In Georgia, there has long been a talk of progress in the government’s efforts to foster a business-friendly environment. But challenges remain for many individuals to directly benefit from positive developments. This is particularly true for young people, a group still trying to take their first steps on a labor market, only to find themselves alone in a heavy employment struggle shared by older generations. 

Georgian authorities have been showing off breakthroughs in business rankings for years, with the country, for example, jumping from 24th place on the World Bank Doing Business list in 2014 to 7th place in 2020. Yet, despite the big leap, the job creation dynamics failed to catch up with the speed of economic growth. 

This has several reasons: the firms in the country are mostly small, while the employment has concentrated in larger and older businesses. The small size has also led to high failure rates and makes it harder to contribute to job creation in the long run. The concentration of many workers in the least productive firms within industries, coupled with misapplication of resources across and within economic sectors, creates additional hurdles: most jobs are available in the traditional, low-productivity sectors, while modern and high-productivity sectors offer few employment chances (ETF, 2018). A further challenge is the continuous political turmoil in the country, putting pressure on the business environment.

Despite a substantial decline in unemployment rates – falling from 27.7.2% in 2012 to 17.6% in 2019 – the problem persists among all age groups in Georgia, with the young people most affected at 30.4% two years ago. The rate went further up to exceed 35% once the COVID-19 pandemic hit its peak. More specifically, the 2020 data show the unemployment rate of 43.9% among 15-to-19-year-olds, 38.3% among the 20-24-year-olds, and 23.2% among 25-29-year-olds. Young people also continued to struggle with lengthy and difficult transitions from education into the labor market.

Youth inactivity deepened by embedded inequalities

The youth inactivity in Georgia goes however far beyond general labor market limitations and is bred by further gaps in access. The share of young people not in employment, education, or training (NEET) is also highest among groups in Georgia, standing at 30.6% for 15-29-year-olds in 2019. To compare, NEETs rate is about 10.8% for tertiary-educated 25–29-year-olds across OECD countries. The World Bank has underlined that low rates of labor force participation and a big proportion of NEETs indicate that Georgia’s youth could be disproportionately at risk of labor market exclusion.

The situation is a part of a bigger inequality problem. Georgia’s Gini coefficient, an international index used to measure economic inequalities, stood at 35.9% in 2019 – one of the highest among the former Soviet countries. Thus, the gaps persist not only across but also within the age groups, reflected in educational access and attainments, as well as in job opportunities among youth. 

For example, spatial disparities are present among urban and rural populations. The high prevalence of informal employment and unproductivity in rural areas also affects youth: most of the young people living there do not work in formal wage occupations, while those self-employed have significantly low-paid and low-productivity jobs. And then there is a gender divide across the country too: young women (36%) are much more likely to be NEETs compared to their male peers (25%), turning gender into an additional risk factor for labor market exclusion.

And where do the desperate youngsters go from here? A lack of income, absence of tangible work experience, and unsuccessful attempts to find stable jobs cause a sense of despair, powerlessness, and confusion. They become susceptible to poverty. So the job insecurity and underemployment lead younger people to see migration as the only solution to survive and build themselves a promising future. The 2019 data of the National Statistics Office of Georgia show that among 105,107 people who emigrated, 30% were those aged 15-29, the highest among all age groups.  

What are some other reasons for youth unemployment in Georgia?

Outside the broader economic factors, there are other, more specific determinants of youth unemployment, and evidence suggests they are closely related to flaws in education. Skills mismatch - both vertical (occupational) and horizontal (over-education/under-education) - is one of them. There is an apparent mismatch between the employers’ demand for highly educated workers and their supply/the availability of workers with wanted skills.

While firms in Georgia value technical competencies along with cognitive and socio-emotional skills, employers name finding experienced workers with the right technical education as the most important constraint. World Bank’s “Workforce Skills in the Eyes of the Employers” 2013 report lists English, leadership, creative and critical thinking, problem-solving, and technical skills among the top five skills young workers frequently lack.

Another related factor is the ineffectiveness of the education system in Georgia. The country scored 60.61 points in the Global Competitiveness Report (2019) of the World Economic Forum, thus landing in the lower half of the countries’ ranking in terms of vocational education and training (VET), the skill set of graduates, and easiness to find skilled employees. Even though the Government of Georgia took important steps in this area, it is evident that the education system, including vocational, is not effective enough to provide the workforce with the skills that meet market needs. 

Challenges related to an ineffective vocational education system include quality and relevance of VET, limited access, participation, and inclusion of diverse groups, including those hard-to-reach and vulnerable. These are coupled with the fact that vocational education is not a prestigious or compelling educational path for young people. 

So what can be done?

The following steps are needed to address the youth unemployment problem:

First, it will be important to engage the business sector in the process of developing policies and programs for youth employment and education.

Second, effective measures are needed in vocational education to narrow the skills gap and prepare graduates in line with the requirements and needs of the labor market. Here, it will be crucial to address the challenges related to low quality and relevance in VET while focusing at the same time on increasing access to and participation in VET, especially for NEETs or marginalized young people.

Third, steps are necessary to combat spatial disparities and urban-rural divides. To boost labor productivity and maximize labor force participation, improving education and the VET system across the country will be crucial, along with removing existing structural barriers for employment opportunities among youth. 

And finally, more focus is needed on girls’ employment. There is substantial evidence about how important the education of girls and women is for the social and economic development of countries, including for reducing youth unemployment. Considering Georgia’s employment trajectory, particularly unemployment rates among young women, it will be crucial to channel efforts at increasing women’s labor participation and bringing them into the labor force, including by removing existing hurdles to their involvement.

Youth unemployment is a problem where, to say nothing about the individual struggles and despair, the entire country has to pay a price. It hinders the national economy as the scarcity of a skilled young workforce hampers the ability of the private sector to generate tangible growth and create more and better jobs for Georgia. Without addressing youth unemployment, Georgia will not be able to sustain or improve productivity and competitiveness in the global marketplace.

Written by: Rusudan Chanturia - an education specialist, who spent the last 17 years developing and managing programs advancing the cause of access to education, human rights, civic integration, tolerance, economic development, and democratic aspirations of Georgia.