The World Bank published a new Human Capital Review on Georgia, a report which takes a look at Georgia’s human capital — the skills, knowledge, and experience possessed by its population viewed in terms of overall value or cost to the country. The report is released as part of the World Bank’s Human Capital Project (HCP), which is a “global effort to accelerate more and better investments in people for greater equity and economic growth.”
Overall, the report emphasizes that human capital challenges “remain significant” in Georgia and the country lags far behind the European Union.
Investing in the Future
Regarding investments made in future generations, the report notes that “despite substantial progress, child development outcomes remain significantly below the EU average.”
While acknowledging that Georgia has undertaken important reforms to improve child development outcomes, the report highlights several concerning trends, including that ‘stunting’ — which affects cognitive development along children’s learning path — is observed in nearly 6% of children, and almost 40% of children aged 2-7 have “high concentrations” of lead in their blood.
Furthermore, almost half of Georgian children younger than five have less than three children’s books at home, while almost one in four children do not attend kindergarten, compared to close to universal enrollment in the EU.
The report underscores that gaps in early childhood development “reflect strong inequities across income, geographical, and ethnic lines that will continue along the life cycle.”
For example, stunting is more than three times as prevalent in households where the mother’s educational attainment is lower secondary education, than those where she has higher education. Similarly, children in rural areas are thirty percentage points less likely to have more than three children’s books at home than children from urban areas.
Meanwhile, regarding ethnic divides, less than one in three children of Azerbaijani ethnicity attend kindergarten, compared to more than eight in ten Georgian children.
Significantly, the report emphasizes that such gaps affect brain development, will prevent the effective accumulation of human capital all along a person’s life cycle, affect their long-term well-being, and stop them from realizing their full potential.
While discussing the importance of education and noting that Georgia has managed to achieve relatively high enrollment rates, the report laments that the country has the second lowest reading score in the region in the 2018 Program for International Student Assessment (PISA) test scores, which showed that 65% of the country’s 15-year-old students are functionally illiterate, “meaning that they cannot correctly process and understand a simple text.”
The report adds that quality is also an issue in higher education, “which remains far below the average of the EU and of many other ECA [Europe and Central Asia] countries.”
Significantly, a lower quality education affects people’s incomes and employment opportunities, and as the report notes, Georgia’s ability to boost productivity since “not having the skills sought after in the labor market significantly reduces the chances of workers securing quality jobs, which will affect their incomes and productivity throughout their careers.”
The report highlights that gender biases continue to affect women’s opportunities, with the gender gap in labor force participation standing at 19 percentage points, and the wage gap indicating that men earn 16% more than women.
Notably, women are also locked into economic activities with lower earnings which tends to exclude them from science, technology, engineering, and math (STEM) fields.
Health and Healthcare
The World Bank’s report also brings attention to the fact that Georgians face “among the highest incidence” of non-communicable diseases (NCDs) like heart disease, stroke, cancer, diabetes, etc. among European and Central Asia countries, which is “affecting productivity, life expectancy, and healthy aging.”
In fact, the prevalence of such diseases is “much higher” than the EU average and the average of its development peers. This is noteworthy in terms of human capital because living with diseases affects workers’ productivity, forcing some people to work less or retire earlier, and thereby shrinking the working population further in a country “that is already rapidly aging.”
As the report explains, a high incidence of NCDs is one of the main causes of low life expectancy, affects aging and the quality of life of elderly persons, and increases the likelihood of developing severe forms of diseases during the COVID-19 pandemic. Having to deal with NCDs also adds an “unnecessary fiscal burden to the health system.”
Another negative trend in Georgian healthcare is that high out-of-pocket health expenditures “force many poor and vulnerable households to choose between falling further into destitution to pay for healthcare and not seeking treatment when it is required.” “Such a harsh tradeoff reinforces inequities in health outcomes throughout people’s life cycles,” it added.
While reiterating that substantial reforms have been implemented in Georgia over the last two decades, the report underscores the country must continue with reform efforts to deliver better and more equitable services to develop its human capital.
According to the World Bank, such important areas for reform are:
- Increase the level and efficiency of spending in the social sectors
- Make social spending more equitable
- Revisit the decentralization process
- Boost monitoring, evaluation, and feedback loop mechanisms, making use of the new opportunities offered by digitalization.
- Improve the social sectors’ workforce management and support
- Boost cross-sectoral coordination and collaboration
- Prepare and invest in crisis response plans
Read the full report and its recommendations here.