Effects of the early years of transition (1990-1997) on Georgian Labor Market
Following the disintegration of the Soviet Union, Georgia’s economy collapsed, as a result of a civil war, two territorial conflicts and the disruption of former inter-republican trade links. By 1996, GDP had shrunk to 29% of its 1991 value, or to the equivalent of its value in 1963 (Samorodov and Zsoldos, 1997, p.II)13. However, contrary to expectations, this was not accompanied by a proportional increase in unemployment, which by 1996 reached only 13% of the labor force14 (Yemtsov, 2001, p.13).
When the centrally planned system broke down, western economists thought that unemployment would be the key transfer mechanism in the transition to a market economy. They argued that a pool of unemployed would be needed in order to have enough labor to fill the new jobs. Read more
Labor Force Participation
Although Georgia’s current rate of LABOR force participation is comparable to that of western industrialized economies, it paints a misleading picture of the LABOR market as it disguises substantial disparities between groups. Georgia’s LABOR force participation rate for 1999 was 66%, compared to the EU-15 rate of 69%17. Both female and male participation rates were similar to EU-15 rates with Georgian female participation, at 58% and male participation at 75%. However these figures mask considerable age, gender and urban/rural disparities.
The most striking of these is the age dimension. As the chart below demonstrates, Georgia has exceptionally high rates of LABOR force participation for individuals above retirement age. In 1999, 57% of Georgian men and 41% of Georgian women over 65 years of age were economically active. This is about 12 times the EU average for men and 20 times that for women. Similarly we see that 50-64 year olds in Georgia are considerably more economically active than their European counterparts. Read more
