Middle Level of Georgia: Social-Economic Role and Importance

Ioseb Archvadze

Social-economy and law background of whole country is hugely depended on the volume and the position of the middle level.

Despite of all these, it was less of society and science attention during recent years in Georgia. The accentuate was transferred from the deep analyze of middle level processes to the poverty study and its reducing among the population, and general economic damage issues.
In developed market economy counties, social stratifications have acknowledged principles of optimal. While such sort of economy condition, middle level should include 60-65 per cent of population, about 20 per cent of rich population and no more then 15- 0 per cent of needy population. Such sort of “three level” separation of current Georgia`s population stays too far from the named proportions, what you will read below:
However, why middle level of the population needs researching and what is the criteria of each one, family and economics to be estimated?
If letting alone gnosiological, political-economy research importance, study of middle level bears importance just because it is tightening bridge between left other, extremely different two groups – reaches and needy population.
Through the critical eye, putting one or family into the list of middle level, determination of material – property, profits, social – professional status and self-identification is necessary. In addition with economy generation is in high, positive correlation touch with middle level size and its part of entire population.
Unfortunately, because of several reasons, economy transformation, reforms, total un-governance and privatization processes “worked” on rich and needy population forming and number rising more then on middle level. Moreover, while the named period, rich and needy population received important “supplement” from “old representatives” of the middle level. From the day of independence achievement, wealth piling was taking place in Georgia beyond law border lines. The most “successful level” in the issue was nomenclature existing by separating leverages. While real market relationship condition, having no practical skill in business running, economy “soviet” structure based Necro-economics brought to sacrifice most of privatized enterprisers to be sold as scrap-irons. That more or less “survived” current utilization and prosperity of such “privatizators” on the background of such property capitalization not realizing. Recent arrangements provided in Georgia maintained mass corruptions, but it did not importantly effect on population` s general prosperity, as on middle level number increase. During this period, economy generation and measures of shadow economy reduction were approximately the same – middle nominal and real salaries increased, incomes become more diaphanous and “clear”, but, meanwhile, incomes from shadow economy sharply reduced. At the same period, approximately 140 thousand people lost their jobs, or were obliged job profile changing because of system transformation and reforms providing. So, “we gained in quality but in not number yet”. According to official statistics, population prosperity level, purchase capacity, money expanses by real opportunities of 2006 (determining inflation) remained on the three years recent level.
“Middle level” population might not be mentioned population of “middle possibilities” or “middle incomes” having. Generally, that is distinct standard of utilization and prosperity. So, while middle level determination, middle or general level of incomes, wealth and prosperity of population should be mentioned if county` s developed market economy includes at least 20 per cent of needy economics, and the middle level existence minimum is 3-6 times bigger. In the other words, middle statistical incomes and incomes facing middle level of individual or economics are different issues, like existence minimum and needy level conception differences. For instance, in Georgia, economics middle income includes 400 lari, but middle level economics income is three times bigger. For long period in Georgia, 3/5 of economics importantly faced less then existence minimum, despite of its excelling. And for today, two of five economics has less income then existence minimum is.
Transmitting period brought separate levels of population to important asymmetry of property (piled property and current incomes). For the middle of 1900th most of economics (at average 3/5) intended to middle and higher social level, by piled property elements, but lower then middle or the opposite, by current incomes. Just 40 per cent of population had both signs of incomes and piled property – presenting to be the same social level.
For now, let`s estimate middle level family (four members) in Georgia, property of which should include apartment/house –approximately 90-100 square meters, yearly current income -USD 4.5-9.0 thousands and no less then USD 45-50 thousands piled property (except apartment), including at least 1/5-1/4 treasury pile, deposit or other property element. In the other words, identification of middle level means distinct financial-economy stability of individual (family), not to be changed because of job status or other sort of social-economy challenges, during too long period of time (no less then 9-12 month).
For instance, job changing, quitting job or demotion should not mean automatic background of moving into middle level or jobs quitting. If one intended to middle level, the status should be remained after retiring.
So, determining piled property, incomes and expanses, middle level population number of today’s Georgia 8 times less comparing with its optimal level. – Determining utilization, prosperity and middle level, at least 8-9 per cent of Georgia ` s population (320-350 thousand people) might be intended to the middle level. About half of them remaining the status up from “pre-market” (soviet) period, other “new middles” were added to the “list” during recent 15 years period, following developed processes. For today, Georgia`s internal- economics 86 per cent is poor and 5 per cent – middle and rich. That means, poor – miserable (lower then middle level) number 17 times excels well – doing and riches (up of middle level) number. While incomes of the richest 5% 63 times excels neediest 5% incomes.
During recent 15-20 years, about 1.5 million of Georgia`s citizens, were slip out of “pre-market” middle level “list”, 1/3 of which left the county. Other every ten remained his (her) status and enriched about 5-6 per cent, left others added to needy level. In the other words, middle level absolute and relative reduction faced the same measure as in 20-30th of the 21st century while provided company for kulaks socially devastating.
And middle level forming is taking place from the binging now. Following economy collapse of 1900th Georgia faces middle level portion increase (but slow) trend. According to our estimation, with 0.4-0.5 percentage points, during recent years. What is at average four times lower then Russia`s analogical increase rate.
Why middle level in Georgia has such low portion?
The basic cause is generally undeveloped economy, and its middle and small business low portion. Small business of Georgia includes 15 per cent of entire production, when EU includes 2/5%.Georgia includes 3/4% of large business and 1/5% of middle business in EU and 1/10 in Georgia. Large business portion 2 times excels EU, but middle business is 2 times and small business 3 times lower in Georgia relatively with European statements. Besides, business portions faced reduction, despite of its increase, check table No:2 attached to the enclosure. Small and middle business is – new job vacancies, mass employment, social and economy stability and prosperity… Without such way of business developing imagine of real progress and prosperity is impossible. There are very few entrepreneurs in Georgia hiring staffers. According to official dates, their number does not excels 20 000, 1.8 per cent of self-employees. Most of state orders given for large companies but their do separate the work among more small and mobile companies.
That rises economy while any business condition in competitiveness environment. So, the authority should maintain middle level number increase with two directions: first of all, via small and middle business developing, taxpaying regime following liberalization, and the second one – state staffers salaries increase. These two directions should be in tight with each other, because society condition is hugely dependent on all these issues.
Middle level forming, its role, social-economy measure determination while market economy transformation process is not just cognitive issue. Number of middle level and its portion among population effects on its influence on state social-economy policy and developing vector. Within the issue, the level bears social-political and historical mission: maintaining society stability. The principle infringed when middle level history fall into decay and factually ignored. The world many countries example serves as a proving of that revolutions, as a rule takes (will take) place in the fallen into decay social-economy and political function of middle level countries, and its developing vector or correspondence alarm is weak, “not understandable” for other forces and easy to be put down, ignored and manipulated… Distinctly is had been knack at early of 1930th in Germany, when because of democracy forces desperation Nazi government came to the power. But France faced opposite condition, middle level and society created most appreciated and right- centrist Shirak was appointed as a president running against ultranationalist Le Penn in 2002. Moreover, central forces representatives (Srakoz, Raule, Bairu) gained more votes (at least 3/4) while 2007 presidency elections.
The cataclysms occurs in Georgia while revolutionary changes in 1900th, it can be directly said, that middle level is under its forming historical process in Georgia, but the society suffers serious problems concerning democracy values inculcation and its protection, because of correspondence traditions deficit. So, middle level forming and its rising up to “Euro Standards” related to our county transmitting to the market economy, its historical chance and perspectives…