Why should I be interested in this topic?

Every person living in Georgia is aware of the challenges associated with securing and sustaining employment, particularly with adequate compensation and decent working conditions. In these circumstances, the most vulnerable groups of society, including the socially disadvantaged and the long-term unemployed, face even more formidable challenges.

Hence, it is imperative, on one hand, to examine the factors driving changes in the employment rate, identify whose wages are increasing, and on the other hand, understand what are the measures the state is implementing to address the issue of unemployment, what is its employment policy and what should not be overlooked when analyzing these issues.

Our comment

The nation lacks a well-defined, systematic welfare-to-work policy and a comprehensive long-term plan to adequately address prevailing challenges. Furthermore, it is important to note that a decrease in the unemployment rate or an increase in the employment rate does not necessarily translate into a corresponding increase in job opportunities.

Today, the state deems that the challenges that the citizens face are solely their individual responsibility and the result of their personal choices. Individuals experiencing socio-economic difficulties are often perceived by the state as the ones capable of employment, yet unwilling to seek it. Consequently, state-initiated programs predominantly follow punitive principles, focusing on sanctions and penalties rather than support and empowerment.

At the same time, the government does not take actions to address the predicaments faced by individuals who are currently employed but receive wages insufficient for a decent living. It is noteworthy that the country lacks both a minimum wage and a living wage policy. Consequently, this situation frequently results in the exploitation of labor, where diligent workers find themselves exerting significant effort while receiving insufficient remuneration. Contrary to the pressing issues at hand, the Georgian government considers the increase in nominal salaries as a major accomplishment. Meanwhile, the rate of informal labor is high in the country and such workers lack adequate legal protection. Regrettably, the government's responses to this challenge remain notably weak.

What factors are crucial to consider when analyzing the employment rate?

To comprehensively analyze employment and unemployment statistics, it is crucial to explore the causes behind the decline in the labor force figure, particularly in comparison to the data from 2015. Several factors may contribute to this decline, including natural population decrease (where deaths surpass births), the migration of the labor force, the loss of the hope of finding employment, and various other reasons.

Despite the overall negative trend in natural decline, recent years have shown a relatively minor deviation from the prevailing negative tendency. However, the migration data underscores a concerning reality: a significant number of citizens have chosen to leave Georgia. In 2022 alone, the number of people departing the country exceeded those entering by 46,397, marking the most unfavorable outcome in the past decade. Consequently, any percentage increase in employment and decrease in unemployment, set against the backdrop of a diminishing workforce, cannot be deemed a success.

Another reason why the employment percentage cannot be considered unconditional welfare is that, according to the methodology, an individual is categorized as Employed if they worked for at least one hour for pay or profit within the week preceding the survey. This definition, however, includes a considerable part of employees engaged in incomplete, non-standard, and precarious work, which do not provide a stable foundation for financial well-being. In addition, it is crucial to acknowledge that the minimum wage in the country is a mere 20 GEL per month. Therefore, being classified as Employed under such circumstances may not necessarily offer significantly greater economic stability and social security than being unemployed or being a person outside the labor force.

Whose wages are increasing?

In speeches, debates, and interviews, government representatives frequently claim that salaries in the country are increasing. However, in their assertions they typically refer to nominal salaries, providing an incomplete portrayal of the actual picture. The average salary, often cited, fails to reflect the salary disparities. Whose salaries are truly increasing? The salaries of individuals engaged in precarious employment, or of the ones occupying high-ranking positions? Answers to these questions require a more sophisticated analysis beyond the scope of a simple arithmetic mean.

For more details, see: Wages in Georgia - What is the methodology used for calculation, and what is crucial to consider?

Furthermore, it is essential to recognize that a rise in wages does not necessarily translate to an increase in overall income. Individuals engaged in informal work and self-employment most probably earn significantly lower incomes compared to their counterparts in formal employment, however, Geostat does not/cannot calculate this income.

The most commonly employed sectors and associated salaries

It is crucial to know the key industries where people are predominantly employed and the associated wage rates within those sectors. Referring to the 2022 Geostat data, the prevalent employment sectors are as follows:

Figure N1

In total, there are 724.2 thousand individuals employed in these four sectors, whereas the total employment figure stands at 1 million 283 thousand people. Accordingly, the combined workforce in these specific areas exceeds the overall employment count in other sectors. Notably, the nominal wages in these sectors consistently fall below the average nominal wage of 1543 GEL (as per 2022 data), underscoring that a majority of employees receive comparatively lower wages.

What actions has the government taken to activate employment?

Since 2006, Georgia has implemented employment programs encompassing different directions. However, as of 2022, in the absence of a comprehensive social code and a unified framework for social protection and systematic policy, the Prime Minister initiated a welfare-to-work program for socially vulnerable individuals. This initiative primarily entails engaging beneficiaries in public employment activities and providing a maximum remuneration of 300 GEL.

As of September 2023, data from the Social Services Agency reveals that a total of 635,769 individuals are receiving subsistence allowances. Among them, 435,578 people receive regular allowances, while 200,191 individuals are enrolled in the public employment program. Evaluating the program's effectiveness even after one year is challenging due to the absence of published information or data that would allow for a comprehensive assessment of its impact.

The legislative acts intended to establish the categories of public works and the standardized terms of the social contract remain inaccessible to the public. Furthermore, information concerning vacancies created by state bodies as part of the program is not openly accessible. Additionally, it is noteworthy that, despite the scarcity of publicly available information, our organization Komentari formally requested updates on the program's outcomes from the relevant state agencies, as was done in the previous year. Regrettably, even after the passage of one year, these agencies have yet again failed to fulfill their legal obligation and didn’t provide us this crucial information.

However, following a comprehensive analysis of the program's regulatory acts and different other sources, it can be noted, that:

• This program does not encompass initiatives aimed at creating employment opportunities, enhancing the skills of its participants, fostering their development, and ensuring sustained, long-term employment. The scope of public works primarily revolves around tasks such as exterior cleaning and minor rehabilitation efforts.
• The exact duration of the program is unknown.
• The specific duration of employment for the beneficiaries is not clearly and directly defined. Is participation limited to a specific period, or can an individual engage in the program for the entire 4 years? The initial impression suggests that preferential conditions apply if the beneficiary accepts any of the offers outlined by the program within the 4-year timeframe. As per the resolution, the employment agency is mandated to extend a new offer to the beneficiary within 3 months following the termination of public work, and the continuation of preferential conditions is contingent upon accepting this offer. However, this remains vague, as the resolution does not provide what circumstances entail “the termination of public work”.

The program does not offer answers to these questions due to the absence of a specific and defined policy. This lack of clarity further complicates the assessment of the employment program.

Conclusively,

In recent years, the government has not changed its vision of either economic or social policy.  As discussed in the article, the rise in the number of employees or the increase in average nominal wages might not be fully reflected upon a significant portion of the population. Nevertheless, these issues are seldom addressed within political or media elites.

At the same time, the country lacks a unified and systematic social policy, evident in the absence of a unified codified document. The adoption of a “Social Code” is still paused, while we see the Prime Minister's initiatives to activate employment, which can be terminated at any time. Besides, limited access to information hampers our ability to assess the program's impact effectively.