While Georgians enjoy relatively wide access to education, there are loose links between education and employment (IBRD & World Bank, 2019). Access to education is high, the literacy rate is virtually 100%, there is nearly universal enrolment in primary education and comparable enrolment rates in secondary education (Table 2). Enrolment figures suggest that secondary and tertiary enrolment can still improve, but the education levels of the Georgian labour force compare well even with high-income European countries (34.2% of the labour force having tertiary education). Tertiary education attainment was 44.1% in 2018 for the 30 to 34 age group. Gender parity has generally been achieved at all levels of education enrolment as well. Internationally, the country is positioned nearly in the middle of global human development and innovation indices, while presenting similar levels of economic competiveness. It is also progressing in terms of its capacity to reap the benefits of future digitisation and ICT, as presented by the digital and networked readiness indices, respectively (Table 2).

Table 2. Human capital development indicators

Indicator	Value	Year
Average years of schooling (UNDP)	12.8	2017
Expected years of schooling (UNDP)	15	2017
Learning-adjusted years of schooling (World Bank)	8.9	2017
Adult literacy (UNESCO)	99.8	2015
Net enrolment rate in upper secondary education (UNESCO)	86.6%	2017
Gross enrolment ratio in tertiary education (UNESCO)	57.5%	2017
VET enrolment as % of ISCED 3 (UNESCO)	8.8%	2016
UNDP's Human Development Index – ranking among 189 countries	71	2018
Global Innovation Index – ranking among 126 countries	59	2018
WEF Global Competitiveness Index 4.0 – ranking among 137 countries	66	2018
Digital Readiness Index – ranking among 118 countries	38/Accelerate	2018
WEF Networked Readiness Index – ranking among 139 countries	58	2016
% of population who use the internet (UNDP)	58.0%	2016

Source: ETF compilation from the databases of international organisations as specified in the table.

As per the 2005 Law on General Education, the education system encompasses primary education (grades 1 to 6), basic education (grades 7 to 9), and secondary education (grades 10 to 12). Education in Georgia is compulsory up to grade 9 (6 to14 years old). Once this stage has been reached, students may choose to continue with secondary education, which typically leads to higher education, or they may choose to continue their studies at vocational institutions (see the chart in Annex 2). VET programmes are provided at levels 3, 4 and 5 of the national qualifications framework, while training and retraining programmes are provided at levels of 2 to 5 (MoESCS, 2019).

According to Geostat, approximately 570 000 students were studying in the general education system (from grade 1 to grade 12) in the 2017/18 academic year in Georgia (Table 3). Combining all types of VET programmes together, a total of 15 600 students were registered in VET in 2018, with similar gender shares. The size of the VET system remains very small, and around two-thirds of VET students are in public VET schools. Levels I, II and III represent IVET (initial vocational schools) and levels IV and V represent secondary vocational education (community colleges). The most popular VET programmes seem to be engineering, business administration, health, inter-disciplinary branches, agriculture and art.

Table 3. Georgian education system in numbers (2017/18 academic year)

Education level/type	No. of schools		No. of teachers		No. of pupils
	Public	Private	Public	Private	Public	Private
General education schools (from grade 1 to grade 12)*	2 331	246	59 544	7 090	518 000	57 200
Total	2577		66 634		575 200
Vocational/community colleges	42	83	2 291	1 793	11 500	4 100
Total	125		4084		15 600
Higher education institutions*	20	55	4 692	3 539	93 600	50 200
Total	75		8 231		143 800

Source: Geostat, 2018. Note: VET enrolment numbers vary due to different time reference: calendar year (1/1–31/12) versus academic year (1/9–31/8). Moreover, there are two enrolments per year in public VET.
*A few general education schools (10) and some higher education institutions (21) provide VET programmes as well.

Only students with an upper secondary diploma have access to higher education and they have to pass a unified national exam to enrol in a state-accredited higher education institution. In the 2017/18 academic year, the higher education system included 143 800 students, 65% of whom attended public universities. Women were over-represented among these students. Looking at the number of students by programme in public universities shows that social sciences, business and law are the most popular subjects, followed by science, humanities and arts as well as engineering, manufacturing and construction (Geostat, 2018). In general, gender-specific differences are most pronounced in the education, health and welfare disciplines, which are clearly dominated by women. In contrast, men dominate in engineering, manufacturing, construction and services (Geostat, 2018).

Wide access to (general) education is also confirmed by the 12.8 years of average schooling in Georgia and the 15 years of expected schooling for pupils enrolling today (Table 2). However, according to the World Bank's recently launched Human Capital Index, after accounting for students' learning gains, the learning-adjusted years of schooling drop to 8.9 years. Moreover, a child born in Georgia today would be only 61% as productive as they could be if they complete the current full education (IBRD & World Bank, 2019).

The results of some international student assessments that Georgia participated in confirm the signs of quality problems in basic education. For example, Table 4 shows the results of the OECD's PISA tests for three consecutive rounds in 2010, 2015 and 2018, in terms of the share of 15 years-olds who could achieve only the lowest level of proficiency (OECD, 2019). Although Georgia has improved its results from 2010 to 2015, the fact that more than half of the Georgian students who could achieve only the lowest level of proficiency was already worrying. On top of that, the most recent PISA 2018 results have deteriorated, where the share of lowest achievers has risen again up to 64% in reading, 61% in science, and 64% in mathematics. The country ranked 70^th out of 79 countries participating in the PISA 2018 test. Weakness in these key competences will have an effect on the lives of these pupils and will limit their further learning capacity, whether they leave education or continue studying in VET or higher education.

Table 4. Underachievement rates in PISA for Georgia (% aged 15)

PISA results	2009	2015	2018
Reading (those who could achieve only the lowest score)	62.0	51.7	64.4
Mathematics (those who could achieve only the lowest score)	68.7	57.1	61.1
Science (those who could achieve only the lowest score)	65.6	50.8	64.4

Source: OECD, 2019 (available at https://doi.org/10.1787/5f07c754-en).

Other international tests that Georgia participated in, such as TIMSS and PIRLS, also delivered below-average results (Table 5). Georgia was ranked 37th out of 49 countries participating in the 4th grade mathematics test, and 39th out of 47 countries participating in the 4th grade science test. Similarly, it was ranked 26th out of 39 countries participating in the 8th grade mathematics test, and 31st out of 39 countries participating in the 8th grade science test. However, the TIMSS 2015 results showed an improvement compared to its 2011 and 2007 results. The results of the PIRLS 2016 tests are not available yet, but the results of PIRLS 2011 ranked Georgia 34th out of 45 participating countries in the 4th grade reading test.

Table 5. Georgian students' performance in international tests

International test	Country ranking	Country mean score	Average mean score	Highest mean score
TIMSS 4th grade, 2015	Maths: 37th out of 49 Science: 39th out of 47	Maths: 463 Science: 451	Maths: 500 Science: 500	Maths: 618 Science: 590
TIMSS 8th grade, 2015	Maths: 26th out of 39 Science: 31st out of 39	Maths: 453 Science: 443	Maths: 500 Science: 500	Maths: 621 Science: 597
PIRLS 4th grade, 2011	Reading: 34th out of 45 countries	Reading: 488	Reading: 500	Reading: 571
PIRLS 4th grade, 2016	Reading: 37th out of 50 countries	Reading: 488	Reading: 500	Reading: 581
PISA 15-year-olds, 2015	60th out of 70 countries in 3 subjects combined	Reading: 401 Maths: 404 Science: 411	Reading: 493 Maths: 490 Science: 493	Reading: 535 Maths: 564 Science: 556
PISA 15-year-olds, 2018	69th out of 77 countries in 3 subjects combined	Reading: 380 Maths: 398 Science: 383	Reading: 487 Maths: 489 Science: 489	Reading: 555 Maths: 591 Science: 590

Source: For PISA results: OECD, 2019 available at https://doi.org/10.1787/5f07c754-en). For TIMMS and PIRLS results, available at http://timssandpirls.bc.edu/.

These results are often linked to varying quality of education and training provision, either because the education quality is lower in certain areas (e.g. rural areas), or because the system does not sufficiently address the vulnerability of certain population segments that are exposed to poverty and inequality (e.g. pupils from poor backgrounds, ethnic minorities, people with disabilities or internally displaced people (IDPs) from Abkhazia and South Ossetia)[3] According to the ggovernment's IDP Livelihood Support Strategy, there were 268 034 IDPs registered in the Ministry of Refugees and Accommodation's livelihood database in 2016.
. For instance, early school dropouts are common among ethnic minorities. This needs to be tackled at community level by the schools (ETF, 2018). Even if these students manage to stay in school, a lack of Georgian language skills represents a further barrier to continuing higher education and hence integrating into the labour market.

Quality of education is also linked to the quality of teachers. Low salaries and pensions and the absence of a retirement age mean that many Georgian teachers continue to teach long after they retire. According to a recent OECD report (2019), around one in five of Georgia's teachers are over 60, around 86% of them are female, 60% work part-time, and many teachers supplement their low salary with private tutoring. Unlike many countries, teachers are not public servants in Georgia. They are only employees of the school where they work. Their contracts are signed by the school principal, as school principals have significant autonomy in hiring and firing teachers but limited oversight (with no central guidelines or requirements for recruitment). The country has started to work on improving the knowledge and pedagogical skills of teachers, also due to the recent changes introduced in the new curricula.

Georgia is not creating as many jobs as its economic growth would suggest, and most economic activity is concentrated in the capital. According to the Ministry of Economy and Sustainable Development (MoESD) (2018a), the average annual growth rate of employment between 2010 and 2017 was 1.4%, while the annual GDP growth rate was over 5% in the same period. The economic growth was largely due to the growth of productivity and capital, so the impact on employment was limited. Since 2010, one important growth factor has been (private and/or foreign) investment, with almost half of total value added created in Tbilisi (MoESD, 2018a). Therefore, there is a very high concentration of jobs in the capital.

According to the World Bank (IBRD & World Bank, 2018), total employment growth in Georgia is low, despite robust firm entry, because firms are mostly small and employment is concentrated in larger and relatively older firms. Small firms and individual entrepreneurs, while contributing to job creation in the short run, fail to grow into medium-sized firms; they also have high failure (exit) rates. Moreover, too many workers are in the least productive firms within each industry. For example, in 2015, individual entrepreneurs (legal persons) represented over 70% of total registered firms, but accounted for only 11% of total employment. In the private sector, employment was concentrated in small firms (fewer than 20 employees) or large firms (more than 100 employees); small firms accounted for 40% of total employment and large firms accounted for another 40%. As a result, employment in medium-sized firms is disproportionately low ('missing middle') (IBRD & World Bank, 2018). Rather than business creation, the growth of micro and small companies seems to be the main problem in Georgia.

The main contributors to economic growth have been trade, manufacturing (aircraft parts, metal parts, textiles and furniture) and the services sector, with hospitality and financial services leading the way. Construction, mining and quarrying and real estate also experienced upward growth (Geostat, 2018). In 2017, the average monthly nominal wage was GEL 999.1 (Georgian Lari, equivalent to approx. EUR 319), but huge differences exist across economic sectors (MoESD, 2018a). Highly paid sectors include financial intermediation, transport and communication, construction, electricity, gas and water supply. The main low-paid sectors are agriculture, hunting and forestry, education and tourism. The problem is the low level of employment in the highly paid sectors, as most of the employed population is working in the low-paid sectors.

Gross value added by broad economic sector indicates that almost 58% is contributed by services, 23% by industry, and only around 7% by agriculture (Geostat, 2018). Yet, as seen in Table 6 below, about 39% of jobs were in agriculture in 2018 (down from 48% in 2010), whereby individuals were either working for themselves or as unpaid workers. Most of these jobs are not desirable and are low-productivity jobs. The share of industrial employment is small and has remained constant, while about 53% of jobs were in the services sector in 2018 (up from 45% in 2010). Due to this economic structure, a continuous imbalance exists between the high numbers of people acquiring higher education and the low demand for a highly skilled workforce. This is not to say that higher education should be limited, but rather that the workforce should be allowed to be productive by identifying the right investment opportunities.

Table 6. Development in employment share (% of 15+ age group) by broad economic sector, 2010–2018

Economic sector	2010	2014	2017	2018
Agriculture & fisheries	48.0	45.9	43.2	38.9
Industry & manufacturing	7.2	7.2	8.1	8.3
Services & construction	44.8	46.8	48.8	52.8

Source: Geostat, 2018 (labour force survey).

It is obvious that the exit from agriculture will continue and further jobs will be needed for those leaving agriculture. Employment is growing in the cities and dramatically decreasing in rural areas. Given the characteristics of the Georgian labour force, coupled with the favourable investment and business climate in the country, the potential exists to expand and create new sectors with higher value-added activities, particularly in services and the agro-food sector. According to the Vienna Institute for International Economic Studies (wiiw, 2019), a development strategy combining the existing competitive advantages of tourism with domestic agriculture, supported by structural reforms in the agricultural sector and targeted FDI policies, could be a viable option for fostering inclusive economic growth.

As previously mentioned, Georgia's population has a relatively high level of education. Based on 2018 labour force survey (LFS) data, 30.4% of the working age population (people aged 15+) has a university degree; 36.1% of the population has upper secondary education, while 21.7% has VET education. Those with only lower secondary education account for 11.8% of the population. Men are over-represented in lower secondary and upper secondary education, while women are over-represented in higher education. There are slightly more women than men with VET degrees. The education levels of the employed population are even higher (see the totals in the last column of Table 8).

Despite this educated workforce, activity and employment rates show a modest use of human capital in the country. Following a gradual increase over the last decade, almost 64% of the working age population was economically active in 2018, with men's activity rate 18 percentage points higher than that of women (Table 7). Women and people in rural areas are less likely to be in the labour market. The employment rate was 55.8%, with 14 percentage points difference again between men and women. Those with lower secondary education have the lowest activity and employment rates and a similar gender difference. Both activity and employment rates increase by education level, gradually increasing from upper secondary to VET education, and the highest rates are among those with university education (Table 7).

Table 7. Activity, employment and unemployment rates by education level, 2018

Education level	Activity rate	Employment rate	Unemployment rate
Lower secondary	35.5	31.9	10.0
Upper secondary	64.7	55.7	13.9
VET	66.7	59.2	11.1
Higher education	72.1	62.8	12.9
Total	63.9	55.8	12.7

Source: Geostat, 2018 (labour force survey).

On top of modest activity and employment levels, underemployment is common among the employed population in Georgia. Average working hours per week have been less than 40 hours in recent years, despite significant diversity across sectors (Geostat LFS data). Most agricultural employment (almost 40% of total employment) is in the form of self-employment in subsistence agriculture. Only a small proportion of this employment is full-time employment, most of it is seasonal or part-time. Indeed, 2018 LFS data shows that up to 9% of employed people worked less than 20 hours a week.

As shown in Table 8, 50.8% of total employment was in wage employment in 2018 (up from 41.2% in 2010). The rest is shared between own-account workers (almost 30%), unpaid family workers (almost 18%) and employers (2%). Not surprisingly, the share of informal employment is also high, even in total non-agricultural employment (36.2% in 2018). More males and rural workers work informally, compared to females and urban workers. Employment status by education level shows some interesting trends (Table 8). Among those working as employees, more than half were university graduates in 2018, followed by upper secondary and VET graduates. Among employers, two-thirds of them were university graduates. Among own-account workers, close to half of them were upper secondary graduates, followed by VET graduates (28%). Finally, unpaid family workers were dominated by upper secondary graduates (53%), but almost one-fourth were also VET graduates.

Table 8. Employment status by education level, 2018

Total % of employed	Employee	Employer	Own-account worker	Unpaid family worker	Total by education
	50.8	2	29.5	17.8	100
Lower secondary	3	0.3	9	14.6	6.7
Upper secondary	25.1	18.8	45.9	53	36.0
VET education	20.4	12.4	28.3	22.9	23.0
Higher education	51.5	68.6	16.8	9.6	34.2
Total	100	100	100	100	100

Source: Geostat, 2018 (labour force survey).

Another indicator of the limited use of human capital is the high unemployment rate. Although it has been decreasing over time (from 16.3% in 2010 to 12.7% in 2018), it is still high by international standards. When the Geostat LFS data is analysed, it shows that total unemployment is always higher among men than women. In 2018, unemployment was highest among graduates of upper secondary education, followed by graduates of higher education (Table 5). Unemployment was slightly lower among VET graduates, but still higher than lower secondary graduates. It seems that having higher education enables more people to enter the labour market, but it is relatively better educated people who face higher unemployment. Youth unemployment is particularly high, which contributes to the limited use of human capital. As this is also linked to the school-to-work transition, it is dealt with in the next section.

Unemployment is much higher in the cities (the highest being in Tbilisi), while it is very low in rural areas. This is not surprising given the fact that part-time and seasonal work in subsistence agriculture is common and counts as 'employed' in the statistics. Broadly speaking, job quality correlates with skills (IBRD & World Bank, 2018). Low-skilled workers live in rural areas and generally work in agriculture for themselves or as unpaid workers, while highly skilled workers are in wage employment. Highly educated men above 30 years of age have some of the best job prospects, and young, low-skilled women have some of the poorest job prospects.

As previously explained, the relative size of the youth population is shrinking over the years (from 21.8% in 2011 to 17.8% in 2018) (Table 9). Young people also get better education in general, as the tertiary education attainment level reached 44.1% among the 30 to 34 age group in 2018. More women (48.5%) than men (39.9%) attend university. Despite these favourable conditions, however, all youth labour market indicators show a very difficult transition from school to work, which leads to either unemployment or inactivity.

As seen in Table 9, the youth activity rate stalls around 40% (47% for males, 32% for females), while youth employment rate is around 28% in 2018 (35% for males, 21% for females). Thus young people are less likely to be in the labour market compared to adults. Moreover, a slight increase in the proportion of early school leavers was observed recently (almost 10% in 2018), although traditionally Georgia has a low share of early school leavers aged 18 to 24 (Table 9).

Table 9. Basic indicators of youth (% aged 15–24), 2011–2018

Indicator	2011	2015	2016	2017	2018
Relative size of young population (% 15-24)	21.8	19.6	18.9	18.2	17.8
Youth activity rate (% aged 15-24)	39.8	40.4	38.2	44.4	40.4
Youth employment rate (% aged 15-24)	24.0	26.8	25.5	31.6	28.3
Youth unemployment rate (% active youth)	39.8	33.8	33.2	28.9	29.9
NEET rate (% aged 15–24)	32.6	26.6	25.9	24.8	26.9
NEET rate (% aged 15–29)	34.8*	31.8	32.2	30.0	31.6
Early leavers from education (% aged 18–24)	7.1*	5.8	6.2	8.9	9.6

Source: Geostat, 2018 (census and labour force survey). *Refers to 2012.

Despite falling from almost 40% in 2011, the youth unemployment rate is still as high as 30% in Georgia. Among the unemployed population, there are certainly more young women than men, and more rural residents than urban dwellers (Table 9). When analysed among the sub-age groups, unemployment is highest in the 20 to 24 age group (MoESD, 2018a), which is the typical transition time when graduates with VET and/or higher education transit to their first job. The second-highest unemployment rate is among the 15 to 19 age group, which is typically the time when graduates with lower and upper secondary or VET transition to their first job. Finally, unemployment decreases significantly in the 25 to 29 age group, which proves that there is a gradual improvement in the labour market after first entry. Therefore, first entry into the labour market and finding a first job is the most difficult for young people.

Another indicator that proves the difficulty that young people have in transitioning to the workplace is the share of young people not in education, employment and training (NEET). This indicates the proportion of young people who are unemployed and those who are inactive. The share of NEETs was almost 27% of the total youth population aged 15 to 24 in 2018 (Table 10). It increases even further with age, reaching almost 30% for the 15 to 29 age group. There are more NEETs among women and in urban areas. The primary reason for being NEET is linked to care responsibilities for family members. Most of this is undertaken by women, which leads to decreasing economic activity. Other reasons include, but are not limited to, unemployment, discouragement, disability or illness. Younger NEETs can also be rural residents (SAVE-DEPA, 2018), which is in line with the higher share of early school leavers in rural areas (Table 10). Their orientation to the labour market is very weak and they lack most of the transversal skills (SAVE-DEPA, 2018).

Table 10. Unemployed young people, NEETs and early school leavers in 2018: gender and place of residence

Youth	Male	Female	Urban	Rural	Total
Unemployed	26.7	35.3	22.5	37.1	29.9
NEET % aged 15–24	23.2	31.0	26.5	27.4	26.9
NEET % aged 15–29	24.9	38.9	32.7	29.9	31.6
Early leavers % aged 18–24	9.7	9.5	5.5	16.2	9.6

Source: Geostat, 2018 (labour force survey).

In Georgia, the transition to a job takes on average one to two years; however, the jobs that young people acquire can often be precarious (ETF, 2018). Moreover, young people tend to work longer hours and in temporary or precarious jobs. Lack of work experience and a mismatch between the required and offered skills in the labour market put young people in a particularly vulnerable position. Three individual factors affecting youth transition are geographical location, gender and education level, which have a greater adverse effect on vulnerable groups (e.g. disabled people, poor people). Good, modern jobs are available only in the cities, and very little economic activity exists in the remaining regions. Being a woman is certainly a risk when it comes to transition. A low level of education is also a disadvantage, although longer time spent in education increases the transition time (ETF, 2018). All of this indicates weak labour and skills matching mechanisms in the country, including poorly developed institutional mechanisms (e.g. employment offices and career guidance services).

According to the ETF's calculations of skills mismatch (ETF, 2019), both over-qualification and under-qualification are observed in Georgia. In terms of occupational mismatch, 36.1% of those with tertiary education worked in semi-skilled occupations in 2016. Gender difference was very high at this level, with a higher mismatch observed among men (46% versus 26%). Among upper secondary education graduates, 9.4% of them were employed in elementary occupations (manual skills level) in 2016 (ETF, 2019).

The most widely observed over-qualification among semi-skilled professions included the following: 30% of service and sales workers had tertiary education, as had 26% of plant and machine operators, 19% of people in elementary occupations and 16% of craft and related trades workers (ETF, 2019). In conclusion, highly educated workers are compelled to take less skilled jobs as there are not enough jobs requiring high skills. Under-qualification also occurred: 24% of clerks and 13% of technicians and associate professionals seem to be under-qualified for the jobs they are doing (ETF, 2019). The lack of VET institutions providing comprehensive teaching curricula for technicians and associate professionals, especially in specific industries, might be the reason for under-qualification in some skilled and semi-skilled jobs (a shortage of workers with technical skills).

A detailed ETF analysis of the 2018 labour force survey results reconfirms the high incidence of over-qualification and under-qualification in Georgia, and sheds light on the mismatch by education level (Table 11). Indeed over-qualification is most common among university graduates (almost 43%), followed by VET graduates (almost 38%). On the other hand, under-qualification is most common among upper secondary graduates (almost 39%), followed by university and VET graduates (around 28% for both).

Table 11. Reply to the question: 'Does your present job correspond to your qualifications?'

Education level	YES	ABOVE	BELOW
Lower secondary	7.7	4.9	2.9
Upper secondary	41.0	38.7	16.6
VET education	19.1	27.5	37.7
Higher education	32.0	28.7	42.6
Total	100	100	100

Source: Geostat, 2018 (labour force survey).

In addition to vertical skills mismatch, many studies confirm the existence of skills gaps in the Georgian labour market (World Bank 2013, 2014a, 2014b). A STEP skills measurement survey carried out by the World Bank indicates that the most important skills that young workers (under the age of 30) often lack are technical competences and problem-solving skills, as well as a lack of English and leadership skills and the ability to think creatively and critically. This refers to both secondary and higher education graduates. For example, close to 70% of employers say that university graduates often do not know English, over 50% say they lack leadership skills, and 40% say they lack the ability to think creatively and critically.

Occupation-specific technical skills are also quite often deemed a problem. University graduates have insufficient technical skills according to almost 30% of employers, and secondary graduates have insufficient technical skills according to almost 40% of employers (World Bank, 2014a). In terms of personal traits, the survey also finds that a lot of young workers lack openness to new experiences, which is alarming since it is the young people who should by definition be open to new experiences. Another survey on IT skills needs revealed that there is a scarcity of qualified IT professionals, and those who have the requisite skills are very costly. Moreover, in addition to digital skills, the IT professionals need communication skills, work ethic skills and project management skills (GITA, 2017). Thus, despite relatively high formal education levels, a skills gap is rather pronounced and poses a serious challenge for the labour market (World Bank, 2013, 2014a).

Georgia ranked 71st out of 189 countries and territories in the UN Human Development Index in 2018. When the human development rankings of countries are compared with their gross national income per capita rankings, Georgia fares relatively well in its human development compared to its level of wealth (UNDP, 2018). The sustained growth experienced since the mid-1990s has reduced poverty and boosted shared prosperity in the country. Poverty was drastically reduced in the last 10 years, mainly due to social transfers and income from economic activities.

According to the World Bank, however, recently the pace of poverty reduction has been muted and relies heavily on pensions and social transfers to a large share of the population that is either unemployed or underemployed (IBRD & World Bank, 2019). Accordingly, one in five Georgians still lives in poverty[4] In 2016, 21.3% of the Georgian population was under the national poverty line. This is known as the poverty headcount ratio (World Bank development indicators database).
and half of the population is considered vulnerable to falling into poverty. Moreover, when poverty in Georgia is measured using the global poverty headcount ratio at USD 3.2 per day (2011 purchasing power parity), it is shown to be higher than in neighbouring Armenia, a country with a similar level of GDP per capita. Georgia also has a higher poverty rate than some lower-middle‐income countries, despite having a higher GDP per capita.

Geostat data also confirms the poverty, particularly among the rural population: in 2017, 12% of the population lived below the national poverty line, i.e. were officially registered and received means-tested benefits known as targeted social assistance. Furthermore, 20.6% of the population lived in relative poverty, defined as those people with a household income below 60% of the median value. More importantly, inequality in Georgia is the highest among the Eastern Partnership countries. According to the World Bank's development indicators database, the Gini income coefficient, as the most commonly used measurement of inequality, was 39% in 2015 and 36.5% in 2016[5] The Gini coefficient is a statistical measure of distribution that is used to measure inequality among values of a frequency distribution (for example, levels of income). The coefficient ranges from 0 (or 0%) to 1 (or 100%), with 0 representing perfect equality and 1 representing perfect inequality.
. Worldwide, these values are within the range of medium inequality, but they are higher than EU countries. Both poverty and inequality prevent people from reaching their full potential and contributing to socio-economic development, and at extreme levels, they constitute important barriers to sustained economic growth.

The results of a recent youth transition survey conducted face-to-face with 2 000 young people shed light on the social inequality in educational attainment (Badurashvili et al, 2019)[6] The survey was conducted by the University of Bamberg (Germany) and Tbilisi State University between October and December 2016 with a nationally representative sample selected using multistage cluster sampling and stratification. After approaching 11 835 households in all regions throughout Georgia, 2 000 standardised face-to-face interviews were conducted with young people aged 18 to 35 who had left the education system during the previous 10 years. This gives an individual-level response rate of 86.0%, with a high confidence level (see Badurashvili et al, 2019).
. According to the results of this survey, gender inequality is visible in education for men as they are quite over-represented in lower and upper secondary education and under-represented in higher education. There is also a clear ethnic inequality in educational attainment, as ethnic minorities are over-represented at the lower education levels of basic secondary (or lower) and upper secondary. Around 9% of respondents dropped out of education. The main reasons were financial burdens linked to education fees and the need to work for income. Almost one-third of VET students and 45% of tertiary education students face financial burdens (Badurashvili et al, 2019).

Even more visible is the influence of family origin on educational attainment. The results of the survey show a strong degree of intergenerational inheritance of education levels: 65% of respondents whose parents' highest level of education was lower secondary education also end up in the lowest education group, whereas this applies only to 1% of respondents with at least one parent with tertiary education. Similarly, there is a pattern of intergenerational transfer of VET educational attainment. The share of VET degrees is highest among persons whose parents had a VET degree as their highest level of education. The advantages that people from privileged families have is also visible in the link between parental wealth and educational attainment. For example, respondents who assessed the financial wealth of their parents as (fairly) poor ended up in basic education (21%) three times more often than respondents who reported that their parents were (fairly) wealthy (Badurashvili et al, 2019).

A deeper analysis of the PISA 2015 results also confirms inequality, as students from the poorest 20% of households exhibit a higher failure in reading, mathematics and science compared to the richest 20% (IBRD & World Bank, 2019). The difference in science performance of Georgian students in the top and bottom quintiles by socio-economic status accounts for about 85 score points and is equivalent to almost three years of schooling. The gap between rural and urban students is also more than one year of schooling (36 score points). Girls outperform boys in all subjects. PISA 2015 results also show that students who were enrolled in preschool for more than two years performed better in all subjects compared to those who were enrolled for one year or less (IBRD & World Bank, 2019).

If a person is exposed to social inequality in educational attainment, ending up with a low level of education, this disadvantage continues pretty much for the rest of his/her life. For example, wage analyses conducted by the ETF show huge differences across education levels, though a certain wage increase was observed for low-skilled jobs in recent years (ETF, 2019). The wages of highly educated workers are on average more than six times that of workers with a low level of education. On the other hand, the wages of workers with a medium level of education (both general and vocational) are on average 2.5 times more than that of workers with a low level of education (ETF, 2019). Thus, higher qualifications tend to command better jobs and higher wages, which is the main reason for the high demand for higher education. At the same time, both VET and higher education graduates show similar employment levels, and VET graduates perform better in the labour market than non-VET graduates (secondary education).