Page 18 - GEORptMar19

Job creation lags behind economic growth in Georgia
Georgia has achieved sustained economic growth over the past two decades, despite a dip during the crisis of the late 2000s, but while this has increased prosperity and reduced poverty, job creation has failed to keep up with economic growth, a World Bank report said. This has worrying implications for the future, as lack of employment opportunities is a key contributor to emigration.
The report reveals that most Georgian firms are small and struggle to grow. As a result, employment is concentrated in larger and relatively older firms. “Georgia has done a tremendous job in creating the environment for firm entry, but more reforms are needed to help firms increase productivity, grow, and thrive in an increasingly competitive global environment,” commented Mohamed Ihsan Ajwad, World Bank Senior economist and one of the lead authors of the report. “Our analysis shows that small and individual firms fail to grow to medium-sized firms.”
The “missing middle” is revealed by employment data. While individual firms represented over 70% of total registered firms, they accounted for just 11% of employment in registered firms. Private sector employment is concentrated in small firms with fewer than 20 employees, or large firms with more than 100 employees.
World Bank economists also point out that while Georgia has made considerable progress putting business-friendly policies in place — the country soared to ninth place on the latest Doing Business index — “political instability remains a significant challenge for firms”.
18 GEORGIA Country Report March 2019 www.intellinews.com