Georgia: Selected Issues

This Selected Issues examines how skill mismatches and sizeable non-labor income from remittances and government transfers affect labor market outcomes in Georgia. Unemployment remains structurally high in Georgia, partly driven by high skill mismatches and weak work incentives amid low wages, with many households relying on remittances and government transfers as key income sources. This paper finds that over‑education remains widespread in Georgia amid limited availability of productive jobs, alongside shortages in technical and job-relevant skills reflecting weak links between education and labor demand. At the same time, remittances and social transfers are estimated to lower the aggregate employment rate by about 2¼ percentage points. Addressing these constraints requires coordinated efforts in education reform, sectoral upgrading, employer‑led training, and more effective public employment services and social assistance benefits. Protect households while strengthening work incentives. Before expanding benefit generosity further, policymakers should assess labor-supply effects and strengthen links.