Nika Vardishvili Ia Vardishvili TSU students of the faculty of economy and business
Few days ago, all of us watched the TV reportage concerning the fact that none of the government members are aware what the living wage in Georgia is.
This was a pratfall for me, but when I heard opinions of economical experts I decided to express my point of view in writing, as I reckon that experts made wrong emphasis.
To my mind, the reason of common ignorance in this matter is not the disinterest of government members or their bad memory. The reason of this is the wrong method of calculation of living wage in Georgia.
Statistics Department is calculating living wage in Georgia and obviously the rate varies on a monthly basis. However, in article No 31 of Georgian constitution, it is stated that living wage should be defined by the law. This standard of constitution should be followed not only because this is requested by the main law of the country, but because otherwise living wage will not perform its function. The practice of developed counties shows that living wage is playing important role in social life. It is essential for the elaboration and realization of social programs and policy, for the assessment of populations’ standard of living and for defining the amount of pension and the minimal wage. It is very important for the formation of country’s budget also.
In many countries, the amount of living wage represents the criteria of absolute poverty. It is defined, on the basis of minimal basket of goods and obligatory taxes-and-duties, for separate social-demographic groups of the population such as able-bodied, pensioners and adolescents. Basket of goods is a unity of foodstuff, minimal goods and services that are necessary for physiological existence of a human and for the maintenance of his/her ability to work. When calculating the Basket of goods for separate socio-demographic group the necessary amount of energy and proteins should be taken into account, together with the food allowance in terms of basket’s minimal value. The Basket of goods should be as far as possible similar to the traditional consumption of the foodstuff. Health care bodies should participate in the calculation process of the Basket of goods. Information basis should represent the results of domestic household research conducted by the state department.
The necessary expenses of Goods and services (shoes and clothes, linen, tableware, household appliances, personal hygiene stuff, heating, lighting, water supply and transportation) might be defined by the actual expenses of the population’s first decade group.
In order to make sure that every interested person of the society is aware of living wage amount and thus national consent is reached concerning this matter, it is essential to define the basket of goods calculation method. In addition Georgian parliament should adopt the structure of basket of goods periodically and define it as a law.
Basket of goods should be revised periodically, but not more than once in five years. Living wage is an assessment of basket of goods. Its specific volume is defined by the government and it should be revised on a quarterly basis or once in six months, considering the changes in the prices on the goods and services and foodstuff. The specific volume of basket of goods should be calculated for separate socio-demographic groups of the population.
The abovementioned method of living wage calculation is known as normative statistical method that is widespread in developed countries. There are some different methods, for instance in USA. The living wage calculated that way cannot become the object for manipulations by the statistics department. Experts T. Giorkhelidze and S. Tsiskarishvili emphasised this issue in their interview in ‘Komersant’ either. To my mind, the calculation of the living wage won’t be such a luxury as it is stated in 24 January edition of the newspaper “Resonance”.
What is more important, the living wage rate will be known not only by the members of the government, but by ordinary members of the society. Therefore, it will be able to perform its important social functions.