VZCZCXYZ0000
PP RUEHWEB

DE RUEHYE #0882/01 3101339
ZNY CCCCC ZZH
P 051339Z NOV 08
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC PRIORITY 8232
INFO RUCNCIS/CIS COLLECTIVE PRIORITY

C O N F I D E N T I A L YEREVAN 000882 
 
SIPDIS 
 
E.O. 12958: DECL: 11/04/2018 
TAGS: PGOV PREL EAID LAB SOCI AM
SUBJECT: AMBASSADOR'S COURTESY VISIT WITH MINISTER OF LABOR 
AND SOCIAL ISSUES AND HER VISIT TO THE GAVAR EMPLOYMENT 
CENTER 
 
Classified By: Ambassador Marie L. Yovanovitch. Reasons 1.4 (b/d) 
 
SUMMARY 
 ------- 
¶1. (C) During their introductory meeting on October 27, 
Minister of Labor and Social Issues (MLSI) Arsem 
Hambardzumian thanked the Ambassador for the significant 
amount of development assistance provided by the USG to the 
Armenian people. Hambardzumian stated the MLSI's two main 
priorities for the coming years are the development of a 
comprehensive social protection strategy and the 
implementation of pension reform. The next day the Ambassador 
drew national and local media attention to USAID's assistance 
in improving employment services throughout the country 
during a ribbon-cutting event with the Minister at the Gavar 
Regional Employment Center. END SUMMARY 
 
PRIORITIES: SOCIAL PROTECTION AND PENSION REFORM 
--------------------------------------------- --- 
¶2. (C) Continuing her introductory calls on high-level 
Armenian officials, the Ambassador met with the Minister of 
Labor and Social Issues (MLSI), Arsem Hambardzumian, on 
October 27. The MLSI is responsible for social protection 
policy and services including labor regulation, pension and 
other social insurance programs; employment services, and 
social assistance for the disabled, elderly, and other 
vulnerable groups. 
 
¶3. (C) The Minister expressed appreciation to the American 
people and the United States Government for their consistent, 
timely and substantial assistance over the years, noting that 
Armenia does not enjoy the same level of cooperation with any 
other donor. He recognized that although Armenia has made 
progress in economic reform, significant challenges remain in 
reforming the social sector to make it more effective and 
responsive to the needs of vulnerable groups. He envisions 
radical change in the next 1-2 years, and stressed that 
continued collaboration with the USG and other donors will be 
critical to their success. 
 
¶4. (C) The Minister then outlined his most immediate 
priorities: 1) the development of a comprehensive social 
protection strategy and 2) implementation of a recently 
adopted pension reform initiative. The MLSI is developing a 
comprehensive strategy on social protection including a 
long-term vision as well as specific goals and budget 
allocations. It builds on existing efforts (such as the 
Poverty Reduction Strategy) and social sector analysis. He 
hopes to have a draft strategy document for review in the 
next several months. 
 
¶5. (C)  The Government's approach to pension reform was 
designed by a multi-sectoral task force with significant 
assistance from USAID and other donors. The MLSI has been 
tasked by the Prime Minister with implementing the reform. 
The Minister cited several challenges including: a very 
ambitious deadline (the new system is scheduled to start 
January 2010); the need to coordinate across several other 
agencies; and the need for sufficient financial and human 
resources to carry out the implementation process. On the 
positive side, he believes the Ministry has a window of 
opportunity to implement this reform given that there are no 
national elections in the near future. He expressed 
determination to move ahead, despite the risks and 
challenges. 
 
EFFECTS OF FINANCIAL CRISIS 
--------------------------- 
¶6. (C) The Ambassador asked how the current global crisis 
will affect pension reform and the economy in general. The 
Minister responded that given Armenia's relatively small 
financial sector, it would be shielded from major impacts. 
However, he was concerned that decreasing remittances 
(currently remittances make up about 20% of GDP and are 
mainly used for food, health, education and housing) and 
declines in jewelry and mining exports would have a negative 
impact on the economy. 
 
¶7. (C) The Ambassador commended the Ministry for leading the 
way in outsourcing social services and asked how the Ministry 
planned to institutionalize this process in the future. 
(International best practice recommends outsourcing 
community-based services for vulnerable populations because 
it is generally more cost effective, more transparent, and 
more responsive to client needs). The Minister confirmed his 
intention to continue this practice and specifically cited 
the USAID-funded Soup Kitchen Support Project, implemented by 
the indigenous NGO Mission Armenia, as a successful example 
of outsourcing social services for the elderly.  He 
highlighted USAID's contribution to building the capacity of 
Mission Armenia, and committed to funding its operations in 
 
 
2010 and beyond. 
 
RIBBON CUTTING HIGHLIGHTS US ASSISTANCE 
--------------------------------------- 
¶8. (U) The following day the Ambassador and the Minister of 
Labor and Social Issues were the guests of honor at a 
ribbon-cutting ceremony to mark the official re-opening of 
the Regional Employment Center in Gavar, a facility designed 
to address the employment needs of local residents. The event 
was covered by national television and print media. Gavar, 
the capital of Gegharkunik Marz, currently has 3,116 
registered unemployed and 110 employers seeking to fill 
vacancies. The employment office in Gavar was located in a 
building that had not been renovated or maintained for 40 
years. In addition to office renovation, the staff was 
trained in best practices in employment services, conducting 
labor market research, teaching job search skills, and 
assisting vulnerable populations to find jobs. The shift in 
focus from paying unemployment benefits to assisting people 
find jobs and obtain marketable skills is critical to 
Armenia's social well-being and economic growth. The 
renovation was part of USAID's Social Protection System 
Strengthening (SPSS) Project, of which one component is to 
upgrade the quality of employment services nation-wide. 
 
COMMENT 
------- 
¶9. (C) Hambardzumian and his ministry have been good partners 
of the USG, and though the Minister is relatively new (less 
than a year), he clearly understands the key issues in the 
social sector, in particular the challenges of implementing 
Armenia's pension reform program.  The USG, through USAID, is 
providing technical assistance on pension reform and is 
pleased at the high-level political committment demonstated 
by the GOAM.  Technical experts agree that the reform 
complies with international best practice and will result in 
a fiscally sound, yet adequate pension system. End Comment. 
YOVANOVITCH