- The reduction in the unemployment rate in the period of 2014-2023 was primarily predicated by the growth in the number of employees in the public sector (+24%) and the decrease in the labor force (-2%). The growth of employment in the private sector (including self-employment) was only 2%.
- In 2014-2023, the largest number of employees in the public sector was in 2016 (1.022,6 thousand people), while the lowest number was in 2021 (916 thousand people) due to the pandemic.
- In 2023, as compared to the results from 10 years before, the number of employees in the private sector had grown by 12%, while the number of self-employed people fell by 9%.
- According to the statistics of the labor force based on the study by Geostat, 320.5 thousand people were employed in the state sector in 2023, while IDFI’s analysis of official data indicates that a minimum of 420 thousand people were employed in the state sector.
- As a result of emigration in 2014-2023, the potential labor force of Georgian citizens in the country decreased by 197.2 thousand people, which was balanced by 202 thousand citizens of foreign countries over the age of 15 entering Georgia.
According to the data of the National Statistics Office, as of the second quarter of 2024, the unemployment rate in Georgia was 13.7%—a historical minimum. In the election program of the ruling party of Georgia, reducing unemployment is cited as one of the most important achievements of the government's economic policy, and they promise to further reduce it to 4% by 2028.
This article analyzes the dynamics of employment and unemployment rates and their determining factors over the last 10 years based on publicly available statistical data. As quarterly employment figures are not available according to separate characteristics (for example, the distribution of employment figures in the public and private sectors), the article analyzes trends mostly as of 2023.
The unemployment rate in the country represents the percentage share of the unemployed in the labor force. The labor force of the country is considered to be the working age population of 15 years and older who are employed or unemployed and looking for a job. Specifically, for the purposes of statistics, a person aged 15 years and older is considered unemployed if they are not employed and if they have been actively looking for work in the last 4 weeks are ready to start working in two weeks if a job is found.
The unemployment rate, considering the specifics of its calculation, is dependent on both the number of unemployed people as well as the total labor force. For example, the unemployment rate would decrease when the number of unemployed people remains unchanged, if the labor force were to shrink.
In 2023, the unemployment rate in the country was at 16.4%, the best result in the past 10 years. The improvement in the unemployment rate during this period was due both to the growth of the employment rate as well as a reduction of the labor force. Specifically, 1.33 million people were employed in 2023, 6% (79.6 thousand people) higher than the number observed in 2014. The volume of the labor force in 2023 stood at 1.596 million people, 2% (32.7 thousand people) lower than the number in 2014. In the study period, the highest indicator was observed in 2015—1.68 million people.
Analysis of the employment indicators according to the sector of employment shows that in the past 10 years the improvement in the employment rate was primarily due to growth in the number of workers in the state sector, while the number of workers in the non-state sector (private sector employees and self-employed people) had not changed to a significant degree. According to Geostat data, 230.5 thousand people were employed in the state sector, a 25% increase from 2014. 1.01 million people were employed in the private sector (hired workers and self-employed workers), a 2% increase from 2014. The largest number of people were employed in the private sector in 2016, while the lowest number was observed in 2021, due to the pandemic. By 2023, the number of those employed in the private sector returned to approximately the pre-pandemic level.
The figures for employment in the non-state sector include both those employed in the private sector and self-employed people engaged in activities for the purpose of making profit. The number of employed people increased by 12% in 2023, as compared to the figure from 10 years ago, while the figure for self-employed people decreased by 9%.
According to the methodology of the National Statistical Office, employees in the state sector are considered to be those employed in all state institutions and all enterprises in which the state has a share of more than 50%. According to the above definition, the statistics produced should fully cover data on employees in the state sector. However, the statistics obtained through the sample survey of the labor force by Geostat are approximate data, and the analysis of actual data on employees employed in public institutions indicates a much larger scale of the bureaucratic apparatus. As a result of the analysis of official aggregate data produced by various state agencies, it is established that at least 420 thousand people were employed in the state sector as of 2023. Accordingly, we can assume that the influence of the state sector in reducing the unemployment rate in Georgia is actually higher than the results of the labor force survey by Geostat show.
There is no single agency in the Georgian public sector responsible for fully and uniformly recording data on those factually employed in the state sector. Various agencies collect such aggregate data for their own purposes.
- The document on the implementation of the central budget by the Ministry of Finance presents employment indicators of those state LEPLs and LLCs that, in addition to being funded from the budget, have their own revenues. 176,151 people were employed in such institutions as of 2023.
- The state budget appropriations document presents the number of employees in the agencies implementing budget programs/subprograms (Parliament, Government, ministries, courts, governor's administrations and various LEPLs). According to the document, 113,678 people were employed in 2023. The number of employees reflected in the appropriations document also covers, to some extent, the staffing data of the LEPLs and LLCs implementing programs/subprograms. Disregarding duplicate data to the maximum extent possible, approximately 77,000 people were employed in organizations that manage the state budget in 2023.
- The Ministry of Finance's Fiscal Risk Analysis document presents data on employees in state-owned enterprises. According to the latest update, about 62,000 people were employed in state-owned enterprises in 2022.
Data on the employees of the city halls and councils of local self-governments, municipal LEPLs, and public institutions of the Ajara and Abkhazia Autonomous Republics are outside the budget documents of the Ministry of Finance discussed above. The Public Service Bureau is the one that records statistics of civil servants that include data from city halls, councils, and autonomous republics. According to the Bureau’s 2023 report, 12,792 civil servants were employed at city halls and municipal councils, while 1,471 civil servants were employed in the public institutions of autonomous republics.
In terms of aggregated data, municipal LEPLs represent the most problematic category of public institutions. The latest consolidated data on employees in such institutions is available in the 2021 report published by the State Audit, which lists the number of employees as of 2019 at 61,401. The studies conducted by IDFI with incomplete data, which looked into the employment policies of municipal LEPLs in subsequent years, showed that municipal LEPLs were characterized by an accelerating rate in the growth of the bureaucracy. Therefore, this figure would have grown significantly by 2023. For example, according to the Audit Service’s data, 3,395 people were employed in Tbilisi LEPLs as of 2019, while the public information requested by IDFI showed that this figure had grown to 4,894 in 2022. Nevertheless, for the purposes of the study that relies only on official data, IDFI does not consider it appropriate to use data extrapolated from estimates and assumptions.
Since 2022, a state program to promote public employment of the socially vulnerable has also been launched. Socially vulnerable persons who formalize their employment and/or are employed in state agencies within the framework of the program in vacancies announced specifically for them will retain the right to receive subsistence allowance for 4 years without interruption. According to the 2023 State Budget Implementation Report, contracts for participation in public work were signed with 39,999 socially vulnerable persons in 2023, of which 32,921 contracts were active at the end of the year. According to the statements made by the Minister of Healthcare during the presentation of the report, 28,282 out of these were employed in local self-government, which could not have been reflected in the statistics discussed above. In addition, again according to the Minister’s statement, 20,096 people registered as being employed in the free market, while 238 registered economic activity. Formalizing employment of socially vulnerable people can also be considered as a partial grounds for the reduction in the unemployment rate.
Various factors can be discussed as potential facilitators for the reduction in the labor force of the country. Among these, one of the most important factors was the outflow of potential labor force out of the country. According to Geostat data, the migration balance of the population aged 15 and over was negative every year from 2014 to 2020. Figures of the labor force have been decreasing annually as well since 2015, reaching the lower figure of 1,523.7 in 2020. Along with migration, the situation in relation to the pandemic and the worsened expectations by the potential labor force with regard to job search can be discussed as another reason for the low figure of the labor force in 2020-2021. The figures start to increase in the post-pandemic period, partially due to the positive balance in the migration of persons over the age of 15. The positive migration balance in 2022-2023 is due to the migration of foreign citizens to Georgia after the start of the Russia-Ukraine war. For example, in 2022-2023, the negative migration balance of Georgian citizens in the potential labor force was - 66,397 citizens, and the positive migration balance of foreign citizens was +118,377 foreign citizens.
In total, 692.1 thousand Georgian citizens over the age of 15 emigrated in 2014-2023, while 495 thousand returned to the country. Accordingly, over the past 10 years, the potential labor force of Georgian citizens in the country has decreased by 197.2 thousand citizens. The potential labor force of Georgian citizens in the country has been replaced by 202 thousand citizens of foreign countries over the age of 15.
In 2022-2023, alongside the growth in the migration of citizens of foreign countries into Georgia, the number of companies registered by them grew significantly as well. New businesses by citizens of foreign countries has had a partial positive impact on the employment rate in Georgia. For example, according to a study by IDFI, Russian citizens registered 30,295 companies in 2022-2024 (up to June 1), 90% of which have been registered as independent entrepreneurs. The growth in the number of independent entrepreneurs in the country in turn is reflected in the number of self-employed workers. In the II quarter of 2024, when the historical low of 13.7% in the unemployment rate was seen, the employment figure had grown primarily due to self-employed workers (+10%).
The analysis of the figures of the Georgian labor force in the past 10 years shows that the reduction of the unemployment rate of the country to a historical low was mainly due to the growth of employment in the public sector, reduction and change of structure in the labor force, state programs for quasi-employment, which are based on socio-political goals and not necessarily linked to healthy economic processes.
The practice of incomplete and inconsistent recording of data about employees in the state sector can be considered another significant problem. This leads to substantial differences between various official datasets and makes full-fledged analysis impossible.
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