The purpose of the research is to determine and analyze the current situation in the Georgian economy, labor market requirements, existing workforce structure, main challenges and trends. Important studies were conducted, within the framework of which market requirements were analyzed, consultations were held with experts in the field, employers, representatives of the Center for the Development of the Quality of Education; The present situation of supply and demand in the educational market is studied and analyzed. Qualitative and quantitative studies were also conducted, within the framework of which the following were identified: the compatibility of higher education programs with the market requirements, the inclusion of practical components in the educational process, the relationship between higher educational institutions and students, and the processes of interaction between education and the labor market. We think that the promotion of professional education will definitely lead us to the desired results, both from the point of view of the economy of Georgia and the general situation in the country. There is simply a need for more involvement from the state and, accordingly, more properly conducted measures, raising the level of awareness in society and creating all the prerequisites in order to change the attitude towards vocational schools as positively as possible. All this will eventually become a contributing factor for improving the level of education or the economic situation. The study concludes with findings and suggestions, which cover the issues facing the Georgian labor market and the labor force demand vision. The examination of the influence of higher education on employment and income in Georgia demonstrates that the investment in higher education yields a discernible return at this point, but the human capital developed in the higher education system is still not being employed eficiently in the country.
In general, the countries have been giving more and more importance to education in the recent period, and accordingly they will pay more expenses for the latter as possible. Why is this happening? The answer is that education is a kind of investment in the creation of human capital. Simply put, the state will pay for the education of a specific person today because it will benefit from this person in the future, it may be performing a specific job, participating in technological progress, introducing innovations or any other form that has a positive impact on the economic and general environment of the country.
To some extent, diferences in education levels can also explain diferences in income between countries, but not always. The truth is that a high level of education also indicates a high level of economic development and growth of the country. However, since there are many other factors that have a noticeable impact on the economy, a high level of education alone is not enough to maintain its good condition. Even if we ignore the influence of other factors, it is still an issue that deserves our attention. Having the necessary resources (in this case, we mean a high level of education) does not indicate guaranteed good results, it is necessary to give these resources the right direction and use them efectively.
To better understand the relationship between education and economy, here we can briefly talk about the factors that have been identified by researchers over time and which have a direct impact on the country’s economy: • Education increases the potential for innovation, which creates the basis for economic growth; • Educated workforce is highly productive (easily assimilates technologies) and therefore contributes to the growth and development of the economy; • By investing in education, a better environment is created for technological development, which naturally has a positive impact on the increase in labor productivity and, accordingly, on the economy.
Here, as an example, we cite the research of Krueger and Lindahl [
Also, we can consider the method of Hanushek and Woessmann [
The study of the economic efect of education has become particularly noteworthy since the
1980s and 1990s, due to the wage inequality in diferent countries. According to international
studies on the assessment of individual educational outcomes, for each additional year of
formal education, the world average of individual financial outcomes increases by 10% [
It is also worth noting that over the last 12 years, the amount of education gaps has decreased
by 0.6%, as access to formal education has increased worldwide and, therefore, the average
number of years of formal education (especially in countries with strong economies). This
circumstance leads to the strengthening of competition in local labor markets based on the
supply of human resources in excess of the existing demand, and also to the proliferation
of low-income jobs, which, in turn, lowers the individual financial benefits of education [
As a result, the article examines the present trends in employment and unemployment in the country, covering industry and age. The labor market’s demand component has been investigated, and the key sectors with especially strong economic activity have been identified, which is one of the required criteria for the expansion of employment in these areas.
Important studies were conducted, within the framework of which market requirements were analyzed, consultations were held with experts in the field, employers, representatives of the Center for the Development of the Quality of Education; the present situation of supply and demand in the educational market is studied and analyzed. Qualitative and quantitative studies were also conducted, within the framework of which the following were identified: the compatibility of higher education programs with the market requirements, the inclusion of practical components in the educational process, the relationship between higher educational institutions and students, and the processes of interaction between education and the labor market. Furthermore, our research involves an examination of job searchers and jobs listed on the website of a private recruitment agency.
The topic of the research concerns 3 main issues: 1. Demand/supply analysis for selected higher education programs. 2. Determination of labor market requirements and challenges. 3. The importance of professional education for the economy.
This paper presents a study of the economic benefits of higher education (educational return) in the population of Georgia from a microeconomic perspective, in order to evaluate the personal/individual benefits (monetary benefits) of investment in education in the form of years and the impact of higher education on employment opportunities. As we have already mentioned, individual education gains show how much an individual’s income increases (or does not increase) according to the number of years spent on formal education. Mincer’s “income equality” is considered one of the most common methods for determining this relationship, and variables such as, first of all, the possibility of employment, as well as professional growth and advancement, job stability, the degree of autonomy in the work process, and so on, are used to determine non-monetary benefits [15]. After that, overall, it afects job satisfaction.
In post-communist countries, where economic reforms started relatively late, the restructuring of the labor market took place diferently from developed economies, where employment increased in contradictory directions, in particular, requiring high and low qualifications. In Georgia and other post-Soviet countries, the number of medium and low-skilled jobs has increased, and there has been an increase in such activities where there is a high demand for physical skills, for example, construction, the service sector, transportation, wholesale and retail trade. Such transformations of the labor market in post-communist countries led to the devaluation of the quality of education, knowledge and competencies of the largest part of the adult population (credential inflation), considering that post-communist countries (including Georgia) are characterized by a high share of the population with university education [16].
Ultimately, this was reflected in high rates of highly skilled labor force, as the population with higher education diplomas agreed to do low-skilled jobs [17]. At the same time, the workforce of the older generation is not equipped with the knowledge or skills corresponding to the requirements of the modern market, which, in turn, is an expression of the problem of knowledge devaluation. In general, the mentioned part of the labor force remains “downgraded” in the national labor market in workplaces with low productivity, where the possibility of professional development is minimal, and those with lower competences become unemployed [18, 19, 20].
The process of “downgrading” is strengthened by the fact that in post-communist countries the number of university graduates is constantly increasing, which exceeds the country’s economic capabilities. As a result, on the one hand, there is an imbalance in the labor market in terms of demand and supply of labor force, and on the other hand, the aging labor force is being replaced by a new generation, which also accepts low-skilled work. As a result, competition in the existing limited market increases and the aging workforce moves into even lower-level jobs or into the unemployed category.
Overall, an aging or young labor force that does not have modern education and skills hinders the adoption of new technologies in the labor market, the development of innovative work areas and the growth of productivity at the macroeconomic level of the country [21]. This is because a strong, educated workforce has the necessary information, abilities, and skills that potential employers are looking for [22].
Employment of young people is one of Georgia’s major labor market issues. Young individuals aged 15 to 24 in particular stand out as having a very high proportion of unemployment (figure 1). This is determined by several factors. In Georgia, most young individuals in the work field have a higher education, and after finishing their studies, they confront the following sorts of problems: 1) There is no demand in the labor market for the professions they have learned, 2) The profession they have mastered is a highly competitive profession, 3) And/or their credentials and work experience do not fulfill labor market standards. Furthermore, the percentage of frictional unemployment should be included in this group, because reasons.
work experience do not fulfill labor market standards.
Furthermore, the percentage of frictional unemployment should be included in this group, because
young people require longer time to obtain the desired work, taking into consideration a variety of
tangible or intangible benefits for the country [
In jobs that require problem-solving and fast-acting skills, productivity declines with age, while in
such a generalized reasoning, the international literature also discusses types of activities that
maintains high levels of
have a positive correlation with the aging of the workforce or are not at all related [26, p.
150productivity [
It is dificult to say with certainty what impact the rapidly transforming labor market will
have on the workforce of diferent age groups [
Also, the results of the OECD 2016 report on economic structures by education field are interesting. Engineering and construction are associated with higher financial benefits; Social Sciences, Business and Law; Exact, natural and computer sciences. The financial benefits of those educated in the above-mentioned fields are, on average, 10% higher than the benefits of other graduates. As for university graduates in pedagogy, education and humanities, as well as language and arts, their financial benefit is 15% less than the average income [19].
In addition, it is important to observe the distribution in the labor market according to their education. The research results reveal that: • The share of hired employees with higher education is high in the education system (82%), complex ofice/administrative (81%) and finance/banking/insurance (86%) fields; • Employees with school education represent the majority in defense and security (82%), production (57%) and construction (61%); • Employees with professional education dominate in wholesale and retail trade (38%), as well as in individual services (43%).
Along with the factors related to education, the factors associated with the employment
market are no less important. This refers to the number and types of vacancies in the market
[
In 2021, according to the results of the labor market demand component survey conducted in
Georgia, trade, repair of cars and household items, restaurants and hotels, metallurgical industry,
individual services are the economic activities in which employers experience a shortage of
personnel [
Regarding the labor force recruitment problems, the majority of the employing organizations point out that there is a shortage of specific and necessary personnel in Georgia and that the applicants do not have the relevant skills for the job positions. Sales and marketing managers, confectioners, bank cashiers, teachers, journalists and others are among the deficient professions.
According to the ISCO-08 classification [
According to the 2022 data of the National Statistics Ofice of Georgia, among the
undergraduate graduates of both state and private universities, the majority are graduates of social
sciences, business and law. These programs have maintained their leading position since 2011.
Educational programs related to the field of service and engineering and construction fields in
both state and private universities are characterized by an increasing number of graduates. A
downward trend is evident in the case of health and social service programs and agricultural
education programs.
10 000
8 000
individual services are the economic activities in which employers experience a shortage of personnel
[
Quantity %
Source: Ministry of Economy and Sustainable Development of Georgia. 2021; Official website of the
employment agency: www.hr.ge [
Unfortunately, vocational education in Georgia is not in a very good condition, more and
more people reach higher education institutions, and less and less people remain in the ranks of
those wishing to receive vocational education [
What will happen if the number of applicants is properly distributed between professional
and higher education institutions? We think that the better the conditions for professional
education, the more people will be interested in it, and all this will have a positive efect on
the level of unemployment. We are talking about the case when the redistribution of people
with higher and professional education will be logical, the demand for vocational schools will
increase and there will be a correct match between vacant places and working people [
40 000
35 000
30 000
Source: National Statistics Office of Georgia, 2022 [
HoAwcecvoerdr,inegvetorytthhein2g02c2odnastiadeorfetdheisNnaotitosnoalsSi mtatpilseti,cssinOcfeficveocoaftGioenoarlgiead,uacmaotinognthfaecuensdveargriroaduusate gprraodbulaetmessoafnbdotchhastlaletengaensd [p4r8iv].ate universities, the majority are graduates of social sciences, business andIflawwe.igTnhoersee upnroegmrapmlosymhaevnet (mwahinicthainiseqdutihteeidrilficeualdtiinngthpeosciatisoenosfiGnceeor2g0i1a)1,.thEodsuecaptrioofneaslsipornosg,rams related to the field of service and engineering and construction fields in both state and private which vocational schools provide the opportunity to master, are quite important for the economy. universities are characterized by an increasing number of graduates. A downward trend is evident in It is good to have higher education, it is good to create the basis of technological progress and the case of health and social service programs and agricultural education programs. to increase the degree of innovation, but all this also requires graduates of vocational education programs. 3.3. The importance of professional education for the economy
We can cite a simple example to better understand the role of professional education. We know that the state will spend resources on education, on the other hand, the individual also In general, the functioning of the economy is significantly influenced by the level of unemployment. spends money and time on education, but often the costs incurred are more, and the benefits A high level of unemployment can have a very noticeable and negative impact on the economy and, arceccoeridviendglayr,e olenssth[e49s,t5a0n,d5a1rd]. oTfhilsivminagyobfetdhueestoocitehtey e[d3u9c]a.tIitonissyasssteomci,atleedss wef oitrht olof wtheinsctoumdeens,t low ihncimomseelsf oinr stoumrneiontdhiceartreeadseotenr.ioHraotwioenveorf, tlhiveinfagctsttahnadtaerdxspeannsdesrewdeurcetisopnenoft ocnonesduumcpattiioonn a[4t0t,he41]. initial stage does not change. At this time, we reach a situation where the expenses and time spent are in vain.
Vocational education requires (in most cases) less costs and, most importantly, less time. As good to have higher education, it is good to create the basis of technological progress and to increase the degree of innovation, but all this also requires graduates of vocational education programs.
We can cite a simple example to better understand the role of professional education. We know that
the state will spend resources on education, on the other hand, the individual also spends money and
time on education, but often the costs incurred are more, and the benefits received are less [
we believeofthraetsporuorfceesssi(ownhalicehduiscantaiotunrpallalyysacacvoemrypaimnipeodrtbaynttrhoele in
thimegprroowvethmaenndt odfevtheleopecmoennotmofy)th[e53c]o.untry's economy, and even more so in the effective distribution
of resources (which is naturally accompanied by the improvement of the economy) [
BBaasseeddoonnthtehererceecnetn(t2(021031-32-022012)1)ddataataofofthteheNNataiotinoanlaSltSattiasttiisctsicOs fOfificcee ooff GGeeoorrggiiaa,, wwee ccaann ccoonnc-lude thcalut dtheethnuatmtbheer nouf mpeboeprleofepneroolpleled einnrvoolcleadtioinnavlosccahtoioonlsalisscchhoaroalcsteisriczheadrbayctaerdizeecdrebaysinagdtercerneda,swinhgich istrnenotd,rweahlliychgiosondo.tTrheeallnyumgoboedr. oTfheednuucmatiboenraolfinesdtuitcuatitoionnsatlhiantstaictucetipotneds tshtuatdeanctcsepfoterdpsrtoufdesesniotsnal pfroorgrparmofseasslsioondaelcpreroasgerda.mTshaelsdoedcreecarseeasinedt.hTehneudmebcerreaosfesitnudthenetsnuemnrboellredofinstuvdoecanttisoneanlroscllheodoilns is shvoowcantiionnFailgsucrheo4o.ls is shown in figure 4.
Source: National Statistics Office of Georgia, 2021 [
It should be noted that over the years, a large part of the demand for vocational schools of Georgia came from the older population, and this demand from the students was quite small, although recently the situation is changing and by 2021, 60% of the population under the age of 26 will be enrolled in vocational schools. Figure 5 allows us to make the mentioned conclusion, where the data of 2021 on students enrolled in vocational schools, divided by age groups, are presented.
We think that the promotion of professional education will definitely lead us to the desired
results, both from the point of view of the economy of Georgia and the general situation in the
country. There is simply a need for more involvement from the state and, accordingly, more
properly conducted measures, raising the level of awareness in society and creating all the
prerequisites in order to change the attitude towards vocational schools as positively as possible.
All this will eventually become a contributing factor for improving the level of education or the
economic situation [
In general, we believe that the promotion of vocational education, especially in the case of Georgia, will be one of the means for reducing the unemployment level and for the efective the situation is changing and by 2021, 60% of the population under the age of 26 will be enrolled in vocational schools. Figure 5 allows us to make the mentioned conclusion, where the data of 2021 on students enrolled in vocational schools, divided by age groups, are presented.
Figuref5or:mDaistitorniboufttiohenloabfosrtumdaernketst. iHnovwoecvaetri,odneaslpsitcehtohoelfsacbtythaagtep,r2o0fe2s1si.onal education is popular Sourcein: NmaatnioyncaoulnSttraiteiss,ttihces aOtftiftiucdeeotfowGearodrsgiitai,n2G0e2o1rg[5ia5i]s. quite negative. The majority of students blindly choose higher education without analyzing the situation and the expected results, and Weinthminaknythcastetshweepcroommeotoiotnheoefxpreonfseessiinocnuarrleeddouncaedtiuocnatwioinll, wdehfeitnhietreiltyislemaodnuestatroy rtheseoudrecseisred results, both froormst uthdenptso’inlatbofr avniedwtimofe,twhehiecchoinsowmasyteodf, wGeeomregaina tahnedctahsee wgehnenertahleseitxupaetniosens inctuhrerecdoounntry. There is simpedlyucatinoeneedxcfeoerd mthoerbeeninefitvsorlevceemivend.t from the state and, accordingly, more properly conducted measures, raising the level of awareness in society and creating all the prerequisites in order to change the att4it.udCe otonwcalrudssivooncastional schools as positively as possible. All this will eventually become a contributing factor for improving the level of education or the economic situation [56].
In Agesncearnabl,e wseeenbferolimevtehethabaotvtehdeatparaonmdotthieoinr aonfalyvsoics,aitniotnhaelmeodduecrantilaobno,r emsparekceitaltlhyerienistahe case of Georgigar,eawteirlldebmeanodnaendo,factchoerdminegalyn,sanfoabrurneddaunccienogf vthaceanutnpeomsiptiloonysmine nthteldeivreecltiaonndoffsoerrvtihcee effective formatainodn soaflesth,easlwabeollrasmianrdkiveitd.uHaloswerevviecre,s.dAesnpdittehethneumfabcetr tohfagtrapdruoafetesssiiosnthale leadrugcesattiionnsuischpopular in many cedouucnattriioensa,ltphreogarttaimtusd,ewhtoicwhairndtshiet fiuntuGreeionrvgoialveisemqupiltoeymneegnattaivseh.igThh-reanmkainjogrpitryofoefsssiotundaelsnts blindly chooserahthigehrethraendsutcaarttiinogn wwoirtkh oinutthaenfiealldyzoifntgradthee,ssailteusaatniodnsearnvdicetshe(ISeCxOpe-0c8te).d results, and in many cases we comeThtoertehfoeree,xiptewnilslensoitnbceuarrneedxaogngeerdauticoantitoons,aywthheatthtehreriet iss amreoanleitmarbyalarnescoe uinrctehse omrosdteurdnents' labor and timnaet,iownahlilcahboirs mwaarksteetdin, wteremmsoefansupthpelycaansdedwemhaenndtohfeheuxmpaenncsaepsitianl.cOurnrethdeoontherdhuacnadti,otnhisexceed the benefitcsirrceucmesivtaendc.e clearly indicates the weak institutional connection between the education policy and the labor market, which is an important factor determining the high degree of vertical and 4. Cohnorcizlounstaiolmnissmatch between education and employment.
As can be seen from the above data and their analysis, in the modern labor market there is a greater demand and, accordingly, an abundance of vac3a3nt positions in the direction of service and sales, as
Summarizing the issues discussed above, we can draw the following conclusion. We have seen that education plays a very important role for each country, it is important both for the country’s economy and for the state of the country in general. Based on history and examples of countries, it can be said that diferences in the level of education often explain diferences in income, which once again emphasizes its important role, although not always, since there are many other important factors that also afect the economy of a country.
The analysis of the influence of higher education on employment and income in Georgia demonstrates that the investment in higher education yields a discernible return at this point, but the human capital, which is created in the higher education system, is still not efectively used in the country. As a result, in addition to increasing state investment in higher education, it is critical to implement other measures to raise the rate of public return on higher education. Possible approaches in this direction include: • Rationalization of state expenditures on higher education based on empirical data; • Increasing the compatibility of higher education system outcomes with market requirements; • Increasing overall income from higher education; • Increasing access to higher education for vulnerable groups; • Providing relevant statistics for distribution of employment and unemployment levels according to qualifications; • Further encouragement of cooperation between the private sector and vocational schools to increase the existing scale of transition to work-based learning. Also, increasing the involvement of the private sector in the process of developing vocational education training programs to ensure compliance of vocational education programs with labor market requirements. [7] R. Fernández, R. Rogerson, Education finance reform and investment in human capital: lessons from California, Journal of Public Economics 74 (1999) 327–350. doi:10.1016/
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