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SOCIAL POLICY
DEVELOPMENT OF NON-AGRICULTURAL EMPLOYMENT AS
AN IMPORTANT FACTOR IN THE DEVELOPMENT OF VILLAGES AND RURAL SETTLEMENTS IN ARMENIA
DOI: 10.52174/2579-2989 2023.6-5
Keywords: rural areas, population, employment, income, seasonality, non-agricultural employment
In the context of equal development of rural areas and social progress in villages, ensuring employment for the rural population is of particular importance. Agricultural production, depending on climatic conditions, direction of production and other factors, has a certain seasonality throughout the year and does not provide stable employment. The already relatively low-paid work in agriculture does not provide high income for rural residents in conditions of underemployment. Mainly for this reason, the level of rural poverty is increasing, the outflow of population from the village and the aging of the village are increasing. These factors influence the incomplete use of agroforestry potential and the efficiency of agricultural production. Therefore, the development of non-agricultural employment is an important issue in regulating employment in rural areas. This problem is being solved through the development of the service sector in rural areas and the creation of small industrial enterprises, especially for the processing of agricultural raw materials. In recent years, agro - and ecotourism, the production of canned food and dried fruits, as well as juices and wines, have been rapidly developing in Armenia. At the same time, especially in suburban settlements, non-agricultural employment of the population develops according to the principle of fluctuating migration.
This paper assesses the opportunities of rural areas of Armenia, studies international experience, and proposes practical and effective areas for non-agricultural employment. We believe that non-farm employment is the most effective means of rural development.
Samvel AVETISYAN
Doctor of Economics, Professor
In 1978, he graduated with honors from the department of Economics of the Armenian Agricultural Institute. He completed his PhD thesis in 1990, his doctoral thesis in 2003, and earned the title of professor in 2007. In 1999, he was elected a deputy in the RA National Assembly. From 2002 to 2011 he worked as the first Deputy Minister of Agriculture. Since 2013, he has been working in the ASUE Research Center "Amberd" first as the head and coordinator of socioeconomic programs, then, in 2016, he was appointed as the director of the Research Center Program "Research of National Competitiveness and Internationalization". He is an author of 150 research papers and 20 monographs.
https://orcid.org/0000-
0002-3019-4075
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Iodern socio-economic
phenomena and the evolving dynamics of rural development make us look at the problems of the rural community from a new perspective of developing new approaches, mechanisms and directions of state support and regulation. The loss of the socio-economic purpose of rural areas of Armenia in the sphere of organization and implementation of agrarian relations and the functioning of the rural-urban continuum can lead to unpredictable consequences for the economy and social sphere.
In this regard, the strategic task for the future should be carrying out structural and functional transformations of rural territories, as well as giving them new properties and characteristics that will allow them to adapt to changing external socio-economic conditions. One of the options for solving this task is the organization and maintenance of the mode of multifunctional development of rural areas. Modern rural areas, especially in regions with traditionally developed agricultural production, are no longer considered only in terms of their implementation of production and nutritional functions. "Range" offunctional tasks performed by rural areas brought them closer to small and medium-sized cities, and also pointed to the need for conceptual justification and practical elaboration of the formation of an appropriate organizational and economic mechanism for multifunctional development. Emphasizing the necessity to develop qualitatively new approaches to the organization of the functioning of the organizational-economic mechanism of the multifunctional development of rural territories, there is a need to develop tools that allow rural territories to implement new functions while preserving traditional ones. This will allow not only to balance the parameters of the social and economic development of the village, but also to give them a new functional status, to logically "build" rural-type territories into the architecture of agrarian socio-economic systems and lay the prerequisites for the formation of the image of the Armenian "village of the future".
In recent years, there has been growing recognition of the role of the non-farm sector in providing employment and income smoothing in rural areas of developing countries, as well as in the European Union (EU), CIS and CEE. However, there has been relatively little focus on the factors that determine people's capacity to take advantage of or to generate these opportunities. It is assumed that two processes are evident: demand, as rural residents respond to new opportunities; and stress pressures where the poorest are forced to seek non-farm work as a survival strategy. Sometimes these processes work together. The non-farm sector is thus vital for rural employment and incomes in situations of both stagnant and buoyant agricultural sectors and rural economy as a whole. It is also important for Armenia's economic growth, as the development of remunerative and sustainable non-farm employment opportunities will have important effects in terms of poverty reduction and the use of government and donor structural funds in the context of the Poverty Reduction Strategy Paper (PRSP). This research aims to identify the key socioeconomic factors, resources, activities and constraints to rural households and enterprises in the non-farm rural economy. Data were collected at the micro-level and analyzed in the context of farm systems theory and contemporary econometric methodologies. The aim is to derive policy conclusions conducive to the development of sustainable rural livelihoods.
Agriculture is a system-creating branch, the development of which contributes to meeting the population's food requirements, the development of rural areas, food, light industry, production, and social infrastructures serving the sector. Along with this importance, agriculture is a high-risk sector. This is because production is organized primarily in the open air, plant growth and development are mainly determined by natural factors, and the behavior of agricultural animals is greatly influenced by the presence of natural and sown forage crops. The sector's dominance
is due to its role in the country's food security, income formation, and living standards of the rural population. In particular, the agrarian sector is too important for the RA economy, as the country is landlocked, the land routes of external communication are not very stable, and there are severe difficulties in filling the food shortage. In addition, more than 11.3% of GDP (in 2021)' is created in the agricultural sector, and agriculture, forestry, and fishing account for about 26% of the total employment of the republic (in 2020)2.
However, our study shows that especially in 2009-2010 and after 2014, the agricultural sector's efficiency decreased significantly. This is evidenced by the low labor productivity per employee and the availability of modern equipment.
The paper aims to study the development trend of the RA agrarian sector, especially in the last decade, to consider the main issues of the agricultural sector. The need to increase the efficiency of the agricultural sector is emphasized in the program of the RA Government3. It is considered as one of the seven strategic priorities of the RA agricultural sector4.
Agriculture is one of the key branches of Armenia's economy and the basis of society's existence, 94% of its gross output is provided
by about 317 thousand farms, each of which has an average of 1.48 hectares of land. 21.8% of the employed in the RA are included in the agricultural sector. It is significant not only as a sector from which a certain added value is obtained, but first of all as a sector, on the quality and level of development of which depends the food security of the population, the living standard and development opportunities of rural areas, the health and safety of people, the place of residence and conditions, as well as the quality and length of life of the population.
The volume of the gross agricultural output in 2022 is about 1,021.4 billion drams, which was 100.4% compared to the same period of the previous year, including the volume of crop production was about 518.8 billion drams, and the volume of livestock breeding was about 502.5 billion drams.
It must be recognized that by the year 2000, only less than half of the rural population was employed in agriculture, and in suburban areas, especially in the suburbs, agricultural employment was about 25%. But still the agrarian function of the village remained leading in most regions. With the beginning of economic reforms, there was a rapid reduction in agricultural employment, especially in regions with the worst climatic conditions for farming. Therefore, the
TABLE 1
GDP and population of the Republic of Armenia (2018-2022)5
20! 8 2019 2020 202! 2022
Gross dcmestfc product (GDP)
Total GDP [million drams) 6 017 035.2 5 543 321.8 6 181 902.6 6 991 777.8 8 501 435.5
of which agriculture 838 913.0 754 157.0 701 633.9 793 115.7 801 065.5
GDP per capita (drams) 2 026 620 2208 716 2 087423 2 360 253 2 863 304
The Republic of Armenia population, colkh. people 2 965.3 2 959.7 2 963.3 2 961.4 2 977.1
By types of settlement
Urban 1894.9 1092.1 1095.6 1892.2 1098.1
Rural 1070.4 1067.6 10 67.7 1069.2 1079.0
RA Statistical Committee Food Security and Poverty, January-June 2022, https://www.armstat.am/file/article/f_sec_2_2022_1.pdf (accessed 05.11.2022)
RA Statistical Committee Statistical Yearbook of Armenia 2021, https://www.armstat.am/file/doc/99528083.pdf (accessed 05.11.2022)
Program of activities for 2020-2022 aimed at the implementation of the 2020-2030 strategy of the main directions ensuring the economic development of the agricultural sector of the Republic of Armenia. https://www.arlis.am/DocumentView.aspx7Do-cID=137852 (accessed 05.11.2022)
Defined in the 2020-2030 strategy of the main directions ensuring the economic development of RA agricultural sector. https://armstat.am/file/article/f_sec_3_2023_1.pdf
TABLE 2
GDP and population of the Republic of Armenia (2018-2022)6
Labor force participation rate Employment-to- population ratio Unemployment rate
2021 2022 2021 2022 202t 2022
Totil in (he RA 57.8 SS.fi 40 .9 50-9 15-5 135
Yerevan 56.5 58.5 44.3 43. B 21.5 16.5
Aragaturtn es, 4 65.6 59,2 62.4 6.7 4.7
Ar&r 53 1 57-4 47. a 53.5 10.0 8-5
Armavir 79 .B 7B.5 71.3 72.4 10.6 7.7
Gejfiarkuiik 47.1 53.3 44.4 49.7 5.7 6.7
Lwl 56.5 54.9 15.9 44.3 ie.a (9.2
Kotyk 5S.3 55.0 47.3 45.1 r;0;l 10.0
Shirak 52 2 46.4 44.2 40.5 154 12 6
Syunik 72. B 71 6 65.7 63 4 9.S 11.5
Vayots Dkw 57.1 59.9 49.J 51.4 14.0 14.2
Tiivush 50,1 52-5 41.7 41.5 16.7 Î0.7
population in the village is simultaneously engaged in non-agricultural activities to obtain income, using local natural resources.
The current situation in the rural labor market shows that the number of rural residents engaged in non-agricultural activities is increasing every year.
In 2018-2022 the annual GDP created in the field of agriculture amounted to 793.9 billion drams on average. According to calculations per employee, this chart is about 3 million drams, which is very modest.
According to the data, in 2021-2022 the level of employment in the RA in 2021 was 48.9 and in 2022 - 50.9%. This indicator is especially high in Armavir, Syunik, Aragatsotn and Armavir marzes (table 2). This is mainly explained by the fact, that in addition to agriculture, people are also engaged in the non-farm sector. In other words, proximity to Yerevan and other cities, as well as the development of local mining and processing industries, contribute to increased employment and increased income for family farms. Along with that, the level of
unemployment is high in Lori, Kotayk, Shirak and Tavush marzes, as a result of which the poverty level is also high in these marzes7.
Studies show that especially in the last decade, the opportunities for non-agricultural employment in marzes have increased. This trend is due to investments aimed at the development of services in rural areas, especially tourism, as well as subsidy programs implemented by the state due to the enlargement of communities. Of course, the activity is noticeable, but still does not provide a tangible result. Therefore, as the international experience shows, a special targeted program and interested donors are needed to give new momentum to the development of rural areas.
In general, diversification of employment in rural areas is an important factor in increasing and streamlining the flow of cash income of the family economy.
The choice of one type of non-farm employment or another depends on various factors: household size, specialization and
The source of data are the results of Labour Force Survey carried out in households by the Armstat (RA-LFS). The methodology of RA-LFS is based on the concepts of «Resolution concerning statistics of work, employment and labour underutilization» adopted by the 19th International Conference of Labor Statisticians (19th ICLS) in October 2013, since 2018. For more details see https://www.armstat.am/file/article/lab_market_2021_03-1.pdf). See the picture of poverty in Armenia 2019-2022, p. 37-38. https://armstat.am/file/article/f_sec_3_2023_1.pdf
location; individual characteristics of the farmer and household members (age, level of education, experience); local conditions, etc. As a rule, the diversification process affects large farms (in the EU, more than 20% of farms with an area of more than 100 hectares have alternative activities). For small farms, the most common situation is when household members, in addition to agricultural activities, also have other jobs outside the farm. Livestock farms often decide to diversify their operations. This may be due to the fact that livestock farming is less susceptible to seasonality than crop production specialization. Household members are employed on the farm all year round, so developing an alternative type of income using household funds is more profitable than looking for work outside the farm. As for the geographical location, as a rule, multi-industry farms are located near large cities or in regions with comparative advantages (mountainous, coastal, wine-growing).
Foreign experience in reducing unemployment shows that there are no general recipes permanent means of employment policy. It varies from country to country, depending on the characteristics of the socio-economic and political structure, cultural traditions, modified with changes in the situation in the economy and labor market. The main goal of modern employment policies in developed and developing countries becomes an increase in employment of the entire population by identifying unused abilities, involving the total workforce in a more efficient and comprehensive system of division of labor. At the same time, the access of new categories of the working-age population to the labor market is encouraged, rather than limited. Let's consider the most striking foreign models of employment policy.
The employment model in Canada is mainly focused on creating a system of vocational guidance and employment for the population. It has interesting experience in creating systems of vocational guidance and employment of the population.
Recently, new forms of vocational guidance have been introduced here (designed not only for students, but also for adult workers), its close relationship with other areas of state regulation of the preparation and use of labor. The most important forms of knowledge for young people "the world of professions" are becoming independent classes in specialized centers professional guidance ("choice center").
This is a new, special type of institution that has automated information systems, video equipment, electronic examiners. In recent years, the external market has also been developing, more similar to the classic one, serving small enterprises, where both the internal and external markets are characterized by stable employment. Focusing on using workers for a long time allows companies to provide professional training and advanced training for at the intra-company level in accordance with the structure of jobs, scientific and technical progress, modification of manufactured products, provide for professional mobility in advance with in the company, to cultivate in employees a creative attitude towards work and high quality work. The management of the company may, at its discretion, reshuffle the employee from one place to another, from one unit to another.
In Japan, wages have long been based on length of service and age. Today there is a shift towards taking into account qualifications and labor efficiency. But the old system of organization is still in effect. This system of industrial relations encourages long tenure and prevents workers from freely moving to other enterprises. The lifelong employment system predetermines, to a certain extent, the solution to the problems of production reduction and the dismissal of workers by reducing the number of workers' time or transfer them to subsidiaries or to enterprises of other companies according to mutual agreement. These measures curb the growth of unemployment. In Japan, new elements of the "hiring strategy" also include: a different principle of remuneration - in
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accordance with abilities and real contribution, and not based on length of service (about 79% of enterprises follow this); course towards the worldwide development of small manufacturing activitie groups (47% of enterprises); development and improvement of professionalism of employees among middle and older age categories (42% of enterprises). In addition, in Japan there is a practice of renting labor employed at a particular enterprise, to another enterprise -usually associated with the first subcontracting relationship, being suppliers, etc. There is also feedback. The share of workers provided for rent among hired workers in enterprises is with more than 1 thousand employees 6-7.2%, from 300 to 1 thousand - 4.8%, and among employed in enterprise management - 17.1%, which in practice makes it possible to modify the use of labor in order to slow down the rate of growth of unemployment and ensure growth of profits.
Thus, the formation of models in countries developed market system lasted for a long time, which is not given countries with economies in transition. In the context of accelerated market transformations economy and social sphere, the time factor becomes important. Foreign experience in building a development model is certainly necessary, and it should be taken into account that successful reform of the
economy and social sphere does not depend on choice "good model", but on whether each country can find its own economic identity based on specific social structures. Even in developed conditions
In a market economy, it is impossible to completely copy someone's experience without taking into account the uniqueness and regional characteristics of a particular country.
At the same time, in China there is one very unusual village called Huaxi, which the Chinese themselves call "Village No. 1 in the Celestial Empire." Local residents live in luxurious houses ranging from 400 to 600 square meters, they drive exclusively luxury cars, and each resident has a fairly decent amount of money in their account. In addition, Huaxi is the only village in the world with its own skyscraper.
In appearance, the village somewhat resembles an ordinary sanatorium where the party nomenklatura likes to come to rest. On its territory there are quite nice two-story buildings, a lot of greenery and flowers are planted, there are fountains, lakes with turtles and much more. The local population of Huaxi is about 35 thousand people, plus 25 thousand migrant workers from other parts of the country who work for them. All local residents have a high standard of living and they receive many privileges and benefits
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"Village No. 1 in China"general view
from Huaxi. But in order to enjoy all this, you must permanently live in the village. In addition, there is one interesting rule in Huaxi: if one of the local residents leaves the village, he loses all his property. Therefore, there are no people willing to leave the village.
Local residents practically do not spend the money they earn, since there is nowhere to spend it. Medicine and education in Huaxi are free for locals, and food costs mere pennies due to subsidies provided to the population. Every resident has the right to free housing, which everyone receives after reaching the age of majority. Elderly residents have old-age insurance, and his family has additional financial support to look after an elderly relative. In addition, upon reaching the age of 100, a one-time benefit of $1,500 is paid. But the most important thing is that every local resident, including minor children, at the end of the year receives their percentage of 20% of the village's profit for the year. The rest is invested in development. It is worth adding that all local residents of the village are shareholders of the Huaxi cooperative, whose securities are traded on the Shenzhen Stock Exchange and bring in good profits. Thanks to this scheme, all local residents accumulated decent amounts in
their bank accounts and became millionaires. The poorest families in Huaxi have about three million yuan - that is a little more than 400 thousand dollars .
Nowadays, this village in China is famous for its high standard of living as well as its rapid level of economic development. Interestingly, there really is no such village in the world. But not everything is so simple: to achieve such material well-being, local residents work seven days a week. And unfortunately they do not know what a vacation and interesting trips around the world are. Instead, local residents are invited to visit the World Park, where they can see replicas of various world attractions.
The village of Huaxi even has its own skyscraper. The height of which is a whopping 328 meters, which is only 2 meters lower than the skyscraper in Beijing. Of course, it was possible to build a higher skyscraper in Huaxi, but the local authorities at that time did not dare to build a larger skyscraper in the village than the one in Beijing itself. About $430 million was spent on the construction of the skyscraper, with each family in the village contributing about $15,000. Currently, it is rightfully included in the twenty tallest buildings in the world. The skyscraper has its own five-star
hotel with 800 rooms, an exhibition hall, one of the most expensive restaurants, and there are gardens and a swimming pool on the roof. The most interesting thing is that every 15 floors represent one idea - metal or wood, water or fire, air or earth. And on the 60th floor there is a sculpture of a bull, for which local authorities paid about 40 million dollars8.
In the near future, it is also planned to build two more skyscrapers in Huaxi, which will also impress not only with their height, but also with their unusual design.
In the early 70s, it was an ordinary village and the local residents simply did not have much wealth. They were engaged in agricultural activities and sold for mere pennies what they managed to grow. However, one farmer from the village with an innate instinct, Wu Zhenbao, managed to occupy the post of Secretary of the village party committee in those years. At the height of the Cultural Revolution in 1969, he made a very important decision for the village - he allowed the construction of a textile factory, for which he could pay with his life. However, he could no longer look at the hungry locals. Oddly enough, Wu Zhenbao managed to get all the documents approved by all authorities. Soon the textile factory began to generate good income, which meant that Wu Zhenbao had chosen the right path. Gradually, Huaxi village almost completely switched from agricultural activities to production. We see the result of this path now. Huaxi Village has turned into a veritable village of millionaires, which even has its own skyscraper. Over the past few decades, eight thriving businesses have been built near the village, helping Huaxi continue to develop by leaps and
bounds. Currently, annual investments in the village amount to more than $4 billion.
The villages of Huaxi are an example of an economic miracle, thanks to which even the "poorest" families in the village have a fortune of at least 400 thousand dollars. The village annually attracts the attention of a large number of tourists, who never cease to be amazed at the luxurious life of the locals. The village has achieved such results in just 50 years; the main secret of success is the right decisions of Wu Zhenbao. Tourists are loved and respected in Huaxi; several hotels have been built for them, so anyone can visit this famous village and see this famous place with their own eyes. Huaxi continues to develop by leaps and bounds and in the future plans to buy an ocean shipping company, establish its own bank and develop tourism, the latter of which they are already doing well, since about two million foreign tourists visit the village every year.
Thus, the study of international experience shows that the expansion of non-agricultural employment of the rural population is of great importance for the development of rural areas. Most communities in Armenia have a qualified workforce that is ready to retrain and engage in industrial and social infrastructure, various services in the service sector, especially textile and tourism activities. To do this, it is necessary to develop a target program and a road map. The efforts of the state and the private sector must be aimed at implementing this plan. The allocation of financial resources from international donor structures and the Armenian diaspora to the development of non-agricultural employment in rural areas is also of great importance.
Huaxi, China: A Journey to the World's Richest Village; https://www.vagabondjourney.com/huaxi-china-worlds-richest-village/
REFERENCES
3.
RA Statistical Committee Food Security and Poverty, January-June 2022, https://www.armstat.am/file/article/f_sec_2_2022_1. pdf (accessed 05.11.2022) RA Statistical Committee Statistical Yearbook of Armenia 2021,
https://www.armstat.am/file/doc/99528083.pdf (accessed 05.11.2022)
Program of activities for 2020-2022 aimed at the implementation of the 2020-2030 strategy of the main directions ensuring the economic development of the agricultural sector of the Republic of Armenia. https://www.arlis.am/DocumentView.aspx?Do-cID=137852 (accessed 05.11.2022)
4. Defined in the 2020-2030 strategy of the main directions ensuring the economic development of RA agricultural sector
5. GDP and population of the Republic of Armenia,
https://armstat.am/file/article/f_sec_3_2023_1.pdf
6. Participation Rates of Population by Marzes and Yerevan city;
https://armstat.am/en/?nid=82&id=2435
7. Как выглядит китайская деревня миллионеров Хуаси, в которой есть 328-метровый небоскрёб https://www.ixbt.com/live/travel/kak-vyglyadit-sa-maya-bogataya-derevnya-huasi-v-kitae-gde-kazh-dyy-zhitel-millioner.html
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Самвел АВЕТИСЯН
Старший эксперт исследовательского центра «Амберд», АГЭУ, доктор экономических наук, профессор
О СОЦИАЛЬНАЯ ПОЛИТИКА
РАЗВИТИЕ НЕСЕЛЬСКОХОЗЯЙСТВЕННОЙ ЗАНЯТОСТИ КАК ЭФФЕКТИВНАЯ МЕРА 5 БЛАГОУСТРОЙСТВА СЕЛА И СЕЛЬСКИХ ТЕРРИТОРИЙ
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В условиях равноправного развития сельской местности и социального развития села обеспечение занятости сельского населения имеет особое значение. Сельскохозяйственное производство в зависимости от климатических условий, направления производства и других факторов имеет определенную сезонность в течение года и не обеспечивает стабильной занятости. И без того сравнительно низкооплачиваемая работа в сфере сельского хозяйства не обеспечивает высокого дохода сельским жителям в условиях неполной занятости. Главным образом по этой причине повышается уровень сельской бедности, усиливается отток населения из села и старение села. Эти факторы влияют на неполное использование агролесомелиоративного потенциала и эффективность сельскохозяйственного производства. Поэтому развитие несельскохозяйственной заня-з тости является важным вопросом регулирования занятости населения в сельской местности. Эта проблема решается за счет развития сферы услуг в сельской местности, создания малых про-
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мышленных предприятий, особенно по переработке сельскохозяйственного сырья. В последние годы в Армении бурно развивается агро- и экотуризм, производство консервов и сухофруктов, а ю также соков и вин. Вместе с тем, особенно в пригородных поселениях, несельскохозяйственная занятость населения развивается по принципу колеблющейся миграции.
В данной статье, оценивая возможности сельских территорий Армении и изучая международный опыт, предлагаются наиболее практичные и эффективные направления несельскохозяйственной занятости. Мы считаем, что несельскохозяйственная занятость является наиболее эффективным средством развития села и сельской местности.
Ключевые слова: сельская местность, население, занятость, доходы, сезонность, несельскохозяйственная занятость
