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Country of the Employed Poor

Poverty is one of the key challenges in our country. After the independence announcement in 1991, our country has faced many challenges. The situation was aggravated by wars and sharp economic crisis. A major part of our population remains impoverished since 1990s.

Despite the poverty level is declining over the past period, the situation remains heavy. For instance, in 2004 the ratio of population below poverty line was 32% and the figure declined to 21% by 2016.

It is interesting that, over the past period, unemployment indicators have also risen, however, increased employment does not make due effect on revenues. As a result, we have cases, when citizens may be officially registered as employees, but they remain poor and take certain social allowances from the Authorities. Employment statistics may be considered as one of the reasons for similar reality. For example, according to official information of Geostat: « An Employee (employed or self-employed) is a body of 15 years old and more, who has worked over the past 7 days before inquiry (for even one hour) for the purpose of taking income (salary, natural incomes, profits and so on), assisted members of other household economies free of charge or missed the working hours under various reasons, but was registered as an employed» – the employment calculation methodology on the Geostat website reads.

A major part of the self-employed work in villages, in their own farmlands. For example, they own land plots or care for cattle and use products for their own purposes and sales. To put simply, a person, who lives in a village, is considered to be an employee, because, as a rule, everybody owns a land plot in villages (registered or in ordinary use). Therefore, this category of citizens are considered to be the employed. Official statistics proves this, because unemployment statistics is higher in cities and especially in the capital city compared to regions. For example, according to the 2016 indicators, unemployment level in Tbilisi is 22%, Kakheti Region – 5.4%, Samtskhe-Javakheti, Guria and Mtskheta-Mtianeti – 4.1%. It should be also noted that 5% unemployment is considered to be a good indicator, because it is impossible to ensure absolute employment environment.

Official statistics of employment contains many gaps and  poverty indicator proves this. Despite unemployment level is the highest in Tbilisi and, in general, the employed indicators are worse in cities compared to villages, poverty indicator is absolutely opposite. This signifies poverty level is higher in villages compared to cities. In 2004, 32% of Georgian citizens were below poverty line (city – 32%; village – 33%). In 2016, this indicator declined to 21%, but mainly as a result of improved situation in cities. For example, in 2016, ratio of population below poverty line was 16.9% and in villages – 25%.

Naturally, unemployment leads to poverty, but we should not also forget low incomes of self-employed, because social background remains heavy despite low unemployment level in our region. Over the past years, poverty level has been reduced at the expense of Tbilisi, where, despite 22% unemployment, the quantity of those seeking social assistance is low, compared to other regions.

Today, about 2/3 of the poor live in villages. The least quantity of socially vulnerable families live in Tbilisi and Samtskhe-Javakheti, the highest number is recorded in Shida Kartli.

The lowest ratio of state aid beneficiaries is recorded in Tbilisi, after Samtskhe-Javakheti Region, Ajara and Kvemo Kartli. The highest indicator of the registered poor is mainly recorded in highland and economically weak Racha-Lechkhumi and Kvemo Svaneti, Shida Kartli and Mtskheta-Mtianeti.

But the deeper analysis shows that, almost in all regions, the number of social allowance beneficiaries and recipients is much higher in villages than in cities. Despite the fact, village residents are considered self-employed in most cases, they ask for social allowances anyway. This signifies their revenues are not sufficient.

It should be noted that in Racha-Lechkhumi and Kvemo Svaneti 40% of population receive social assistance, while, according to official statistics for 2016, unemployment level in this region is 10.8%. We have the same paradoxical situation in Shida Kartli Region, where 36% of total population ask for assistance, of which 18.6% receive social assistance. According to the employment statistics, unemployment in Shida Kartli is 9.2%. We have the same paradoxical situation in almost all regions with a great number of the employed poor.

As to official indicators, according to Ministry of Health, by the beginning of 2017,  we have the following situation in terms of distribution of revenues in Georgia: citizens with low and unregulated incomes and self-employed with monthly salary of under 900 GEL – 1 154 000 citizens. Citizens, whose rating scores range from 70 000 to 100 000 – 102 000 citizens. Adolescents between 6-18 years old – 503 000 persons;  children up to 5 years old; students; pensioners; persons with disabilities, teachers; socially unprotected citizens – 1 700 000 persons.

Citizens with high and medium incomes: with incomes of under 40 000 GEL – 32 000 persons. With monthly incomes of more than 900 GEL, but yearly  incomes of no more than 40 000 GEL – 300 000 persons.

To put simply, only 0.8% of population of Georgia receive more than 40 000 GEL income a year, while 8.7% of Georgian citizens receive more than 900 GEL a month. It should be also noted that according to the first quarter indicators, averaged monthly revenues of the employed is 1 024 GEL. This signifies only 8.7% of Georgian citizens receive salaries that stand near the averaged salary. If we compare the number of employees, we will receive the following picture: according to the 2016 report, there are only 1.998mln economically active citizens (workforce) in Georgia, of which 1.7633mln are employed and only 235 000 persons are registered as unemployed. This signifies only 178.8% of the employed citizens receive 900 and higher salaries a month, that is, 4/5 of the employed citizens receive less than the averaged salary.

Everybody knows that poverty is a sharp problem in Georgia and inclusive development is one of the key promises of the Government. This signifies benefits from economic growth of the country should be shared to all social layers.

However, existing gaps in statistics do not give precise picture and consequently due policy is not carried out. According to current conditions, 80% of population belong to poor class, due to ranking of their revenues.

For economic and democratic development of the country, it is necessary that a major part of the society constitute middle class.

As to inclusive development, regretfully, over the past years, benefits from economic growth are directed to pockets of only small part of our population.