Economy

Anatomy of Georgia\’s Labor Market

Anatomy of Georgia\’s Labor Market June 5, 2018Leave a comment
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Economists always discuss various statistics to appraise economic state of a country. Besides gross domestic product (GDP) level, the unemployment level? has become the statistical indicators that pulls attention of economists and society.

Unemployment is a heavy burden on Georgian population also it leads to economic, psychological and social losses. Based on various theories, a 1% boost unemployment level results in about 2% reduction in GDP. Moreover, the Authorities lose revenues as a consequence of reduction of amount of taxpayers. In western world and some developing countries, expenditures grow more, as the Authorities should pay higher compensations? for increased unemployment. You will find a different situation in Georgia, considering that the Authorities do not any compensation for unemployment and unemployment burden is laid on only unemployed citizens. Their incomes shrink and skills and experience regress throughout time. Moreover, unemployment reduces motivation for working.

Current Situation

According to all or any statistical and sociological inquiries in Georgia, unemployment issue number 1 trouble in the country. In accordance with sociological survey conducted by NDI in May 2015, 67% of Georgian citizens look at a deficiency of job places to be a key problem, while based on the research, 66% consider themselves to generally be unemployed. In accordance with national statistics service of Georgia, the entire year of 2009 recorded highest unemployment indicator (16.9%) plus the lowest figure was recorded in 2015 (12%).

Therefore, you should clarify why such big difference between official statistics and reports of sociological surveys on unemployment issues.

First of all, we\’ve got to determine the essence of unemployment. A person is unemployed who cannot get a desirable job place with desirable salary. In Feudal system there wasn\’t any unemployment in reality, because individuals was missing the legal right to reject job. If an individual doesn\’t have a income, he/she needs to leave for foreign countries or receive social allowance. Many countries issue high unemployment allowances and also this factor competes with low-income job places too.

Perception of unemployment is an extremely important issue. For this reason reason, generally official statistics does not coincide with sociological surveys. Including, most people, who do not work on desirable place, consider themselves unemployed, including taxi drivers, land workers and the like. Although the official statistics would not consider them as unemployed.

Employment in Numbers

Business sector\’s turnover inside fourth quarter of 2016 rose by 15.3% every year and marked 17.4 billion GEL. This business sector\’s output indicator also grew to 8.8 billion GEL inside fourth quarter of 2016, up 20% every year.

Ratio of major business during the reporting period comprised 81%, medium business sector – 9.4% and small company sector – 9.6%.

A quite different situation is met in the case of total output: major business – 79%, medium sector – 11.3% and online business – 9.7%.

Value of items and services purchased by enterprises marked 13 billion GEL, up 2.4% year on year, while sales of items and services made-up 8.1 billion GEL, up 11.7% year on year.

Averaged amount of employees constituted 620 800 persons, up 6.2% year on year, including 40.7% women. Ratio of major business as a whole range of the employed marked 61.3%, medium – 16.6% and business – 22.1%.

Total volume of hired citizens made up 584.9 thousand persons, up 3.7%. Total personnel expenses constituted 1997.Six million GEL, up 12.2% year on year.

Monthly salaries marked 1130.4 GEL, up 85.8 GEL year on year, including women salaries marked 819 GEL, up 66.1 GEL. Averaged monthly salary caused by height and width of enterprises will be the following: major business – 1268.5 GEL, medium – 1110 GEL and small business – 646.6 GEL;

In the reporting period, trade (vehicles, household items and also? things), processing industry and construction fields emerged? as leaders with regards to wide variety of employees with 25.5%, 13.8% and 10.4% ratios, respectively.

However, considerable ratio inside structure is recorded for health insurance social assistance (10.3%), transport and communication (9.9%), property operations, leasing and? service companies (9.8%).

As to number of employees, this indicator is shipped as a result of regions within the following way: Tbilisi – 65.8%, Ajara – 9%, Imereti – 6.9%, Kvemo Kartli – 5.5%, Samegrelo-Zemo Svaneti – 3.6%.

Asymmetry of Methodology

If we analyze international methodology of unemployment statistics, we will have that Labor Statistics Bureau determines unemployment level that delivers annual indicators for unemployment along with issues with labor, for instance types and quantity of unemployment. Indicators are calculated through research of household economies (families). Inquiries are held every quarter and men and women 15 and above age families of about 3400 household economies are inquired.

Based on survey results, Labor Statistics Bureau includes each mature an affiliate families in three categories: employed – persons, who spent a serious part of the week at offices; unemployed – persons, who attemptedto look for a job place within the last few 1 month, but failed; Those unrelated to workforce – bodies, that do not are members of either of the previous groups (students, housewives, pensioners).

Bodies of 25 years old and above are thought to be unemployed if they\’ve not helped A week prior to the survey of course, if they already have sought job position for prior times A month, including agriculture sector workers, tutors, retailers etc. If these persons been employed even sixty minutes for a week ahead of the survey, they may be considered employed, reported by this methodology.

In general,? amount of self-employed bodies exceed volume of the doing work in Georgia. Amount with the employed is the reason 1.7 million persons, including about 1 million persons are self-employed. That is why a significant portion of population won\’t consider themselves as employed.

According to official methodology, 1.7 million persons were doing work in Georgia, which often 246 000 are unemployed. After we analyze quantity of job seekers on domestic market, we can conclude that only 246 000 persons seek job places, but an essential element of self-employed too. This means that job places are manufactured in Georgia, however this does not signify how the new job places are occupied by unemployed citizens. There may be much probability that this mentioned new positions be occupied by self-employed bodies. Currently, a major an important part of employed citizens are self-employed, ones 59% are employed agriculture sector, which creates 8% in GDP.

Structural Unemployment

In time, changes occur in structure and technology of consumer demand, which, on his or her turn, change structure of joint need for workforce. Resulting from similar changes, interest on professions grows. In this situation unemployment arises because workforce will not fully respond to new adjustments in structure of employment.

Access to finances won\’t represent an important obstacle for working in Georgia, but amorphous? system of crediting business sector by commercial banks can be a problem. By way of example, once we analyze loans issued by commercial banks, almost 60% of total loans are concentrated in trading sector which is not an important method of obtaining formal employment, while the major employer industry receives only 20% of total loan portfolio.

Noncompliance of workforce skills and experience to job places on the market is usually a key reason of structural unemployment. This especially concerns the previous Soviet Republics, where values were revised and skills of workforce with Soviet education ended up inappropriate.

Inappropriately-educated workforce doesn\’t exist in only elder generations. Despite? reformation, education system still remains inefficient in bringing up future leaders, would you meet the modern market demands.

Over earlier times Twenty-five years, after announcement of independence, the state of hawaii has never executed efficient reforms against structural unemployment in both education or labor relations field. All reforms and initiatives, including production of employment agency, introduction of general skills and various standard methods in educational space or various preferences for socially unprotected citizens, represented not socially-oriented insurance policy for long-term results, however, for short-term antisocial target policy, where Government assisted them who had been granted the state run status of your poor. Meanwhile, tenacious portion of population were forced to? depend upon families and market.

As to reasons of arising unemployment, naturally, these 4 elements vary. Factional unemployment is among the most reasons, as soon as, when folks need here we are at finding desirable job. Another good reason stems from structural unemployment, individuals small working put on industry and also the variety of people looking for work exceed the available appointments. (Based upon economy of our own country, the sales of employment prevails the provision). The last reason is related to market power of trade unions that raise salaries throughout the balance level and labor supply becomes excessive. Finally, we can easily summarize and say that unemployment is an incorrect communication of things.

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