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The Problems of Public Administration in Armenia

Prof. Edward Ordyan, PhD
Armenian School of Public Administration

The establishment of a liberal democracy and a market economy in Armenia required the drastic re-conceptualisation of the entire public administration system. A set of strategic reforms that revised the state’s role, objectives and functions were required to meet the new challenges in securing economic growth, strengthening independent statehood, improving living standards and ensuring the security of the country. These reforms included streamlining existing public administration structures and adding new entities where appropriate, modernising the civil service, utilising its potential more effectively and optimising the balance of centralised and decentralised government. 

1	The Specifics of Public Administration in Armenia
The development of a public administration system in Armenia, in conjunction with political and socio-economic reforms, necessitated the re-conceptualisation of the role of the state. Gradually, therefore, the state shifted from directly influencing the public administration to a partner that regulates, stimulates, assists and sets “the rules of the game.” As a result, the following contemporary principles and approaches have been given greater attention:
•	the decentralisation of vertical structures of administration and the strengthening of horizontal connections;
•	the delegation of more authority, functions and responsibilities to lower levels of government;
•	the improvement of communication and information flow in all directions;
•	emergency and crisis management;
•	programme-oriented management, prioritised to cope with contemporary problems (e.g., reconstruction of the earthquake zone, strengthening of border areas, protection of Lake Sevan, creation of market infrastructures and the development of small businesses);
•	the streamlining and merging of public administration bodies to achieve maximum efficiency and effectiveness.

2	Prerequisites for the Formation of a Public Administration System
A number of steps aimed at developing a public administration system were taken during the first eight years of Armenia’s independence, and hundreds of laws and bylaws were introduced. It is, therefore, possible to analyse these measures and their impact to identify areas of the public administration system where further improvement is needed.
Armenia’s independence and the establishment of a market economy brought about the formation of a public administration system and heavily influenced the range of its activities through changes in the economic system (Box 1). In turn, the strengthening of market relations in Armenia resulted from the creation of an adequate legislative base.

Box 1: Legal Framework for the Transition to a Market Economy in Armenia
The development of market activities in Armenia began with the introduction of an appropriate legal framework. The following laws were developed and implemented: the “Law on Private Property” (1990), the “Law on Peasant Farmers and Collective Farms” (1992), the “Law on the Privatisation of Enterprises and Unfinished Construction” (1992) and the “Law on Privatisation of State Housing” (1993), among others. 

As a result, a system of multiple-ownership developed, and enterprises with various legal statuses and structures were founded, ensuring the self-sustainability of economic units and establishing the preconditions for a market economy (Figures 1 and 2).

The data presented in Figures 1 and 2 is from the 1998 annual report of the Ministry of Statistics and the State Register.

Figure 1						Figure 2

*

Enterprises by Types of Ownership, 1998 	Enterprises by Types of Organisation and Legal Status, 1998

4.6%

35.2%

5.4%

30.6%

24.2%

2

1

4

3

5

2

3

4

1

6.5%

7.7%

26.5%

59.3%

Key
1. State Ownership         				1. State Enterprises
2. Collective Ownership        				2. Limited Liability Companies
3. Private Ownership         				3. Individual Enterprises
4. Mixed and Foreign Ownership      			4. Joint-stock Companies 
5. Other Organisations					5. Other Organisations

From 1991 to1997, 6,356 small and 1,252 mid-sized and large enterprises were privatised. At present, over ninety-five percent of agricultural land and production capacities have been privatised. At the beginning of 1998, of 37,687 enterprises, Armenian state ownership comprised 7.7%, collective ownership was 59.3% and private ownership was 26.5%. The remainder of these enterprises were registered under mixed and foreign ownership. 
When viewed by type of organisation and legal status, state enterprises only comprised 4.6% of the total number of enterprises in 1998, evidence of the decrease in state ownership. In comparison, limited liability companies formed 35.2% of all enterprises, individual enterprises were 24.2% and 5.4% were joint-stock companies. In 1997, 83.8% (over seven hundred and fifty thousand) of state apartments of Armenia were privatised. At present, over seventy-five percent of Armenia’s gross domestic product is earned by the private sector. 
The data presented above is indicative of the state of Armenia’s conversion to a market economy and the massive reforms currently underway. Naturally, these factors are reflected in the forms and methods of the state’s role in the economy. If the previous administrative-command system was characterised by centralisation, a rigid hierarchy and limited independence of subordinate entities, in a market economy, economic factors play a greater role, competition is encouraged, several public administration functions are decentralised and the independence of enterprises is ensured. In particular, the participation of the populace as the power holders in the public administration system is a major element of democracy.
According to current legislation, the Armenian population participated in the development of the public administration system directly through referendums (in 1991 and 1995); the elections of the president (in 1991, 1996 and 1998); the Supreme Council (1990); the National Assembly (1995); and local governance bodies (1996). Indirectly, the population participated in the public administration through representative bodies, opinion polls, etc. At the same time, the population delegated some powers to political parties, social organisations and movements that emerged in the last eight years. Furthermore, public participation in the administration is a form of freedom of speech, guaranteed by the constitution, and illustrates the freedom of the media and the multiplicity of opinions in the country.

3	Reforms in Public Administration Functions
The reorganisation of the public administration led to the elimination of several tasks that were no longer necessary, while expanding and adding other duties. The following issues formed the basis of public administration reform efforts:
•	the identification of the volume and types of activities of the public administration in relation to the current state of political and economic development;
•	the election of adequate bodies of public administration;
•	the distribution of administrative functions between various public administration bodies in order to avoid both duplication and “vacuums” wherein certain tasks are not covered by any administrative division. 

These three areas present complex challenges for Armenia and, therefore, priorities needed to be defined. The priorities were undoubtedly the reform of the public administration in terms of the transformation of functions inherited from the former system to contemporary needs and the creation of mechanisms of executing these new functions (see Table 1).

Table 1: Bodies Reforming and Implementing Public Administration Tasks

Human Development Report. Armenia-1998 (page 44).

Public Administration Functions | Bodies Performing Functions
| Previous System | Current System
Limited Functions | |
Planning | State Planning Committee (GOSPLAN) | Ministry of Finance and the Economy (strategic planning), economic entities (current planning)
Price Control | State Price Committee | Ministry of Finance and the Economy, Energy Committee
Expanded Functions | | Commercial
Monetary Relations | Office of the USSR State Bank in Armenia and other banks | Central Bank of Armenia, Commercial Banks
International Economic Relations | GOSPLAN | Ministries of Finance and the Economy, Foreign Affairs and Industry and Trade
Discontinued Functions | |
Socialist Competition | Republican Council of Trade Unions | —
Public Supervision | State Committee for Public Supervision | —
Provision of Production Means | State Committee for Production Means | —
New Functions | |
Privatisation & Denationalisation | — | Ministry of Privatisation
Public Employment | — | Ministry of Social Security
Crisis Management | — | State Department for Crisis Situations
State Territorial Administration | — | Ministry of Territorial Administration and “Marzpetarans”
Local Self-Governance | — | Mayors’ offices, village governance bodies, community governance bodies
Creation of Market Infrastructures | — | Ministry of Finance and the Economy and other ministries

The new role and responsibilities of the public administration required new mechanisms of effective functioning, as well as new legal and organisational approaches. In particular, the public administration was at least partially responsible for the creation of favourable conditions for market competition, the implementation of anti-trust policies and for the management of the civil service. 

*

The extent of the participation of any given body in the complex system of public administration is also very important. Public administration organisations in Armenia, according to the nature of their functions, are divided into the following groups:
•	central authorities (the government of Armenia);
•	functional administrative bodies;
•	sectoral administrative bodies; 
•	territorial administrative bodies. 

The role of functional administrative bodies was expanded during the early years of independence to include general competence in all areas of the economy, including planning, management, coordination, registration and supervision. Reforms have been introduced to improve administrative structures and to avoid duplication, including the merger of the Ministries of Finance and Economy; Internal Affairs and National Security; the State Department of Refugee Issues and the Ministries of Labour and Social Security. In addition, the Department of Statistics, State Registry and Analysis was upgraded to a ministry (Box 2).

Box 2: Functional Ministries in Armenia
At present, the functional administration in Armenia consists of the following bodies: the ministries of finance and the economy; social security; statistics, state registry and analysis; privatisation; justice; foreign affairs; the environment; internal affairs and national security; and defence. The Minister of Structural Reforms and the Minister of Government Personnel and Current Issues may also be included in this category. 

Some proposed mergers were not justified adequately or accepted by the public, e.g., the merger of the ministries of internal affairs and national security. The final evaluation of these mergers and their necessity are pending.

4 	Sectoral Public Administration 
The reorganisation of the sectoral public administration in Armenia was based on the privatisation of state enterprises in various sectors of the economy, radical structural reforms and the creation of enterprises in various legal-organisational forms. As a result of these measures, nineteen ministries and agencies were abolished between 1990 and 1998 (Box 3).

Box 3: Sectoral Ministries in Armenia
In the present structure of the government, the sectoral administration consists of the following ministries: agriculture; energy; education and science; health, culture, youth affairs and sports; transportation; post and communication and urban development.

The mergers of ministries were designed to improve the ministerial structure, eliminate duplication of functions, downsize the management and enhance the effectiveness and efficiency of the administration. In general, these mergers involved decentralising administrative functions, delegating tasks to lower levels of the administration and achieving a new balance between centralisation and decentralisation. The results of these mergers and subsequent procedural reforms led to the following results: 
1)	Administrative reforms in the manufacturing sectors (agriculture, industry, construction) were tightly connected with the privatisation process. More than ninety-five percent of agricultural land and production means, more than half of industry, and a significant part of the construction sector was privatised. As a result, many economic entities emerged – approximately thirty-eight thousand organisations and forty thousand individuals have registered with the appropriate authorities. 
2)	In the agricultural sector, three hundred and twenty-one thousand personal farms and two hundred and seventy-three collective farms replaced eight hundred collectives. In addition, economic organisations were granted the right to independent economic activity. 

From the annual reports of the Ministry of Statistics, State Register and Analysis of the Republic of Armenia.

3)	The means and methods of exercising power in the sectoral administration also changed – sectoral ministries ceased directly influencing the manufacturing and agricultural sectors and assumed a new role appropriate to contemporary needs, including:
•	developing and implementing sectoral development strategies;
•	ensuring legal regulation of economic activities;
•	implementing foreign economic policy;
•	encouraging investment;
•	creating a competitive environment in the given sector.

Nevertheless, economic entities, especially those in the agricultural sector, still need state assistance (see Box 4).

Box 4: Steps Planned in the Agricultural Sector
Considering the weak state of development of the agricultural sector as a result of unbalanced privatisation activities, state policy should be directed toward effectively utilising existing resources. The government currently plans to provide state assistance in the following areas:
•	importing material and technical means to improve agriculture (seeds, fertilisers, fuel);
•	providing or facilitating loans to enhance the effectiveness of farming; 
•	establishing an agricultural insurance system; 
•	forming a land market and creating market infrastructures;
•	increasing the effectiveness of irrigation systems.

Consequently, sectoral ministries have shifted from exclusively sectoral functions to sectoral-functional approaches, but the organisational structures are static and respond to these changes very slowly. This can be seen from the present structures of a number of sectoral ministries, where the apparatus is inflated and functions are often duplicated by several departments and, in some cases, by other ministries (Figure 3).

Figure 3: Structure of the Head Office of the Ministry of Industry and Trade 

Board of Ministry

Minister’s Staff

Minister

Division of Privatisation and    Denationalisation

Personnel Office

License Division

I-III Departments

Foreign Economic Policy Division

Deputy Minister

Deputy Minister

Deputy Minister

Deputy Minister

Deputy Minister

Deputy Minister

I Deputy Minister

Division of Science

Industry Policy Division

Investments and Foreign Policy Division

Local Market Regulation Division

Small and Mid-sized Business Development Division

Tourism Policy Division

Foreign Trade Policy Division

World Trade Organization Division

Organizational Economic Division

Special Programmes Division

Industry Branch Division

News Division

Division of Technological Development

Division of Standards, Measurements and Certification Policy

Intellectual Ownership Protection

Investments and Export Programmes Division

Investments and Export Programmes Division

Export Encouragement Division

Division of Regulation of Enterprises and Entrepreneurial
Activities

Regional Policy Division

Finance-Economic Division

Division of Assistance to Small and Mid-sized Businesses

Foreign Assistance Coordination Division

Tourism Division

Division of Tourism Promotion

In the search for solutions to these weaknesses, the Armenian government developed a programme to improve the management of state enterprises. The plan calls for the creation of industrial unions, which will improve the organisational structure of the Ministry of Industry and Trade to a certain extent. Opportunities for structural changes in other sectoral ministries are plentiful:
1)	Public administration reforms in the physical infrastructure sectors (energy, transport, communication) have progressed slowly because of their specificity, and they generally are characterised by monopolies, with the exception of ARMENTEL. In addition, some enterprises of limited strategic significance have not been privatised. Given the importance of these sectors to the country, a state in transition must take direct responsibility for the rehabilitation and development of corresponding infrastructures.
2)	The transition to a market economy also affected the social sector (health, education, science, culture), where changes directly influenced the interests of the vast majority of the population. Reforms in these sectors have aroused mixed feelings among the population.

Health care reforms are carried out through balancing centralised and decentralised functions. The centralised functions, handled by the Ministry of Health, include: the formation of state health care policy, setting state standards, the supervision and licensing of medical and pharmaceutical activities and collecting data. For these purposes, a Licensing Centre, an Agency for Medical and Pharmaceutical Technologies and an Information Analysis Centre were created within the ministry. The State Health Care Agency was created within the government to implement and supervise state-financed health care.
The decentralisation of the health care system included delegating certain functions to lower-level self-governance bodies, including the right to conduct economic activities in health care and services. Despite initial reforms, this sector is nevertheless one of the most inflated and unproductive. In fact, the state has not succeeded in reconciling its responsibilities with the capacities of the budget. Future reforms must be directed towards improving the management system and forming an effective state financial and insurance system.

Source: the program of the Government of the Republic of Armenia.

	The major issues in public administration reform in education and science include: radically reforming the formation and scope of state orders for state-financed higher education; defining general state criteria for licensing private higher education institutions; improving thematic state financing for the sciences on a competitive basis; encouraging private financing of the sciences; and improving the management and financing mechanisms of public schools. The adoption of the “Law on Education” and the “Law on Science” is essential for the successful resolution of the problems mentioned above. 
One noticeable tendency is that – with the development of a market economy – a gradual reduction in the authority of sectoral administrative bodies (primarily in the manufacturing sector, followed by manufacturing and social infrastructures) will take place. 

5 	State Territorial Administration and Local Self-Government
  	The current territorial administration in Armenia is based on the new territorial-administrative division of the country, consisting of ten Marzes (administrative regions), as opposed to the previous thirty-seven administrative regions, and Yerevan, which was also granted Marz status. State administration is implemented through the Marzes.
The 1996 elections of local self-government in urban and rural communities identified nine hundred and thirty-one communities with local self-governance. They received the right to resolve issues of local importance (formerly the state’s responsibility) and to provide the populace with opportunities to participate in local decision-making. The development of territorial administration and local self-governance laid the foundation for the democratisation of the state, the decentralisation of the administration and community self-governance. 
The territorial system of administration is still developing. Among the essential steps recently taken was the creation of a legal framework, including a number of laws and regulations that were adopted on the basis of the constitution (see Box 5).

Box 5: Measures on Establishing Local Self-Government
The following laws and regulations were adopted to facilitate the development of local self-government: laws on “Local Self-Governance,” “Elections of Local Self-Government Bodies,” “Administrative-Territorial Divisions;” presidential decrees on “Public Administration in Marzes” and “Public Administration in Yerevan;” and a number of government resolutions. 
The economic basis of local self-governance (i.e., community property) was legally established by the state government, and the organisational structures of Marzpetarans and other community governance bodies were defined. In addition, communities were provided with their own budgetary revenue sources. Nevertheless, the effectiveness of local self-government depends on additional legal, regulatory and organisational measures being developed by the Local Self-Governance Committee of the Office of the President.

Although state territorial administration and local self-governance systems became operational only recently, some areas for improvement are evident already. For example, these systems could be improved if the administration was decentralised through a more effective distribution of functions among central, Marz and local self governance bodies, particularly by increasing the already existing (voluntary and delegated) authority of local self-government. Examples include delegating social, health care (especially primary health care facilities) and education (schools, in particular) jurisdiction to communities. The mayor’s office in Sisian is a solid example of how redistributing tasks would be beneficial as the current staff of fourteen would hardly be able to deal with new functions (Figure 4).

Mayor

Head of Staff

Deputy Mayor

Agricultural and Environmental Department

Architectural Department

Urban Development Department

Programme and Projection Department

Culture, Health Care and Sports Department

Educational Department

Legal Department

Financial Department

Figure 4: Organisational Structure of the Sisian Mayor’s Office

Human Development Report. Armenia. 1998 (pages 52,53).

At the same time, the issue of financially supporting communities must be resolved to secure the effective implementation of new duties. Effective state taxation, activating obligatory payment mechanisms and increasing the share of community incomes (presently under thirty percent) would help address these needs. 
At present, the elaboration of the duties of Marzpetarans is urgent. Under current law, Marzpetarans implement the government’s territorial policy in the following areas: finance, urban development, housing and communal services, transport and road construction, education, health care, social protection, culture, sports and the environment. In addition, Marzpetarans coordinate the activities of territorial branches of central executive bodies in the areas of national security, defence, communications, energy, trade and services, taxation, crisis situations and civil defence. Figure 5 outlines the structure of Marzpetarans.

Figure 5  Organizational  Structure of  Marzpetarans

Human Development Report. Armenia. 1998 (pages 52,53).

Deputy Governor

Governor/Marzpet

Territorial Development

Urban Development and Civil Architecture

Housing and Communal Services

Accounting

Social Security

Transport and Communication

Agriculture

Education

Support Staff

Registry

Human Resources

Information Services and Public Relations

Health

Legal issues

Environmental Protection

Head of Staff

Logistics

Financial Department

Projects and Prognoses

Culture and Sport

In addition, several sectoral administrative departments could be united and their administrative functions transferred to communities. At the same time, functional departments should be strengthened, (e.g. programme and prognoses departments) in consideration of their supervisory functions. This would also facilitate adjusting structures to contemporary circumstances and downsize the inflated number of Marzpetaran staff (about two thousand employees at present). The transfer of authority, however, must be reinforced through legislation. 
One of the important functions of the state territorial administration and local self-government is the elaboration of three-year socio-economic development plans. Due to the absence of a common and comprehensive methodology, Marzes either do not formulate development plans at present or do so according to their own interpretations, causing difficulties in integrating them into central development strategies. 
Effective territorial administration and its continued development primarily depends on the level of professionalism and qualifications of staff. Approximately two-thirds of Marzpetaran and community employees became specialists under the communist system and do not have adequate experience for the new system of territorial administration. In addition, a significant portion of employees who entered the public administration on the wave of democratic reforms in the early 1990s does not have the necessary training or administrative experience. Therefore, upgrading the qualifications of approximately eleven thousand employees is of paramount importance. 

According to a survey conducted by the Armenian School of Public Administration.

One of the most important functions of a community is developing economic and financial programmes, a process that requires specialised education and qualified staff. Local self-governance staff training programmes are outlined in Box 6.

Box 6: Training Local Self-Government Staff 
>From 1996, the International City Management Association (ICMA) and the Armenian School of Public Administration (ASPA) have collaborated on a training and technical assistance programme directed towards fiscal self-governance reforms in order to enhance the qualifications of local self-governance bodies. 
Deputy heads and leading financial specialists from the Yerevan, Vanadzor, Sevan, Ashtarak, Jermuk, Abovian and Sisian mayors’ offices participated in the first stage of the programme. The seven-month programme involved seminars and studies of the experience of Romania and Hungary in municipal management. At the end of the programme in October 1997, participants devised annual community budgets and three-year financial plans to be implemented in each community. In-depth training on local budgets and finances will be offered for participants of the first part of the programme in the near future. Deputy heads and heads of financial sections of two additional Yerevan communities and six mayors’ offices have been selected for the second stage of the training. 
The sixteen communities participating in the first and second stages of the programme will serve as models for other communities in developing economic and financial training.

ICMA annual report.

6 	Modernising the Civil Service
Armenia has limited experience with the civil service. During the First Republic (1918-1920), basic steps towards forming a civil service system were taken, but in 1920 the Soviet system took root, some elements of which are still present. After the break-up of the Soviet Union, the Newly Independent States (NIS) attached great importance to the civil service and adopted related laws. In Armenia, however, the steps necessary for the development of a civil service system were not initiated, and the importance of civil service institutions largely were ignored, even in the constitution. The absence of social-legal civil service institutions in the public administration had a number of negative consequences, including: 
•	instability in state organisations and their frequent restructuring; 
•	arbitrariness in recruitment, promotion, grading and displacement, and an inflated state apparatus;
•	high staff turnover, ranging from twenty to forty percent per year in some ministries; 
•	inadequate professionalism and qualifications among civil servants; 
•	a lack of respect for a significant portion of state institutions as well corruption in some of them. 
        
The solutions to these problems largely depend on the state. Although the initial features of a legal framework for the civil service were outlined in 1994, focused activities in the field have been executed only in the last several years. In 1997, the “Concept of the Civil Service” was developed, which became the basis for drafting the law on “Civil Service” in 1998 (Civil Servant News, N. 1, 1998). Currently, this law is being discussed and revised. 
At present, Armenia must utilise the opportunities provided by the so-called “Late Economic Development Effect” and the experience of other countries to avoid their mistakes and develop a more effective civil service system. In most European countries, civil service includes various subsystems: state, state service, territorial state service and health care, which are regulated by different laws and are assisted by various training institutions. Compared to the American model, where trained civil servants enter the system on a general basis, and the European system, where the state issues orders for training civil servants and employs them in corresponding positions, the European model is more suitable for Armenia. Consequently, Armenia should incorporate contemporary European experience in consideration of the state, social, national and other specific features of the country. It is vital to mention a number of important principles for civil servants:
•	independence from changes in political leadership;
•	stability of employment;
•	legal, economic, and social security;
•	merit-based promotions, based on competition, classification, qualification, grades, training, and the enhancement of qualifications;
•	ensuring appropriate education, management skills, and ethical attitudes through training and professional development. 

A professional and capable staff can be cultivated only through following these principles, and the civil service will be based on abilities and qualifications as reflected in the classification system set by the state. The government envisions four categories (A, B, C, D) and twelve classes of civil servants (see Figure 6). 

Figure 6: Classification of Civil Servants

A

CLASS

B

CLASS

C

CLASS

D

CLASS

1

2

3

4

5

6

7

8

9

10

11

12

International experience shows that a civil service without an appropriate training system is ineffective. To this end, a system for enhancing the qualifications of personnel through training must be part of the framework of civil service policy. Currently, between one thousand eight hundred and two thousand employees in the executive branch require training each year, while only twenty-five percent of them actually participate in some form of instruction.
 	The effectiveness of the civil service can also be increased by a complete and accurate personnel database. Unfortunately, this database is currently poor in terms of its statistical value, which renders the evaluation of the quantity and quality of potential civil servants very difficult. As a result, it is not only necessary to collect data on the number of current and potential civil servants, as is current practice, but also social-demographic (sex, age, family situation) and status-qualification (education, specialisation, work experience, qualification grade) data. To partially fill the gap in statistical information, the Armenian School of Public Administration conducted several surveys on the various attributes of civil servants and provided an analysis (see Box 7).

Box 7: Evaluation of the Quality and Quantity of Civil Servants in Armenia
 	The ASPA surveys were aimed at registering state employees by their social-demographic (sex, age) and status-qualification (education, specialisation, work experience) characteristics. Two typical state governance bodies, ministries and Marzpetarans, were included in the study. The results show that 88.4% of ministerial employees and 84.2% of Marzpetaran employees hold a higher education degree. In ministries, the average age of employees is between twenty-six and thirty-five years, and in Marzpetarans the range is from thirty-six to fifty. The ratio of male to female employees in ministries is sixty/forty and, in Marzpetarans, seventy/thirty. In ministries, 65.6% have more than fifteen years of work experience, whereas in Marzpetarans the figure is eighty-three percent. 
Sociological analysis was conducted through questionnaires in 1998 and, according to this research project, a negative opinion about state personnel prevails at present. According to eighty percent of experts, the civil service system is far from optimal and needs development. Analysts attribute the current condition of the civil service to structural instability, its frequent reorganisation (seventy-two percent of respondents), staff turnover (forty-two percent), the legal-regulatory framework of the civil service (sixty percent) and the absence of a flexible and fair salary system. The salary of civil servants neither corresponds to the volume and intensity of their work nor the level of their personal responsibility. Twenty-five percent of civil servants receive a salary that is not even enough for survival, and many live on additional income from their families or from secondary employment.
In order of importance, the majority of experts cited the adoption of the law on civil service (eighty-five percent) and the introduction of a flexible and fair salary system (seventy-eight percent) as primary concerns. Other important factors included enhancing the professionalism and discipline of employees. According to this evaluation, only one out of five higher officials are qualified for their current position by their educational level, and one in four did not have any supervisory work experience prior to being appointed.

These issues can be regulated by a special administrative body with inter-sectoral jurisdiction within the office of the president or prime minister. Competition, qualifications, and classifications must be implemented and dispute resolution committees must be created in the central civil service management. These committees should regulate and provide methodical assistance and leadership to all interested agencies, including the Armenian School of Public Administration (ASPA), currently the only institution training civil servants. 
ASPA was established in May 1994, by decree of the Armenian government and with the technical assistance of the TACIS programme, as a national centre for training and re-training civil servants. In this regard, it was the first in the Commonwealth of Independent States. Several European features are evident in ASPA’s programmes, including: 
•	a focus on training universal civil servants (generalists) with multiple professions;
•	the fact that the training follows the completion of a higher education degree programme; 
•	a competitive admissions programme;
•	training is organised through state orders, and the graduates acquiring the civil service qualification are guaranteed to have jobs in the state service.

>From 1995 to 1998, ASPA had one hundred and sixty internal and seventy external students. During this period, over one thousand six hundred and fifty civil servants from ministries, municipalities, departments and regional centres were trained to increase their qualifications. From 1995 to 1997, the school organised training and re-training programmes for civil servants in cooperation with the TACIS programme. At present the school, in cooperation with ICMA, trains specialists in self-governing local units. In the social sphere, ASPA cooperates with the SPRITE programme of the World Bank’s Economic Development Institute (see Box 8) and is a member of NISPAcee. 

Box 8:  Cooperation Programme for Training Social Sector Employees
In 1996, the “Social Policy Reforms in Transition Economies” (SPRITE) programme was introduced in eleven CIS countries and Mongolia by the World Bank’s Economic Development Institute. Armenia joined the programme in 1997 on the basis of a memorandum signed between the Economic Development Institute and the Armenian School of Public Administration. SPRITE’s objective is to provide assistance for social reforms, to create effective social security systems and to implement these reforms through personnel training, including:
•	seminars for high ranking officials;
•	training for trainers;
•	seminar series for officials at various levels of the administration.

In 1997 and 1998, the following seminars were organised for high-ranking officials: “Issues of Pension Reform in Armenia” (1997, 1998), “Social Reforms in Armenia” (1998) and “Issues of Health Care Reform in Armenia” (1998). The results were an evaluation and analysis of social reforms in Armenia, the identification of weaknesses and the development of mechanisms for improving these areas of the public administration. Armenian lecturers have been trained in Israel, Ukraine, Russia and Austria. In addition, the SPRITE programme will offer seminars on education and employment reform. Seminars on pension and health care reforms for other levels of administration will also continue.

This data was gathered from the reports of the Armenian SPRITE team.

In the field of state service, ASPA provides advisory services and conducts research. By strengthening the state service system, the role of the school and its functions undoubtedly will become better defined. Thus, the establishment of the civil service, as one of the most important institutions in the system of public administration reform in Armenia, is a major priority. 
An effective solution to this complex problem can be identified provided the political, economic, legal, social-psychological and organisational factors influencing the system are taken into account and adequately utilised.

7	Organisational Public Administration Reforms and Enhancing their Effectiveness
Armenia inherited a broad public administration network from the communist system, consisting of forty-four ministries and agencies, which was reduced significantly to twenty-one by 1998. However, the reorganisation of these ministries was not accompanied by a corresponding decrease in the number of employees or expenditures. In fact, the opposite occurred, which can be ascribed to the fact that many state institutions did not have efficient structures, new state institutions such as the presidential staff were created, and the structures of the old institutions were strengthened. Detailed data is available in Tables 2 and 3.
Any policy aimed at reducing state expenditures and increasing the effectiveness of administrative activities must start with rationalising administrative structures, especially those of the executive power. To this end, the government’s functions and its relationship with the president and other branches of power must be further elaborated. At present, the position of the deputy prime minister does not exist in Armenia, which negatively affects the implementation and quality of the government’s resolutions. In addition, currently public administration reforms are not coordinated by any government structure. These issues might be placed under the responsibility of the Minister of Economic and Structural Reforms, appointed by presidential decree, or a central civil service management office, which will be created once the law on “State Civil Employment” is adopted. For this purpose, flexible and dynamic committees and councils might be created. The adoption of the law on the “Government of the Republic of Armenia’’ will contribute to solving these problems.
The effectiveness of the public administration often depends on the rational, optimal and flexible features of other administrative bodies (ministries, agencies, Marzpetarans, communities), implying that it is necessary to establish their by-laws and administrative structures.

Table 2: Number of State Employees and State Service Expenditures, 1990-1997

From the 1990 to 1997 annual reports of the Ministry of Statistics, State Register and Analysis.

Year | Number of State Employees (in thousands of people) | Ratio of Expenditures for Maintaining the State Apparatus
| | Compared to State Budget Expenditures (%) | Compared to GDP (%)
1990 | 18.3 | 1.4 | 0.5
1991 | 21.1 | 2.3 | 0.6
1992 | 29.5 | 3.3 | 1.2
1993 | 30.3 | 3.3 | 1.2
1994 | 30.4 | 2.6 | 0.6
1995 | 29.3 | 3.3 | 0.8
1996 | 28.6 | 5.9 | 1.2
1997 | 29.5 | 9.5 | 1.7

Table 3: Number of Employees in the State Apparatus and Government Bodies

From the 1995 to 1997 annual reports of the Ministry of Statistics, State Register and Analysis.

Name of body | 1995 | 1996 | 1997
National Assembly | 420 | 412 | 440
Presidential Staff | 155 | 163 | 179
Government | 230 | 238 | 227
Ministry of Energy | 75 | 90 | 97
Ministry of Urban Development | 231 | 168 | 183
Ministry of Post and Communication | 49 | 47 | 50
Ministry of Trade | 269 | 230 | 259
Ministry of Industry | 128 | 166 |
Ministry of Justice | 90 | 84 | 95
Ministry of Transport | 67 | 60 | 60
Ministry of the Economy | 200 | 189 | 842
Ministry of Finance | 189 | 294 |
Ministry of Education and Science | 143 | 137 | 138
Ministry of Foreign Affairs | 230 | 247 | 257
Ministry of Agriculture | 494 | 604 | 255
Ministry of Culture, Youth Affairs and Sports | 233 | 231 | 110
Ministry of Health Care | 111 | 111 | 111
Ministry of Social Security | 2024 | 2122 | 739
Ministry of Environment | 508 | 520 | 475
Ministry of Statistics, State Registry and Analysis | 158 | 241 | 267
Tax Inspectorate | 1732 | 1648 | 1803
Customs Authority | 622 | 773 | 801
Yerevan Mayor’s Office | 964 | 1139 | 1155

In particular, it is necessary to improve the academic level of the School of Public Administration, including expanding research in philosophy, politics, jurisprudence, economics, public administration, sociology, psychology and other spheres. Considering the fact that the system of public administration is new in Armenia, and the fact that an academic base is vital for efficient governance, it is necessary to undertake the following steps:
•	develop a programme of high priority research and organise tenders for projects under the guidance of the Ministry of Education and Science;
•	provide resources to finance public administration research to the Ministry of Education and Science and the Ministry of Finance and Economy.

Legislative acts and norms should include both adopting the law on “State Civil Service” and other laws and bylaws on state civil service, including presidential decrees, government decisions and other regulatory documents of ministries and departments. The law on “State Civil Service” is the first and basic bylaw affecting public administration, and only after its adoption can the larger activities of the Institute of State Civil Service begin. Therefore, continued delays in developing and adopting the law are not justifiable.	
	Undoubtedly, the state civil service can work only under specific bylaws. There is a need for the creation of a national state civil service body, the development of a registry of state positions and their requirements, the adoption of state civil service testing, orders approving state civil service qualification degrees, the regulation of social security for the state civil service, and orders for training and re-training the state civil service.
 As a result of Armenia’s recent independence and the introduction of a market economy, the public administration system has formed and is functioning. At present, mechanisms for the improving the system’s effectiveness are being developed, and as administration is a dynamic phenomenon, political and economic developments in the country will lead to changes not only in public administration reform policy but also in its institutional structures.

References
1.	Ordyan, E. The Main Principles of the Formation of Governance Structure in Independent Republic of Armenia (in Armenian). (USA); 1991. 
2.	Ordyan, E. “The Problems of Enhancing the Governing Levels of the Economy.” The Information from Economics Council of the Republic (in Armenian). July 9-10, 1994. 
3.	Ordyan, E. “The Problems of the Formation of Civil Service in the Republic of Armenia.” Collection on the Problems of Armenia in Transition (in Armenian). 1996.
4.	Atamanchuk, G.V. The Theory of Public Administration (in Russian). 1997.
5.	“The State in a Changing World.” World Development Report. 1997.
6.	 Pilulkin, A.V. The System of Public Administration (in Russian). 1997. 
7.	M. Labour Market and the Social Policy in Central and Eastern Europe (Transition Period and the Subsequent Development). 1997. 
8.	Simon, G. Management in Organisations. 1995. 
9.	M. The Governance of the Civil Service Personnel (in Russian). 1997.
10.	“The Role of the State.” Human Development Report. Armenia 1998. 
11.	Public Administration and Social Policies in Central and Eastern Europe. Bratislava. 1998