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Georgian Business can’t Create New Jobs

In 2014 the number of Georgian citizens employed in the business sector has decreased by 2.8%  despite the fact that according to official statistics, the unemployment rate has declined.

The difference between these two figures shows that unemployment in the country is reduced at the expense of the self-employed and employees of the public sector. At the same time the number of employees in the business sector is decreasing. In 2014, the unemployment rate grew by 2. 2% in comparison with 2013 and totaled 12.5%. According to the Georgian Statistics Service, the economically active population amounts to 66.5% of the total population – this indicator in 2014 exceeded the level of 2013 by 0.3%.

In 2014 the employment rate reached  the  11- year maximum and economic activity was higher only in 2012. The number of employed increased by 1. 6% in rural areas and cities. The so-called self-employed  traditionally dominate in  Georgia. In 2014 in comparison with 2013 year, the number of contract workers increased by 5. 2%, the self-employed – by 1.1%.

Along with the general increase in the level of employment, the statistics show a reduction of jobs in the private sector by 2.8%. If in 2014 the business employed 550 885 people, in 2014 this figure fell to 16 000, ie by 2.8% and amounted to 534 952. Experts do not call the statistics into question, however, in their opinion, the situation is still dramatic, and improved situation by   2.2% does not change anything substantially.

In addition, experts believe that the difference between the decline of employment in business and a general increase in the level of employment is caused by incorrect methodology of calculation. According to the expert Soso Archvadze, this can be explained by  the fact that the total number of employed is determined based on the survey of families, while employment in the business sector –  based on the results of the quarterly report of the company.

The expert Nodar Kapanadze says job cuts in business by  16 000  within a year does not go beyond the statistical error, accordingly, it cannot be regarded as something particularly dangerous. “At this stage there is no particular danger, but if the reduction continues in 2015, then we can say that there is a tendency with which we must fight,” – he explains.

With regard to the overall decline in the unemployment rate, in his opinion, it is merely sporadic and not a system. The expert Zviad Kandelaki notes that  a reduction of employed in business structures indicates that the business  still faces  problems, and the number of employed in the country grows only at the expense of the self-employed and employees of state agencies.