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Rural Poverty Markedly Down Since 2012 Due to State Transfers Rather Than Jobs – OECD on Georgia

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BM.GE
16.12.20 23:00
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Despite tremendous progress on a range of measures, reforms have not sufficiently advanced broad-based economic growth. While poverty reduction, particularly since 2012, has been notable, around 20% of the population still lives in poverty, according to the national poverty line, and half the population is at risk of falling below this line – such is one assumption of the OECD’s recent investment policy review for Georgia.
 
According to OECD, while urban poverty has more than halved since 2004, rural poverty increased following liberalization reforms, only declining markedly since 2012. “Today around one in four rural dwellers lives below the poverty line, compared to one in six urban residents. Rural poverty reduction appears primarily due to increases in state transfers and other social assistance, rather than job opportunities“– reads the Review.
 
OECD argues that the overall unemployment has declined in recent years to around 11%, from an average of just under 20% after the 2008 global financial crisis and war with Russia; however, this figure masks important differences within the country, geographically and by age group: Around one in six urban residents (active population) is unemployed, and one in four youths (aged 20-29).
 
“While the rural unemployment rate is lower, the vast majority of the rural labor force (70%) is self-employed or in unidentified work. Most rural residents work in agriculture, primarily as subsistence farmers. There are also substantial gaps in educational performance between urban and rural areas, with negative implications for skills development“ – OECD argues, adding that actual unemployment or under-employment in Georgia is substantial when taking into account the self-employed or those in precarious work.
 
“According to one poll – OECD writes in its recent Review - more than half of working-age respondents consider themselves unemployed. Among ral espondents who report having a job, only half consider it stable. Georgia has a large informal economy, estimated by the government to constitute 13% of GDP, though other estimates suggest it could be up to four times this figure. According to national data, around one-third of non-agricultural workers are in informal employment”.
 
OECD believes that while successive reforms have improved livelihoods for many, they have not sufficiently increased economic opportunities for the majority of Georgians, since GDP growth has not been accompanied by sustained growth in productivity, aside from initial gains following liberalisation. “Over the past decade, economic growth has been driven largely by investment; total factor productivity has contributed little, and labour less“– the Review said.