Issue 4, 2018. August-September

   

GEORGIAN HOUSEHOLDS: POSITIVE LONG-TERM TRENDS, THOUGH POVERTY REMAINS

Hans Gutbrod

In early June, UNICEF published the results of its biannual Welfare Monitoring Survey. Some of the headline findings, such as the increase in children growing up in poverty, drew much public attention. In social media, the findings sometimes were truncated to "poverty in Georgia is up," and some commentators saw this as an indictment of recent government policy. Yet a closer look at the data (available at http://bit.ly/UNICEF-WMS-2017) highlights that there are many positive trends in Georgia. Over the longer term, poverty seems to be decreasing. Certainly, many households are better off than they were a few years ago. Arguably, this illustrates that, overall, Georgia is on a sensible course.


Among other things, the UNICEF data shows that incomes in Georgia have increased quite sizably between 2015 and 2017. According to the UNICEF survey, mean annual nominal income increased from 609 GEL to 772 GEL in those two years, which constitutes a 27% increase. If this data is accurate, that would be a sizeable 13% year-over-year jump. UNICEF also highlights that income inequality seems to have decreased slightly, which runs against much of public received wisdom.

Other data seems to corroborate a positive long-term trend. The Caucasus Barometer, a survey by the Caucasus Research Resource Centers (with which the author used to work) has found that over the past several years, many households are much better off. Many indicators (see http://caucasusbarometer.org/en/) point in that direction: In 2008, 64% of households said they had a refrigerator. In 2010, that number had climbed to 89%. In other words, another 25% of the population has been able to afford an essential household item. Similarly, 24% of households claimed to own a car in 2008. By 2017, 37% of households claimed to own a vehicle. Tbilisi traffic jams seem to illustrate this change, too. We see an even more dramatic rise with washing machines, also essential for automating household chores: in 2010, 30% of households had a washing machine. By 2017, this number had more than doubled to 71%.

Such improvements don't always mean that households think they are better off, as researchers around the world have found. If neighbors buy a newer fridge, you may feel left behind. Being well-off is a relative concept.

Yet even here, one sees some positive trends. In 2010, 51% of Georgians saw themselves on the bottom four economic rungs (out of 10). In 2017, that number had fallen to 38%, occurring in a steady decrease over the preceding years. Other questions, too, show that households are doing better. In 2008, 35% of respondents said that they had typically had enough money to buy food without borrowing money during the previous six months. By 2017, that number had gone up to 48%.

Positive as that trend is, it also shows a real problem. The economic situation of way too many households is precarious, as nearly half the respondents says that they sometimes have to borrow money to buy food. The UNICEF report, in particular, highlights that one in five children in Georgia grows up in a household in which basic needs are not met. This finding lines up with Caucasus Barometer data: 22% of households say they don't typically have enough money to buy food. (The reported increases in poverty in the UNICEF report, however, may be subject to debate, as they are close to the margin of error; monetary income data is notoriously difficult to collect; exchange rate fluctuations may play a role, too.) Targeted social assistance programs will continue to be important to give disadvantaged children a fair chance in life. The problem is particularly acute in rural areas.

Poverty, therefore, does remain very real. At the same time, there are positive trends, too. The reason why these positive trends matter is because they illustrate that many of the country's economic policies have actually worked over the last 15 years. Good policy can make a difference, even if progress has not come quickly enough for many.

Dr. Hans Gutbrod teaches at Ilia State University and works as an analyst and consultant. He is on Twitter at @HansGutbrod.

For more information:

http://bit.ly/UNICEF-WMS-2017

http://caucasusbarometer.org/en/