Unemployment grows , plants close Armenia “catches up” to the rest of the world

Weathering the Storm: Unemployment grows, plants close Armenia catches up to the rest of the world


ACP repeated the fate of its southern colleague in Kapan: operations are suspended at both Dino Gold Mining and Alaverdi copper and molybdenum plants.

Gayane Abrahamyan

ArmeniaNow reporter, on assignment for Eurasianet (www.eurasianet.org)


Along with Armenias lingering political crisis, authorities here also face the complex issue of overcoming the accelerating economic crisis and of stopping the growth of unemployment.

The mining industry has been hit first, and hardest. Copper, gold, molybdenum, zinc and lead are Armenian exports with the strongest ties to world markets, where prices have tanked in recent months.

Already, some 2,000 jobs have been lost since November in southern Armenia. Nationwide, that number has climbed as high as 5,000 since October, said one government source who asked not to be named. Those cuts will hit a labor market with limited buoyancy; Armenias official 2008 unemployment rate was 6.3 percent. But the number is misleading, as it only represents the number who have applied for unemployment. Some non-governmental organizations put the number as high as 27 percent.

The Canadian Dino Gold Mining Company, the largest job provider in Kapan, a town with a population of 40,000 some 350 kilometers south of Yerevan, has been suspended due to the drop in the prices for nonferrous metals on international markets, for three months now.

The plant and the adjacent production lines provided jobs to 1,526 people with 60 percent of them being sent to forced outage since November 1 and another 280 dismissed due to the closure of the mine exploration project.

The situation is tough if we take into account the 725 people in forced redundancy who used to provide families of five in average. This means at least 3,600 people have appeared in hard social condition in the town, said Ruben Petrosyan, head of the Kapan regional center of employment.

The employers of the enterprise held a strike for a few days in early November, when the management of the plant announced the job cuts.

The strike was stopped only after negotiations with the members of the government, when the ministers of energy and natural resources, labor and social issues as well as economy arrived in Kapan and the neighboring industrial towns of Agarak and Qajaran. Agreements were signed with the companies to postpone the job cuts to February 18, but send workers to forced outage and pay two thirds of the wages.

Nobody can predict what will happen after February 18. It depends on the economic situation in the world, said Dino Gold Mining Company Director Robert Falleta. [There] can be job cuts, even the factory may be closed.

Prime Minister Tigran Sargsyan underlined during the government session on November 13: The problem is serious as the province of Syunik relies on the plants.

The number of employees in the three largest enterprises is about 6,000, amounting to 10,000 with the satellite enterprises. We will have a serious problem in the province, because the work of about 10,000 people from the 25,000 registered employees in the region is tied up with the operation of these three largest enterprises, said the PM promising to keep the problem within the focus of attention.

But the mood in the small town of miners do not inspire hope.The town was 40 percent destroyed during the war over Karabkah in the early 1990s.

This economic crisis, it has once again thrown us into despair! We lived with an expectation of shells to fall on our house then (during the war), and now we expect job cuts, said Siranush Grigoryan, a mother of five, whose husband has been out of work for three months. We are very scarce of money; we hardly manage to get bread for children. We took a loan from the bank to buy a TV set and a washing machine a year ago, but cant pay it back now and the bank say itll sue us.

The Grigorians are not alone in Kapan; the closure of the plant has hit both the employees and also middle and small entrepreneurs.

The financial department of the Syunik province administration said the plant provided the town with about $500,000 annually, and the majority of the shoppers in the town were employees of the enterprise.

A manager at one of the home appliance stores said sells have dropped by about 50 percent in three months.

No plant, no consumers. Since October, when people were laid off, we almost havent had customers and those who have bought things with loans are unable to pay them back, a shop manager said, adding that the shop has also been started on a loan and it equally suffers and faces a perspective of closure as well, if there is no trade.

Job cuts were also made at the copper and molybdenum plant in the town of Agarak (population 4900) in December, when 450 people lost jobs.

Today more than the half of the working population in Agarak is jobless and the government has to be seriously concerned with this, Arkadi Sargsyan, the chairman of the Agarak plant trade said, underlining the further situation is still unclear: Negotiations are held with the government; maybe we will get an offer. Nothing is clear yet.

Nerses Yeritsyan, Minister of Economy of Armenia asserted the results of the negotiations will be satisfactory.

We have overcome the first wave of the crisis, the government works according to the ongoing situation; we analyze world markets every day. I cant tell anything at the moment, but I am confident the situation will improve, the minister said.

And while the government searches for ways to improve the situation in the southern province of Syunik, a wave of job cuts covered the north of the country. Two plants have closed in Gyumri since December and 800 employees of a chemical plant lost their jobs in Vanadzor. Also in Vanadzor a welding equipment factory shut down, dismissing all 350 workers.

Armenian Copper Program Company running the copper and molybdenum production for the last five years in Alaverdi, some 190 km north of Yerevan, used to provide about 70 percent of jobs there.

Andranik Ghambaryan, head of the department for general issues of the company said 640 of the 1,044 employees have remained in the plant. The planned suspension of contracts with them due in February has been postponed till April 1.

This problem depends neither on the state, nor the management of the company, but I can say one thing Alaverdi will not survive without the plant. We have neither land to go into agriculture, nor means, mayor of Alaverdi Artur Nalbandyan says.