Overview of Georgian Economy: Georgia in the Past
Georgia began its independent development under conditions, which seemed relatively favorable at the time. Before the break up of the Soviet Union, Georgia had a well-developed industrial sector. Food processing accounted for about two fifths of industrial production in 1990, followed by light industries (consumer goods, such as textiles and shoes). Electronics and electric engineering were a new, fast growing sector. Other major economic activities were the production of chemicals, cement, Ferro-alloy, fuel pipes, fertilizers, construction, machinery, as well as agriculture, mining, tourism and services. Agriculture had been a leading sector, highly specialized in the past following Soviet Gosplan directions, in the cultivation of citrus fruit, tea, quality wines, tobacco and flowers. In 1990, over one third of the net material product derived from agriculture, much of it was in private hands even before the transition to market economy. Trade with the USSR also played an important role in Georgia’s economy, with imports and exports amounting together to almost half of the GDP in 1988 -1990. Employment was divided comparatively equally between agriculture, industry (including construction), and services. The share of employment in agriculture (about one third of the labor force) was high as far as Georgian agriculture was characterized with high labor efficiency and relatively highly priced final products. Read more
Georgian Labor Market Overview
This report provides a study of the LABOR market in Georgia based on an analysis 1998-1999 data of the Georgia LABOR Force Survey, which has been carried out by the State Department for Statistics with the assistance of UNDP and the ILO.
It begins with a historical background, briefly describing the Soviet LABOR market and the early years of transition to a market economy. It reveals that by the end of the 1990s, almost 10 years after the disintegration of the Soviet Union, the massive collapse in output had not been matched by an increase in open unemployment, as had been widely predicted. This was initially due to LABOR hoarding within enterprises, and then to a reallocation of LABOR from paid-employment into self-employment in small-plot agriculture. Contrary to expectations, privatization and restructuring have not led to a growth in small and medium enterprises, which were to be the driving force of economic growth. Read more
The Soviet Labor Market
The Soviet Union had a centrally planned LABOR market and economy. However, contrary to the widespread image of a system where workers were obliged to stay in the jobs that they were allocated, the Soviet LABOR market was characterised by a considerable degree of LABOR mobility. In practice, workers were reasonably free to change jobs and employers were reasonably free to compete for their LABOR.
There is evidence that the vast majority of hires were arranged directly between the individual and the prospective employer (Oxenstierna, 1990, p.109-113). Otsu (1992), reviews data for medium and large enterprises from a wide range of sources and finds that the turnover rate from the 1960s onwards was approximately 20% per annum (Otsu, 1992, chpt. VI). This rate was comparable to that of Western European countries and higher than that of countries such as Italy and Japan. Thus, although there were some restrictions on LABOR mobility, through housing and administrative constraints, by and large workers could move and were guaranteed employment and job security. Read more
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
