Youth employment, and giving economic opportunities to young people to put their skills, knowledge and resources to productive use, is essential for ensuring sustainable development and for building stable societies. Young generation brings social reforms and improvement to the society; hence, youth empowerment is a cornerstone for economic development and wellbeing. Unemployment rates among youth are strikingly high in both Georgia and Armenia. Persistently high levels of unemployment among youth leads to inactivity, less engagement and participation from the side of young generation in the society, meaning unutilized potential and underemployment of valuable assets, causing costs on individuals and the economy in lost output, income and psychological pain. Consistently high unemployment rates have been a bottleneck of decades for both countries, which in most cases, also explains particularly high migration rates.
As of 2021, unemployment stands at 20.6% in Georgia and 18.2% in Armenia. With these indicators, Georgia and Armenia recorded the highest unemployment rates among the countries of Eastern Partnership in 2020. Unemployment is particularly high among youth, in Armenia, 33.3 % for women and 31.6 % for men, while in Georgia 38.2 % and 40.1 %, respectively. In Armenia, youth unemployment is relatively lower for those with vocational skills (IMF, 2021). Quality of employment is also an important subject of assessment, almost half of the employed youth in Armenia has informal sector jobs. Lack of employment opportunities or quality employment chances lead to high labor migration, which is far more common in Georgia and Armenia (and Moldova) than in other countries of Eastern Partnership region. The largest share of these migrants are represented by youth, their choice mainly determined due to lack of appropriate jobs especially for medium to highly skilled workers.
Particularly striking is the high percentage of youth who are labeled as NEET (not in employment, education or training). According to the World Bank (2019), 31% of youth between the age of 15-29 in Georgia and 33 percent of youth in Armenia are not in employment, education or training (NEETs). For Georgia, the number has increased to almost 35 percent. If we compare with the EU average of 13.1 % the indicator is rather alarming and means that there is a large share of the population who are economically inactive, and are at risk of becoming socially excluded, unable to improve their economic situation in the future.
NEET rates are the highest among those with vocational, upper secondary and even higher education and this is particularly true among women. Education does not seem to play an instrumental role in the NEET statistics. We can cite several factors for explaining the high number of NEETS, for example relate them to the relevance of education programs, or skill mismatches on the labor market, which hamper employment of graduates. If analyzed from gender perspective, we see that NEET rates are considerably higher for females than for males in both countries, for example at the age of 20, 37 and 38 percent of women are NEET in Georgia and Armenia. The primary reason for this division is gender related roles in the society and the unpaid care work. Women who report that they are not working cite family-related responsibilities seven times as often as other reasons for not working in Armenia (UN, 2019). In Georgia, the share of economically inactive women aged above 15 is higher than that of men and comprises 56.9%, the underlying reason is quite similar to that we see in Armenia. In Armenia, the activity rate among male workers is 85.5% and for female workers is slightly above 49 %. Since women are more likely to be responsible for taking care of the household as opposed to men, this explains them not entering the labor market or postponing the entry at a later stage in their lives.
Both Georgia and Armenia are facing similar peculiarity of on the one hand having persistent high unemployment rates and on the other hand lack of qualified labor and the lack of skills that are demanded by the employers. The problem of the so-called skills mismatch in the labor market has been mentioned for almost a decade now by various studies and reports of international organizations. A phenomenon labeled as “overeducation” is often cited as a problem for industries in the search of workforce with skills provided by vocational education institutions.
Armenia and Georgia have national policies in place for creating an environment that ensures full-fledged integration of youth in the society through provision of decent employment, healthcare, well-being, etc. In a broader sense, policies directed towards youth empowerment should not only target the issue of unemployment, but rather more widely focus on ensuring employment/better employment and also overcoming the problem of underemployment. However, in most cases, reasons for structural challenges that lead to difficulty of transition to work are deeply rooted in contextual circumstances, ranging from overall lack of economic opportunities in the countries of interest, all the way to particular structural bottlenecks. Hence, when discussing recommendations and policies for overcoming these multidimensional set of issues, multifaced reform and policy packages are needed starting from creating overall favorable business and investment climate for fostering inflow of investments, know-how and tech transfers, education policy all the way to reforms for addressing the skills mismatch issues, programs for fostering education to work transition paths, women and youth economic empowerment issues.
Author: Irina Guruli
The blog is produced within the Economic Policy Research Center’s (EPRC) project ACTION -Activating Civil Society Organizations through Training and Inclusive Operational Network. The project is implemented with the support of the Swiss Agency for Development and Cooperation.
