of social support and strengthening the pension system will help protect vulnerable households.
