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Irakli Gharibashvili: “The unemployment rate is at a historic low.”

Verdict: FactCheck concludes that Irakli Gharibashvili’s statement is a MANIPULATION.

Resume: According to 2022’s data, the employment and the unemployment indicators in the country have increased considerably as compared to the pandemic years (2020-2021). However, as compared to the years before (2015-2019), the workforce and the employment indicators have actually been worsened.

Technically speaking, the lowest unemployment rate (17.3%) was registered in 2022, although this was largely precipitated by a decrease in the number of economically active people which is definitely a negative occurrence. According to the unemployment rate measurement methodology, if a person no longer seeks employment and is a so-called “discouraged worker,” he/she is withdrawn from the workforce and is no longer considered as unemployed. The number of unemployed people registered in 2022 has decreased precisely for this reason as compared to the previous years (2015-2019) and not because of a growth of employment.

In 2022, the economically active population increased as compared to 2020-2021, although it is still less as compared to the indicators for 2015-2019.

In 2022, the employment rate (the percentage share of employed people vis-à-vis the relevant age [15+] people) reached 42.9% which is higher as compared to the figures of the previous years, although it is not at a historic high. The best employment indicators were registered in 2015-2016. In regard to the number of employed people, this number was higher in 2015-2018 as compared to 2022.

As of 2022, the number of registered unemployed people is indeed at a historic low. However, this is precipitated by the fact that many unemployed individuals ended up outside of the workforce (ceased to look for jobs) or left the country.

Therefore, FactCheck concludes that Irakli Gharibashvili’s statement is a MANIPULATION.

Analysis

As stated by the Prime Minister, Irakli Gharibashvili: “We have the unemployment rate at a historic low.”

First of all, we should clarify how the unemployment rate is measured. The National Statistics Service of Georgia is responsible for the compilation of workforce statistics which in turn is based on the International Labour Organisation’s methodology. The unemployment rate is measured by the ratio of unemployed people and the economically active population (workforce). The workforce is the total sum of employed people and unemployed individuals who are seeking employment. Of note is that a person who is employed but does not seek employment (was not seeking employment in four weeks before the survey) is withdrawn from the workforce and is no longer considered as unemployed. Therefore, in some cases, the unemployment rate may technically decrease because of the shrinking workforce and without an increase in employment. Therefore, an analysis of the workforce and the employment parameters is crucial in order to properly assess the unemployment situation in the country.

In 2022, the employment/unemployment parameters in the country drastically improved. As compared to 2021, the unemployment rate in 2022 decreased from 20.6% to 17.3%. In a one-year period, the economically active population increased by 18,000 (nearly 1.1%). In 2022, the number employed people increased by nearly 66,300 (5.5%) as compared to the previous year. Of this amount, hired employees increased by 41,500 (5%) and self-employed individuals increased by 24,900 (6.4%). Therefore, the reduction of the unemployment rate in 2022 was precipitated by the growing numbers of employed people which is definitely a positive occurrence.

The impressive improvement of the employment/unemployment figures can be explained by comparing them to 2021 when the number of employed people contracted sharply and the unemployment rate increased because of the pandemic-related economic restrictions. As compared to the pre-pandemic 2019, the unemployment rate in 2022 was 0.3 percentage points less, although this was precipitated by a decrease in the workforce instead of growing employment. In the same period, the total employment figure is nearly 0.9% (12,200) less if we compare 2019 to 2022 whilst the number of hired employees is nearly 3% (26,600) less.

As a result, the pre-pandemic indicators have not yet been fully recovered despite the fact that the employment figures improved drastically in 2022.

Graph 1: Employment and Unemployment in 2015-2022

Source: National Statistics Office of Georgia

In 2010-2022, the lowest unemployment rate was registered in 2022 which is related with the decrease in the number of economically active people instead of a growth of employment. The Prime Minister focuses only the percentage figure of the unemployment rate and disregards the workforce and the employment indicators.

Since 2015, the workforce in Georgia (the total sum of employed people and those looking for a job) has been declining annually. In 2015-2022, the number of economically active people contracted by 124,000 (7.4%). The workforce increased in 2022 as compared to 2020-2021, although it is still lower as compared to the figures for 2015-2019.

The best employment rate (the ratio of employed individuals to the relevant age [15+] people) in Georgia was registered in 2015-2016. In 2022, the employment rate was 42.9% which is higher as compared to the figures for 2020-2021 as well as slightly more than pre-pandemic indicator which is precipitated by a drop in the number of the 15+ age population in the country which cannot be considered as a positive occurrence. In regard to the number of employed people, there were more people employed in the country in 2015-2019 as compared to 2022.

As of 2022’s data, the employment and the workforce figures are only higher as compared to the pandemic years (2020-2021) and are lower as compared to 2015-2019. The number of registered unemployed people in Georgia as well as the unemployment rate is at a historic low since many unemployed people ended up outside of the workforce, meaning they either ceased to seek employment or left the country.


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