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Lasha Khutsishvili: “The number of employed persons in the second quarter of 2021 is 85,000 more as compared to the first quarter. The major reason behind the growth in the unemployment rate is the expanding workforce which is indicative of a rapid economic recovery.”

Verdict: FactCheck concludes that Lasha Khutsishvili’s statement is a MANIPULATION.

Resume: The Minister of Finance of Georgia puts the main emphasis on the comparison between the first and second quarters of 2021. However, whilst analysing unemployment statistics, making a comparison of different quarters with each other is manipulative since the employment dynamic is very seasonal with the first quarter of the year usually tending to be passive. In addition, more stringent coronavirus-related restrictions were still in force in the first quarter of 2021 in contrast to the year’s second quarter and, naturally, the technical growth in various economic parameters as a result of the relaxing of restrictions, which includes employment figures, was expected. It is, however, vague vis-à-vis any actual substantial progress on the labour market. In fact, the technical growth in employment (the shock caused after lifting the regulations) only increased the seasonal effect.

At the same time, the growing unemployment rate in the second quarter as compared to the first quarter can be largely explained by the rise in the number of the economically active population since employment has not decreased. However, as mentioned earlier, any comparison of different quarters with each other is manipulative. In the second quarter of 2021, the number of unemployed people increased by a total of 67,200 as compared to the second quarter of 2020. Here, the decrease in the number of employed people (23,000 persons) is a substantial factor and there is no reasonable ground to dismiss the impact caused by the shrinking employment or to consider it as a second-rate explanation which the Minister did in his statement.

In light of the decreased employment, it also groundless to state that the growth in the number of people looking for jobs at the expense of people who lost their jobs is in any way indicative of a rapid economic recovery.

Therefore, FactCheck concludes that Lasha Khutsishvili’s statement is a MANIPULATION.

Analysis

The Minister of Finance of Georgia, Lasha Khutsishvili, whilst commenting on workforce statistics, stated: “The employment figure has increased significantly. The number of employed persons in the second quarter of 2021 is 85,000 more as compared to the first quarter. The major reason behind the growth in the unemployment rate, methodologically speaking, is the expanding workforce. There are more people willing to find jobs as compared to the previous quarter or even the previous year which, in turn, is indicative of a rapid economic recovery.”

In the second quarter of 2021 as compared to the first quarter of this year, the number of employed people increased by 84,900 persons. However, any comparison of different quarters with each other is inappropriate since employment statistics are highly seasonal. In the past, FactCheck has previously reached out to the National Statistics Office of Georgia multiple times. As clarified by the National Statistics Office of Georgia, the year’s first quarter employment figures are generally relatively low. At the same time, the pandemic context also needs to be taken into account.

Graph 1: Employment Figures in 2018-2021, First and Second Quarters, Thousand Persons

Source: National Statistics Office of Georgia

In the first quarter of 2021, more stringent coronavirus-related restrictions were still in force in contrast to the second quarter and, naturally, the technical growth in various economic parameters, including employment figures, were expected as a result of the relaxing of restrictions. Therefore, this may be an effect of allowing previously banned economic activities instead of any fundamental changes in the economy. Therefore, using this variable as an indicator lacks substance.

Table 1: Workforce Figures, Thousand

Source: National Statistics Office of Georgia

In the second quarter of 2021 as compared to the second quarter of 2020, the number of employed persons decreased by 23,000 individuals. In the second quarter of 2021, the unemployment rate reached 22.1% which is a record high for the past three years. As compared to the same period of the previous year, the unemployment rate increased by 3.8 percentage points whilst growth amounts to 0.2 of a percentage point as compared to the first quarter of 2021.

The unemployment rate is a percentage share of unemployed people in the economically active population of a relevant age group. Therefore, if the unemployment rate increases in parallel with the growth in the number of the economically active population and the number of employed people remains the same or increases, this means that the growth in the unemployment rate is arithmetically stipulated by the growth of the workforce’s participation (activity) level. On the other hand, if people in the workforce cannot find jobs and employment shrinks, then explaining the growth in the unemployment rate by an expanding workforce is only partially possible. In the second quarter of 2021 as compared to the first quarter of the same year, the growth in the unemployment rate is explained by the rising number of the economically active population. However, such a comparison is less appropriate given the seasonal nature of employment. In the second quarter of 2021 as compared to the second quarter of the previous year, the number of unemployed persons increased by 67,200. Here, the shrinking number of employed persons (by 23,000 people) is a significant factor. Therefore, there is no logical ground to disregard the effect caused by decreased employment.


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