How Much Gyumri’s Condominiums Spend on Their Management

Since 2014, Compass Research, Training and Consultancy Center conducts periodic research of the condominiums’ activities in Gyumri – second largest city of Armenia.

The first research paper of the Compass revealed the problem of the high salary ratio in the condominiums’ annual budgets. However, the last research, updates based on the 2014 annual data, has shown progress related to the problem.
The problem of high ratio of salaries was deeply researched in Compass’ research “The effectiveness of condominiums in Gyumri”. The condominiums spend the most part of the income to pay the employees’ salaries, meanwhile their main activities just lack financing as a result. According to the data from 22 condominiums, in 2013 69.9% of their income was spent to pay salaries and related taxes. In this case, the condominiums just distribute the collection and reallocation of the money from the householders to some people working in that body.
In 2014, the analysis of the data from 19 condominiums (22 condominiums were reorganized to 19 in 2014) has shown a big progress. Compared to 69.9% salary costs in 2013, only 38.97% of total income was paid by condominiums as salary in 2014.
This is the average ratio for all condominiums in Gyumri, meanwhile the indicator variates widely different condominiums. The problem is still worrying in the condominium “Ghandilyan/Gorki 104/Yerazanq”, where the ratio of salaries is 67.39%. Only 7 condominiums from 19 have lower than a 40% ratio. There are, of course, some condominiums with lower ratios, for example “Mush/Sheram/Gor-Ara” with 22.05% and “Barekamutyun” with 22.89%.
It should be mentioned, that the Condominiums’ Monitoring Department of the Municipality of Gyumri has its big influence in the optimization of salary ratios and its reduction to the normative value – 40%. However, 40% is still a very high ratio of salaries for the management of the multi-apartment buildings. The management costs indicator varies from 7 to 12% in the countries of Eastern Europe.
The next important issue is the problem of documentation and low allegations. The condominiums consider all the payments to the workers as management costs, meanwhile some of them are just payments for services provided by individuals. Including all of the payment to individuals as salaries, the condominiums mechanically increase the salary ratio. There is a need to classify the costs as management costs and service payments. This classification will provide a more complete and concrete image of the management costs in condominiums in Gyumri.