Resume: In 2016-2017, the number of employed people[1]
in Georgia decreased. In accordance with the data of the National Statistics Office of Georgia, there were 1,733.8 thousand employed people in 2015. In 2016, that figure decreased to 1,717.3 thousand and it dropped further to 1,706.6 thousand in 2017. In addition, the share of employed people in the workforce decreased from 57.4% to 56.7%.
Of note is that unemployment also decreased (in percentage figures) in the aforementioned years. However, this does not mean there was progress in terms of employment because the decreased unemployment rate[2] is not caused by adding jobs but by decreasing the number of the workforce[3] (individuals willing and able to work). Of note is that a decreasing workforce; that is, the economically active portion of the population, is a negative thing.
Even though in this specific case the unemployment level (%) does not depict the real situation (the number of employed persons is a more precise indicator), Ivane Machavariani’s statement that “unemployment is at an historic minimum” is still inaccurate because the unemployment level in 1998-2004 was less than today’s 13.9%.
Analysis
During the presentation of the 2019 draft state budget of Georgia, Minister of Finance, Ivane Machavariani, stated that unemployment in the country is at an historic minimum.
The unemployment level refers to the share of unemployed people in the workforce. This consists of employed persons and unemployed persons who are willing and able to work. A person is consideredunemployed if he was not employed for even one hour during a seven-day period prior to the National Statistics Office of Georgia’s survey, was looking for a job in the last four weeks and was ready to start working in the next two weeks. Therefore, other people who are able to work are not included in the statistical figures (workforce) if they were not looking for a job in the four weeks preceding the survey. On the other hand, having people outside of the workforce might be caused by the rise of the so-called “discouraged worker” numbers. This term refers to a situation when a person who is able to work is looking for employment for a long time but cannot find a job and then ceases to continue looking. Therefore, the situation in terms of employment/unemployment is better shown using the level of employment which illustrates what part of the workforce is employed.
As of 2017, 56.7% of the total workforce was employed. In 2016, this figure was 0.4 of a percentage point higher and reached 57.1% whilst it was 57.4% in 2015. Therefore, there is trend of a decreasing share of employed people in the last years. In the same period, the workforce among people who are able to work also decreased. In 2015, the workforce was 66.8% of people who were able to work whilst this figure dropped to 65.8% in 2015.
Graph 1:
Population, Workforce and Employment Level (Thousand Persons, %)
Source: National Statistics Office of Georgia
Even though the unemployment rate; that is, the share of unemployed people, decreased in 2016-2017, this does not mean that the number of employed people has increased. On the contrary, the number of employed people has decreased whilst reducing the unemployment rate is caused by decreasing the workforce (economically active population); that is, people who are willing and able to work.
In 2016 (unemployment level 14%), the number of employed people was 1,717.3 thousand whilst (unemployment level 13.9%) the number of employed people decreased by 10,000 and dropped to 1,706.6 thousand in 2017.
Graph 2:
People Able to Work, Number of Employed and Unemployment Level (Thousand Persons, %)
Source: National Statistics Office of Georgia
Graph 2 illustrates that the number of employed people increased between 2008 and 2015 but dropped in 2016-2017. In 2016-2017, the unemployment level decreased from 14.1% to 13.9% but this was not caused by employing more people. The decreased unemployment level is caused by reducing the share of economically active persons who are able to work. In turn, reducing the number of economically active persons is caused by their decision to cease looking for job.
Even though in this specific case the unemployment level in percentage does not really show the existing situation and does not indicate an increase in the number of employed people, the Minister’s statement that “unemployment is at an historic minimum” is still inaccurate because the lowest unemployment rate of 10.3% was registered in 2000.
[1]
An individual aged 15 years and older who is either hired labour or self-employed and in the seven days prior to the survey worked to get income or was assisting household members for free. This includes those individuals who are not at work but are officially registered as employed.
[2]Share of unemployed (%) in the total workforce.
[3] Individuals aged 15 years and older who work or are ready to work and are looking for a job.
