Minimum Wage Fixing Convention, 1970 (No. 131) - Armenia (Ratification: 2005)

Direct Request (CEACR) - adopted 2017, published 107th ILC session (2018)

In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on wages, Convention No. 131 (minimum wage) and Conventions Nos 95 and 173 (protection of wages), the Committee considers it appropriate to examine them together.

The Committee notes the observations of the Confederations of Trade Unions of Armenia (CTUA) on Convention No. 131, Convention No. 95 and Convention No. 173, communicated with the Government’s reports.

Minimum wage

Minimum Wage Fixing Convention, 1970 (No. 131)

Articles 3 and 4 of the Convention. Criteria for the determination of the minimum wage level and consultations for the operation and modification of the system of minimum wage. The Committee notes that, in reply to previous observations of the Republican Union of Employers of Armenia (RUEA) and the International Organisation of Employers (IOE) concerning the absence of consideration of economic factors in the determination of the minimum wage level and the absence of full consultation of the employers’ organizations, the Government indicates that, following the adoption of the National Collective Agreement for 2015–18 by the Republican Tripartite Commission, a new methodology for the determination of the minimum wage has been developed in consultation with the CTUA and the RUEA. The Committee notes that the methodology transmitted by the Government in its report takes into account the criteria listed in Article 3. It also notes the Government’s indication that the draft modifications of the minimum wage level are communicated to the social partners for comments. Finally, it notes that, following a request from the Government in May 2017, the country is receiving technical assistance from the Office on the application of the Convention. The Committee requests the Government to provide information on developments in this respect.

Informal economy. In its observations, the CTUA indicates that the methodology for the determination of the minimum wage does not address the extensive problem of the informal economy. The Committee requests the Government to provide its comments in this respect.

Protection of wages

Protection of Wages Convention, 1949 (No. 95)

Article 2 of the Convention. Application to public officials and public servants. The Committee notes that section 181 of the Labour Code provides that the procedures and conditions of remuneration of public officials and public servants shall be prescribed by law. The Committee also notes the adoption of Law HO-157-N of 12 December 2013 on the remuneration of persons holding public offices, which is not available in English. The Committee therefore requests the Government to indicate whether provisions of this Law ensure that public officials and public servants benefit from the protection of the Convention, and if this is not the case, how effect is given to the Convention for this category of workers.

Article 3(1). Prohibition of payment in a form other than legal tender. The Committee notes that pursuant to section 192(2) of the Labour Code, the payment of wages in the form of securities or commitments is prohibited, except in the cases prescribed by law. The Committee requests the Government to provide information on the cases, if any, in which the law authorizes the payment of wages in the form of securities or commitments.

Articles 6 and 7. Freedom of workers to dispose of their wages. The Committee notes the Government’s indication that these Articles of the Convention are directly applicable to the national legal order by virtue of the ratification of the Convention.

Article 14(a). Information of workers in cases of changes in their wages. The Committee notes that section 194 of the Labour Code – pursuant to which the employer was requested to notify the workers in writing before changes in their conditions or remuneration occurred as a result of changes in the law or in collective agreements – was repealed by Law HO-96-N of 22 June 2015. Therefore, the Committee requests the Government to provide information on whether measures have been taken to ensure that workers are informed in cases of changes in their wages, in accordance with Article 14(a) of the Convention.

Article 15(d). Wage records. In its previous comments, the Committee requested the Government to adopt measures to ensure that adequate wage records are maintained in an approved form and manner. It notes the information provided by the Government that under Government Decision No. 1676-N, workers may request an excerpt from their individual account in the database of the Personal Registration of Income Tax and Social Payments. These excerpts include the information that employers are required to provide to the tax authorities on the workers’ income, and on the tax and social contributions applied. Recalling that the maintenance of wage records also serves to facilitate the work of labour inspectors, the Committee requests the Government to indicate whether and how labour inspectors have access to wage records.

Protection of Workers’ Claims (Employer’s Insolvency) Convention, 1992 (No. 173)

Article 6 of the Convention. Protection of workers’ claims by means of a privilege. In its previous comments, the Committee requested the Government to clarify whether the privilege for wage claims provided for under the Bankruptcy Act of 25 December 2006 covered all the claims listed under Article 6. The Committee takes note of the Government’s indication that the list of claims covered by the privilege is found in Government Decision No. 853-N of 8 August 2013, which includes all the claims listed in Article 6.

Articles 9–13. Protection of workers’ claims by means of a guarantee institution. In its previous comments, the Committee requested the Government to provide information on the progress made for the establishment of a wage guarantee institution. In its observations, the CTUA indicates that the absence of a wage guarantee institution increases poverty and fosters the development of the informal economy. The Committee takes note of the Government’s indication that the establishment of a wage guarantee institution would be inappropriate under the country’s current phase of socio-economic development, as it would excessively burden the employers’ financial capacity and undermine employment creation. The Committee invites the Government to take advantage of the technical assistance that the country is receiving from the Office in order to make progress towards the creation of a wage guarantee institution, in accordance with the Convention. It requests the Government to provide information on progress made in this respect.

Enforcement

Sanctions and labour inspection. With reference to its comments under the Labour Inspection Convention, 1947 (No. 81), the Committee requests the Government to provide specific information on the measures taken to inspect compliance with the national provisions on minimum wage and protection of wages, and on the sanctions adopted in cases where violations have been identified, if any. It also requests the Government to provide information on the provisions of the national legislation which contain the possible sanctions in this respect.

Direct Request (CEACR) - adopted 2013, published 103rd ILC session (2014)

Articles 1 and 4 of the Convention. Minimum wage system – Full consultation with employers’ and workers’ organizations. The Committee notes the observations of the Republican Union of Employers of Armenia (RUEA) and the International Organisation of Employers (IOE) concerning the application of the Convention, which were received on 4 July 2013 and transmitted to the Government on 11 September 2013. The two employers’ organizations express their concern about recent amendments to the Minimum Wage Act of 2003 and the establishment of a new minimum wage rate without any prior consultations with representative employers’ organizations. The RUEA and the IOE indicate that even though the draft legislation was communicated to the RUEA for comments, the assessment of the impact of the minimum wage on the economy was carried out by the Government, and the criteria used for the determination of the minimum wage did not reflect factors such as the changes in the cost of living, the relative living standards of other social groups, the requirements of economic development, the levels of productivity and the desirability of attaining and maintaining a high level of employment. In addition, the Committee notes additional comments made by the IOE on 17 July 2013, according to which the involvement of social partners in minimum wage setting, adjustment and enforcement is vital and therefore it would be appreciated if the Committee could raise awareness among ILO member States of the utmost importance of consulting social partners at all stages of the minimum wage fixing process. The Committee requests the Government to submit any comments it may wish to make in response to the observations of the RUEA and the IOE.

Direct Request (CEACR) - adopted 2011, published 101st ILC session (2012)

Articles 1(1) and 4 of the Convention. Minimum wage system. Consultations with the social partners. Further to its previous comment, the Committee notes that there is still no institutionalized framework in place for conducting consultations with representative employers’ and workers’ organizations before fixing and adjusting minimum wage rates. In this regard, the Committee notes the comments of the Republican Union of Employers of Armenia which indicates that the Government simply informs them of the latest decision determining the minimum wage level. The Government refers to a tripartite committee operating under the terms of the National Collective Agreement of 2009, which discusses wages-related issues, without being clear however, if this is a permanent consultative body mandated to regularly review minimum wage rates and formulate recommendations on their adjustment. The Committee therefore requests the Government to provide additional explanations on any initiatives to establish a framework for carrying out genuine and effective consultations with the social partners at all stages of the minimum wage fixing process.

Article 3. Elements to be considered in determining minimum wage levels. Further to its previous comment, the Committee notes the Government’s indication that the current minimum wage rate is set at 32,500 Armenian Dram (AMD) (approximately US$85) per month while the value of the minimum consumer basket is calculated at AMD43,056 (approximately US$111) per month based on World Bank methodology and at AMD62,644 (approximately US$163) based on methodology prepared of the Ministry of Health. The Committee notes that according to the terms of the Act of 16 March 2004 on minimum goods necessary for subsistence and living wage, the minimum consumer basket is to be used as a benchmark for the determination of the minimum wage, pensions, scholarships and other social benefits. The Committee also notes the comments of the Confederation of Trade Unions of Armenia according to which: (i) no procedure has yet been established for the indexation of the minimum wage as prescribed by the Labour Code; (ii) living standards are not taken into consideration when determining minimum wage levels; and (iii) there is no legal text defining the structure of the minimum consumer basket. In this connection, the Government indicates that draft legislation amending the Act of 2004 was prepared to define the structure, composition and methodology for the calculation of the minimum consumer basket but has not been adopted for fear that integrating the cost of minimum consumer basket in social policy might negatively impact on the macroeconomic stability of the country. The Committee requests the Government to elaborate on any measures taken or envisaged in order to ensure that minimum wage levels are determined taking into account not only economic factors but also social considerations, such as the basic needs of workers and their families, along a methodology that guarantees the full consultation and direct participation of employers’ and workers’ organizations concerned.

Article 5 of the Convention and Part V of the report form. Application in practice. The Committee notes the statistical information provided by the Government concerning the evolution of the minimum wage rates in the period 2008–10 as compared to the evolution of the average wage and the cost of the minimum consumer basket. It also notes the inspection results concerning the number of infringements of the minimum wage legislation reported in 2010. The Committee requests the Government to continue providing up-to-date information on the practical application of the Convention, including, for instance, the approximate number of workers remunerated at the minimum pay rate, the evolution of the minimum wage as compared to the evolution of economic indicators such as the inflation rate, inspection results showing the number and nature of contraventions observed and sanctions imposed and copies of official reports or studies addressing issues of minimum wage policy.

Direct Request (CEACR) - adopted 2008, published 98th ILC session (2009)

The Committee notes with interest the Government’s first detailed report on the application of the Convention as well as the observations made by the Union of Manufacturers and Entrepreneurs of Armenia and the Confederation of Trade Unions of Armenia. It wishes to draw the Government’s attention to the following points.

Article 1(1) of the Convention. System of minimum wages. The Committee notes that section 179(1) of the Labour Code of 2004 provides that the minimum monthly and hourly wage rates are determined by law and that different rates may be established for certain branches of economic activity, regions or categories of workers. The Government specifies in its report that at present a single national minimum wage has been established and is currently set at 20,000 Armenian drams (AMD) (approximately US$65) per month. The Committee notes, however, that the Labour Code does not contain any provisions on the institutional machinery or the procedure for fixing minimum pay rates while the Government’s report does not elaborate on this aspect either. Moreover, the Committee notes that both the Union of Manufacturers and Entrepreneurs of Armenia and the Confederation of Trade Unions of Armenia denounce in their comments the lack of a minimum wage fixing mechanism. The Committee therefore requests the Government to provide additional information in this regard, for instance, the institutional framework within which minimum wages are reviewed and readjusted, the composition of any consultative body which is associated with the minimum wage fixing process, etc.

Article 3. Elements to be considered in determining minimum wage levels. The Committee notes the Government’s indication that by virtue of Government Decision No. 994-N of 8 August 2003 on the strategic programme to combat poverty, the minimum wage is determined by reference to the general poverty line, which is calculated on the basis of the cash value of a basic basket of essential consumer goods, and also taking into account the rate of economic growth and budgetary constraints with respect to public spending. The Government adds, however, that the factors listed in Article 3 of the Convention are not considered when determining the amount of the minimum wage. In addition, the Confederation of Trade Unions of Armenia refers to the Act on minimum goods necessary for subsistence and living wage, which was adopted in 2004, and indicates that to date no subsistence minimum living wage has been adopted. Recalling that the fundamental purpose of minimum wage fixing is to ensure to low-paid workers and their families a decent standard of living, the Committee asks the Government to specify the measures it intends to take so that minimum wage levels adequately reflect the socio-economic realities prevailing in the country, as prescribed by this Article of the Convention.

Article 4(2) and (3). Consultation and participation of employers’ and workers’ organizations. The Committee notes that according to the Union of Manufacturers and Entrepreneurs of Armenia, there are no consultations with employers’ or workers’ organizations in the process of determining the national minimum wage and the employers’ organization is in practice informed of new increases of the minimum wage from media reports. The Committee recalls that the full consultation with, and direct participation of, representative employers’ and workers’ organizations at all stages of the minimum wage fixing process is a core requirement of the Convention. The Government’s attention is drawn to paragraphs 7 and 8 of the Minimum Wage Fixing Recommendation, 1970 (No. 135), and also to paragraphs 186–273 of the 1992 General Survey on minimum wages, which offer guidance on the content and process of consultation with the social partners. The Committee therefore asks the Government to take appropriate steps, in accordance also with the principles of social partnership set out in sections 39–42 of the Labour Code, in order to enable representative organizations of employers and workers to be associated in equal numbers and on equal terms with the operation of the minimum wage fixing machinery.

Article 5 and Part V of the report form. The Committee would be grateful if the Government would provide up to date information on the application of the Convention in practice, including for instance the minimum wage rate in force, statistics on the proportion of the workforce remunerated at the minimum wage, the evolution of minimum wage rates in recent years compared to the evolution of economic indicators, such as the consumer price index over the same period, labour inspection results showing minimum wage-related offences reported and sanctions imposed, etc.