New initiative of Trade Union of Georgia
Irakli Petriashvili declared that due to the current situation in the country unemployment benefit in amount of 55 GEL should be assigned to every registered jobless person in Georgia. Ministry of Labour, Health and Social Care of Georgia is responsible for the registration and financing of unemployed people. Corresponding amendments should be made in Georgian law concerning “2009 state budget of Georgia”. These amendments include financing the registration of unemployed people and assigning unemployment benefit to them. Irakli Petrishvili declared that according to the data of third quarter of 2008 there are 280 thousand unemployed people in Georgia. Due to difficult situation in some fields (construction, banking-insurance business, service, trade etc) employment layoffs take place. Therefore, it is anticipated that approximate number of jobless people will increase in the nearest future up to 350 thousand. Irakli Petriashvili emphasized that he relies on official data published on the website of Statistics Department of Georgia. According to official prognosis, crisis will continue to the end of 2009, so the duration of unemployment benefit should be not less than 6 months. In order to assign 55 GEL benefit to 350 thousand unemployed people for six months – 115.5 million GEL is needed. The unemployment benefit offered by this draft bill encourages social justice and solidarity; moreover it provides minimal aid for the major part of the population and thus avoids aggravation of poverty. Irakli Petriashvili declared that in case if the bill passes budget’s income will increase as the main part of the assigned funds will be spend on teh local market, for the consumption of goods and services. The president of Georgian Trade Union declared that according to official statistical data, the value of goods produced by small and average enterprises in Georgia amounted 1 726.2 million GEL (small business – 826.6 million GEL, average – 897.6 million GEL). The number of people employed in enterprises is 132.5 thousand. Average salary in small and average enterprises amounts 323.2 GEL. The value of goods produced by one employee is 13027 GEL or 115.5 million GEL creates 8 880 working places and 34.3 million GEL will be required a year for remuneration of labour. Country will receive 6.9 million GEL a year with 20% income tax or 6% of the assigned sum – 115.5 million GEL. Initiators of the draft bill declare that its passing will have no affect on supply of Georgia state budget in 2009. It will not increase the supply, but cause the necessity to make some amendments in separate parameters of budget items.
As the source of the mentioned 115.5 million GEL can be used part of active income tax and from 20% tax system direct 3% to it. According to the law of 2009 state budget, planned index of revenue is defined in amounted of 1 123 million GEL for state budget and 1 200 million Gel for consolidated budget. 3% of the mentioned sums amounts 168.5 million GEL and 180 million GEL that is enough to assign unemployment benefit for 6 months.
Irakli Petriashvili declared that the sums assigned by 2009 state budget need to be reviewed as some of them are quite irrelevant. For instance it is obscure why the funds assigned to Georgian parliament have been increased, while the number of parliament members has reduced. For more clearness we are offering the data of financing state structures:
Irakli Petriashvili emphasized the increase of funds assigned to Ministry of Defence and declared that it doesn’t include purchasing of the weaponry.
Unemployment benefit is an approved practice in the world:
Unemployment benefit Italy, is assigned for seven months from the date of losing a job and it amounts 40 percent of the salary (some other aids of social care are active also);
The amount of unemployment benefit in Sweden changes by gradation in accordance with the period: during the first 200 days unemployed receives 80% of the salary, within the period of 201-300 days – it amounts 70% of salary, while for the next 301-450 days it reduces to 65%; Amount of unemployment benefit in Great Britain depends on the age of a person, his/her family conditions and other incomes. For instance, in the age of 16-17 years – 36.65 Pound Starlings are assigned a week, 18-24 years – 46.85£, while above the age of 25 – the sum increases up to 59.15£ a week.
The amount of unemployment benefit in China is defined by minimal wage and minimum of subsistence.
Work insurance practice is established in Canada as an unemployment benefit, while in Australia the sum is defined by ages.
According to the prognosis of UN Labour Agency, due to economic recession 40 million people might loss their jobs; the unemployment rate reaches highest point in the decade. The number of unemployed people considerably depends on the economic policy carried out by the governments. It is forecasted that at the end of the current year, the number of unemployed people will fluctuate within 210-230 million. According to the data of Labour international organization, economic crisis will last up to 2010 and the unemployment rate in the world will be 7.1 percent. General Director of the organization Khuan Somavia declared that most of the governments have started to help their economies, but in order to overcome global social recession, more coordinated and intrepid steps should be taken. World has already recognized that in Þ addition with fiscal and monetary interventions, world economy needs some creative measures in order to improve the social state of the employed people. Moreover it is necessary that governments give due regard to small and average companies, as they create the main mass of the working places.
As regards “: the amendments and additions in the labour code of the country”, Irakli Petriashvili emphasized that government should act in accordance with the principles of social justice and it should fulfil own obligations.
There is a resolution of Georgian parliament of 1997 about “Harmonization of Georgian legislation with the European one”. According to the resolution, Georgia is obliged to harmonize its legal system with the principles of European Union. On 1 of July 1997, the agreement between Georgia and EU about “Partnership and cooperation” became operative. The agreement obliges Georgia to coincide home legislation with the EU regulations. This obligation concerns labour law also. There have been many talks about the imperfections of Georgian labour code. To say more precisely Europe gives us some remarks. Despite the fact that in terms of European neighbouring policy, Georgia is strictly obliged to harmonize its labour code with European standards, it doesn’t fulfil its obligations and competes with China in cheap manpower. There are no regulations for employment layoffs and obligation of compensation in Georgian Labour code. In western European countries, in case of employment contract termination on employer’s initiative, employee receives compensation in amount of 22 weeks salary. Due to current economic crisis in Georgia and in whole world that will be resulted in employment layoffs, in case of employment contract termination on employer’s initiative Georgian Trade Union offers the state to establish two months salary compensation instead of one. One cannot disregard following fact: according to the law about “Public service”, in case of dismissal the employee is given 2 months salary as a compensation that points at double standard approach as the people employed in private sector are in a discriminative situation and they receive only one month salary compensation. “Flexible” and well “regulated” labour code encourages increase in number of short-term employment contracts. Representatives of EU are pointing at gross errors in Georgian labour code.
In 2008Y resolution of Labour International Organization about “Use of conventions and recommendations” experts strictly criticise the fact that Georgian legislation doesn’t encourage social dialogue between employer and employee. EU commissions interim resolution should be noted either, according to which Georgia is requested to fulfil its obligations in terms of European neighbouring policy.
– The aim of the draft bill is to create such levers that ensure protection of labour and social-economic rights of the employees in the country due to current crisis. In case of employment contract termination on employer’s initiative or refusal of contract prolongation on the ground of its expiration, employee should be given relatively high compensation that will partially compensate the pecuniary loss due to dismissal. This will encourage employer’s social responsibility, and protect the rights of the employees; moreover this will bring justice elements in the labour field.
Economic expert Lado Papava declared that he supports amendments in the draft bill. He also noted that moral and economic aspects should be taken into consideration while assessing unemployment benefit assignment. Only economic approach cannot be justified as we are dealing with humans. Lado Papava reckons that of course 55 GEL is not a living wage, but it helps people not to feel ignored and alienated from the state.
– Concrete mechanisms should be specified, so that by means of various machinations one could not receive unemployment benefit again, after expiration of six months period. In recent years, when the employment program was conducted in Georgia, people often presented false employment contracts. So one might say that this was a throw away money. It would be better to use the money for social aid rather than for employment. This would be fair and clear approach for everybody. From moral point of view, even minimal aid for unemployed people can be justified. As regards economic side of the matter, in terms of crisis this issue becomes more acute. There is a tendency in whole world – governments directly help businesses and that is a big mistake as business becomes dependant on the state. The second way is to directly help citizens. Counsellor of Georgian president Ilarionov, who is also a representative of CATO Institute, reckons that it is a huge mistake to help enterprises and banks financially and it would be more proper to render aid to the citizens. CATO Institute has liberal direction and therefore the mentioned initiative doesn’t confront with liberal understanding. It’s true that it is impossible to exactly define human behaviour, but it is a fact that man with low income first of all spends money on consuming articles of prime necessity. I agree with the initiative that is supported by most liberal institute about what type of measures should be taken by the government during the crisis. Of course aid rendering will cause inflation, but it should be noted that during the crisis governments are often induced to take several measures. This will not be a rampant inflation that could create actual dangers.
– There is some problem with self-employed people that are not registered anywhere. There is no information about them in the ministries. Þ
Economic expert Mr. Emzar Jgerenaia offered different solution of the problem. He reckons that the matter should be divided in two parts, principle and technological. While discussing the principle part of the subject he declared that the bill draft would be more beneficial if unemployment and aid issues will not be presented there, as people do not know whether they will have the job tomorrow or not.
-Bill draft would be beneficial if the issue of employment insurance will be included. The insurance charges can be posted as the expenses in the accounting. As a result 580 thousand employed people in Georgia will start to make minimal deposition in an insurance company and thus insure own unemployment. It should be noted that only people employed by contract is meant here. The draft bill should clearly define what is meant under unemployed people. According to official statistics, the number of able-bodied people is 2.8 million, while 2 million people desire to be employed. The number of self-employed people – 1.2 million is wrong. Unemployment rate is much higher than the official data. Therefore it is possible that some claims can arise between beneficiaries and those desiring to receive unemployment benefit. This can become a matter of confrontation. What are we going to do with those people who are registered in the Department of Statistics as self-employed, but without using some acknowledged method of actual registration? Draft bill should include successive items, in order to avoid such pitiful analogues as when the person having a fridge at home cannot receive aid. One of the acute problems is that labour exchange doesn’t exist in Georgia. Therefore it is impossible to prove that some person was trying to find a job, as there is no registration of it.
It should be argued separately why it is better to render unemployment benefit for six months that is quite short term instead of investing the money in construction and banking sectors, which are having hard times now. We should have more careful approach while amending labour code. If the labour code becomes too strict, we will receive the analogue of France, where it is almost impossible to dismiss an employee. The main task is not to create problems by too much intervention in employment field of Georgia. It is written in the draft bill – “Individual approach of dismissal”. What would be better to give two months salary compensation to the dismissed person or to allow Trade Union to decide every particular case by negotiating with the administration? The perception of the reality is needed, crisis will last for 2-3 years, and therefore the draft bill shouldn’t be considered only for six months. Nobody knows what is better Ilarionov’s approach or rendering aid to business. To my mind market will sort out everything itself. However, some leadership will be sacrificed to this. The professionalism problem is quite acute in Georgia either.
-It is almost impossible to improve professional qualification this year in Georgia, as the country doesn’t invest in this field. State should be interested in having qualified labour force in the country. However officials are discussing how to compete with China and India and they are seeing the solution in cheap labour manpower. Legislative or executive authority shouldn’t try to improve competitiveness of the manpower this way, moreover when competing with the country having billions of population. There are no funds assigned for vocational training. As it became known that EU renders ˆ28 million for vocational training, they immediately presented Tata Vardanashvili’s enterprise, where 800 people will be trained. However, if it goes on this way, we are going to have plenty of shoemakers in Georgia, while there will be lack of drivers and cooks etc.
Economic expert Demur Giorkhelidze declared that countries in whole world publish unemployment rate on a monthly basis. The rate is quite unsteady. It is essential to calculate the number of unemployed people in Georgia. Afterwards it becomes clear whether 115 million GEL is enough or more funds are needed. Mr. Demur reckons that liberal economy is wonderful, but it shouldn’t be distorted and it shouldn’t become a reason for irresponsibility.
Unfortunately, in terms of world economic crisis, the growth of unemployment rate in Georgia is inevitable. Therefore government should take into account that there are lot of people in the country living beyond the minimum living wage. It is necessary to take measures, but at the same time the measures taken by the government should be long term and effective in order to improve population’s social condition. Maybe it would be better to invest the money in economy in terms of world economic recession?