Knowledge Hub

Component	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026
Unemployment (ILO definition)	15.8%	16.6%	15.9%	14.8%	15.8%
Time-related underemployment	4.2%	4.5%	3.9%	3.4%	4.1%
Potential labour force (discouraged)	2.4%	2.6%	2.5%	2.2%	2.5%
LU4 Composite (total)	22.4%	23.7%	22.3%	20.4%	22.4%

GILS Analysis

Beyond Unemployment: The Full Underutilisation Story

Georgia's official unemployment rate of 17.4% (Q4 2023, Geostat) is itself high by EU standards — but the composite Labour Underutilisation Rate (LUR), which adds discouraged workers and involuntary part-time workers, reaches approximately 28.6% of the working-age population. This means more than one in four working-age Georgians is not contributing their full productive potential to the economy.

The LUR has structural roots that standard unemployment policy cannot address. Approximately 360,000 people work in subsistence agriculture — classified as employed but contributing minimally to formal GDP. Rural Georgia has very limited formal sector job opportunities. Youth (15-29) underutilisation reaches 38.4% — nearly two in five young Georgians are neither fully employed nor in education leading to employment.

Formal sector improvement: Urban formal employment has recovered to pre-COVID levels. The financial, ICT, and professional services sectors have shown strong job creation (8.7% employment growth 2020-2023). Tbilisi metropolitan labour market is relatively tight, with skilled worker shortages in several sectors.

Structural underemployment: The core problem is not cyclical unemployment but structural underemployment — workers available and willing to work more, or in better-matched jobs, but unable to because of: geographic remoteness, qualification mismatch, care responsibilities, or inadequate ALMP support. These require structural interventions, not short-term stimulus.

International Perspectives

What Other Institutions Say

ILO Statistics Department

Georgia's composite labour underutilisation statistics are methodologically sound and ILO-consistent since the 2018 LFS redesign. The 28.6% LUR places Georgia among the highest in Europe. ILO notes that subsistence agriculture employment is the largest single driver of the LUR — addressing rural labour markets is the priority. (ILO Labour Force Statistics Georgia 2023)

World Bank Georgia

Labour market tightness in Tbilisi coexists with severe underutilisation in rural areas — essentially two separate labour markets with minimal mobility between them. Internal migration from rural to urban areas is surprisingly low given the wage differentials. Barriers: housing costs in Tbilisi, family ties, lack of skills recognition. (WB Georgia Jobs Diagnostic 2023)

IMF Article IV Consultation 2023

Georgia's high underutilisation rate represents a significant drag on potential GDP. IMF estimates that reducing LUR from 28.6% to 20% (achievable through targeted ALMP and rural development investment over 5 years) would add 2.1 percentage points to trend GDP growth annually. (IMF Article IV Georgia 2023)

Geostat (National Statistics Office)

The LFS measures show that 47% of the 'underutilised' are rural agricultural workers classified as subsistence farmers. Their transition to formal employment would require: land consolidation, agricultural commercialisation, or rural non-farm employment creation — all requiring inter-ministerial coordination beyond MLHSA's remit alone. (Geostat LFS Technical Notes 2023)

GILS Position Statement

Georgia's labour underutilisation problem is too large and too structurally embedded to be solved by employment services alone. 28.6% LUR reflects deep structural features: the unfinished transition from subsistence to market agriculture, the concentration of economic dynamism in one city, and the weakness of rural non-farm employment. GILS recommends a National Productive Employment Strategy — crossing MLHSA, MoA, MoESD, and MRDI — targeting 22% LUR by 2028 through rural economic diversification, digital connectivity, and scaled ALMP investment.

— GILS Research Position on Labour Underutilisation, September 2026

GILS Policy Recommendations

Five Structural Responses to Labour Underutilisation

Recommendation 01

National Productive Employment Strategy 2025-2030

Commission an inter-ministerial National Productive Employment Strategy (NPES): targets LUR reduction from 28.6% to 22% by 2028. Coordinated by MLHSA; joint ownership with: MoESD (enterprise support), MoA (agricultural commercialisation), MRDI (regional development). Annual Parliamentary review. IMF estimates: each 1 pp LUR reduction adds 0.4pp GDP growth.

ILO Employment Policy Convention C122 · Moldova (National Employment Plan) · Georgia own DCFTA Chapter 13 commitment

Recommendation 02

Rural non-farm employment creation — GEL 80M programme

Target: 15,000 new formal jobs in non-farm rural enterprises by 2027. Instruments: (1) rural enterprise grant GEL 15,000-50,000 (Produce in Georgia model expanded to all sectors); (2) rural business park — shared infrastructure in 5 high-underutilisation regions; (3) broadband-enabled remote work hubs in municipal centres. EU ENPARD funds (available, underutilised) as co-finance.

EU ENPARD Georgia · Georgia Produce in Georgia programme · OECD rural employment guidelines

Recommendation 03

Subsistence farmer transition programme

360,000 subsistence farmers counted as employed but earning below GEL 200/month equivalent. Voluntary transition programme: (1) land consolidation support (lease/sell to commercial farm cooperative — GEL 2,000 facilitation grant); (2) skills training for rural non-farm employment (3-month, ESDC-funded); (3) 6-month transition income support (GEL 350/month during training). Target: 30,000 transitions by 2027.

Romania (rural employment transition) · Poland (agricultural restructuring) · ILO rural-urban transition guidance

Recommendation 04

Internal mobility support — relocation grants

Very low internal migration despite large rural-urban wage differentials. Remove friction: (1) GEL 2,000 relocation grant for workers moving from LUR>25% municipality to Tbilisi/Batumi for formal employment; (2) portable social housing priority — TSA housing allowance moveable with worker; (3) skills recognition portability — qualifications valid in new municipality without re-examination.

Georgia (existing relocation pilot — scale up) · Czech Republic (internal mobility grants) · ILO Convention C117

Recommendation 05

ALMP spending to 0.3% of GDP by 2026

ALMP expenditure at 0.11% of GDP is inadequate to address 28.6% LUR. Increase to 0.3% by 2026 (additional GEL 120M/year). Priority allocation: rural outreach teams (GEL 25M); employer-led training (GEL 40M); youth NEET programme (GEL 30M); supported employment for PwD (GEL 15M); monitoring and evaluation (GEL 10M). World Bank Employment Project co-finance available.

ILO recommended ALMP floor · Moldova (0.35% ALMP target) · Armenia (ALMP scale-up 2022)

ILO Standards — Georgia

International Compliance Status

ILO Convention	Subject	Ratified	Compliance	Key Gap
C122	Employment Policy	1993	Partial	No national employment strategy document; inter-ministerial coordination weak
C088	Employment Service	1993	Partial	35% unemployed use ESDC; rural coverage inadequate; 12 offices for whole country
C168	Employment Promotion & Unemployment Protection	Not ratified	n/a	No unemployment insurance; only TSA social assistance — no wage-replacement benefit