Public servants’ wages to be increased in Armenia as compensation for their social pays

YEREVAN, October 25. /ARKA/. Armenian National Assembly passed today the amendments implying the increase of the nominal wages of public sector employees as compensation for social pays, which will be deducted from wages starting from January 1, 2013, when the new income tax law takes force. 

Now the major portion of the monthly social insurance payment is paid by employers, while after January 1 it will be fully taken from employees’ salaries. However, employers ought to raise their employees’ wages so that employees have their actual wages unchanged after the deductions. 

“It means salaries will neither increase nor shed,” Finance minister Vache Gabrielyan said today while presenting the amendments to lawmakers. 

The National Assembly also amended certain bills setting criteria for calculating wages for employees of judicial system, executive and legislative institutions, the central electoral commission, the ombudsman’s office, the control chamber, public radio and television as well as tax and customs agencies, special investigation agency and prosecutor offices. 

Earlier, Labor and Social Security Minister Artem Asatryan downplayed speculations that after the amended law on income tax enters into force from January 1, 2013 the employers will cut their personnel salaries. He said the changes are part of a pension reform.

Explaining the essence of the amendment, he said that now if an employer pays a worker 100,000 dram salary, he/she has to pay also 19,000 drams as social payments,” he said. “Besides, another 3000 drams are deducted from a worker’s salary as social payments in addition to 6,450 dram income tax. All in all, 9,450 drams are deducted as taxes and the net income is 90,550 drams.”

From January 1 all these components are combined into a single income tax and are deducted from the worker’s salary, but the employer will have to raise worker’s salary by 19,775 drams.

Actually, the size of salary will not change - in fact it may be raised by 775 drams.

The pension system reformation was launched in Armenia on January 1, 2011. ($1 – AMD 405.92).-0---