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Resume: As per a clarification made by the United National Movement, Nika Melia makes a comparison between the labour remuneration component from the 2012 state budget to the respective planned figure in the 2020 state budget. In 2020, the labour remuneration component increased by GEL 526 million as compared to 2012.

The aforementioned figures about bureaucratic expenses do not reflect the funds spent on the well-being and the luxury of bureaucrats per se and they envision important components such as the necessary expenses for the military, penitentiary, police, teachers, doctors, etc. In order to analyse the changes in the budget expenses over the years it is necessary to compare relative figures instead of doing an analysis based on nominal figures. The reason behind this is that the state budget’s nominal figures are growing over the years and, therefore, nominal figures for bureaucratic expenses also follow suit. The second reason behind the growth of the nominal figures for budget expenses is inflation.

An analysis of administrative expenses requires not only the labour remuneration component but the total sum of the labour remuneration and goods and services components. These components, in addition to purely bureaucratic expenses (activities of executive and representative organs), include the salaries of public sector employees as well as the purchase of goods and services required to carry out their functions. Although the common budget’s absolute figures are growing and the planned absolute figure for the 2020 administrative expenses exceeds the 2012 figure by nearly GEL 1 billion, the relative figures both as part of the gross domestic product (GDP) and as part of the total budget expenses have a decline trend. The administrative expenses to GDP ratio decreased by 2.5 percentage points as compared to the 2012 figure whilst the administrative expenses to the common budget expenses ratio decreased by 6.6 percentage points. In addition, the relative figure for the labour remuneration component also declines – the labour remuneration to GDP ratio by 0.8 of a percentage point and the labour remuneration to budget expenses ratio by 2.2 percentage points.

Analysis

On air on Mtavari TV, United National Movement member, Nika Melia, stated: “The government spends GEL 525 million more on bureaucracy.”As per a clarification made by the United National Movement, Nika Mela makes a comparison between the labour remuneration component from the 2012 state budget to the respective planned figure in the 2020 state budget. In 2012, the total appropriation for the labour remuneration component was set at GEL 1.04 billion whilst the planned figure for 2020 is nearly GEL 1.57 billion with the difference between them at GEL 526 million.

Above all, of note is that the aforementioned figures vis-à-vis bureaucratic expenses do not reflect the funds spent on the well-being and luxury of bureaucrats per se and they envision important budget lines such as necessary expenses for the military, penitentiary, police, teachers, doctors, etc. The growth of their wages is naturally reflected in the growth of the labour remuneration component. Therefore, the lack of specifics in this statement leaves the impression that the growth of the salaries of individuals in certain professions is negative and it is analysed through the lenses of bureaucracy.

Apart from the aforementioned, in order to analyse changes in budget expenses over the years it is necessary to compare relative figures instead of doing an analysis based on nominal figures. The reason behind this is that the state budget’s nominal figures are growing over the years and, therefore, the nominal figures of bureaucratic expenses also follow suit. The second reason behind the growth of the nominal figures for budget expenses is inflation. In particular, given the annual rise in the level of prices, less money was needed to purchase similar volumes of trade and services in 2012 as compared to the present day. The labour remuneration of those employed in the public sector cannot be kept unchanged and in light of the changing macroeconomic parameters, the growth of their wages is an objective necessity which also contributed to the increase of the nominal figure for administrative expenses.

An analysis of administrative expenses requires not only the labour remuneration component but the total sum of the labour remuneration and goods and services components. These components, on top of purely bureaucratic expenses (activities of executive and representative organs), include the salaries of public sector employees as well as the purchase of the goods and services required to carry out their functions. The common budget incorporates the consolidated figures of the state, autonomous republic and self-governing unit budgets whilst the common budget’s administrative expenses are the expenses for their labour remuneration and goods and services. Therefore, it is appropriate to analyse the common budget’s figures.

Graph 1: Dynamic of Administrative Expenses in 2012-2020, GEL Million

Source: Ministry of Finance of Georgia

Although the absolute figures are increasing and the planned absolute figure for the administrative expenses for 2020 exceeds the 2012 figure by nearly GEL 1 billion, the relative figures both as a part of the gross domestic product (GDP) and as a part of the total budget expenses have a decline trend. The administrative expenses to GDP ratio decreased by 2.5 percentage points as compared to the 2012 figure whilst the administrative expenses to common budget expenses ratio decreased by 6.6 percentage points. In addition, the relative figure for the labour remuneration component also declines – the labour remuneration to GDP ratio by 0.8 of a percentage point and the labour remuneration to budget expenses ratio by 2.2 percentage points.


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