Strategic investment in Georgia’s human capital will lead to a more resilient COVID-19 recovery
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Georgia confirmed its first case of the novel coronavirus (COVID-19) on February 26, 2020. The government responded quickly, declaring a state of emergency in March. To curtail the contagion, severe travel restrictions were imposed, lockdowns in all major cities were enforced, and public gatherings were banned. Although many schools and universities have since reopened, strict safety measures remain in place.
Despite the country’s best efforts, the pandemic has had a highly negative impact on both economic growth and human capital. Georgia’s real GDP growth is projected to further decelerate to 4.8 percent in 2020. The magnitude of the impact will be manifested by a sharp rise in mortality, as well as large losses in employment and in learning. This will in turn have spillover effects on productivity, employability, and poverty, especially among vulnerable people, causing more demand in social assistance.
What can Georgia do to mitigate these impacts and ensure a resilient recovery from the crisis?
Strategic investments in health, education, and social protection and labor will help the country’s response to the shocks of the pandemic. An early adopter of the World Bank’s Human Capital Project, Georgia can benefit from the Project’s recently updated Human Capital Index, which leverages new and expanded data through March 2020 and allows for comparability over time in each of the HCI components related to health, education and survival. This data provides a snapshot of the state of human capital before COVID-19 and a baseline to track the pandemic’s impacts on human capital.
In 2010, Georgia’s HCI value was 0.54, meaning that a child born at the time in Georgia would be 54 percent as productive as she could be as an adult if she had enjoyed full health and had benefited from a complete education. In the 2020 update, the country’s HCI is 0.57, indicating that Georgia has made some strides in human capital. Yet, there is still room for improvement.
A recent report, Survive, Learn, Thrive: Strategic Human Capital Investments to Unlock Georgia’s Potential, shines a spotlight on the state of human capital outcomes in Georgia, explores the remaining challenges to building and activating human capital, and provides evidence-based human capital strategies.
Although Georgia’s deep economic and governance reforms have spurred incredible progress in recent decades, the country still struggles with unlocking its full human capital potential.
Georgia’s population has declined by nearly a quarter since 1993 and today remains stagnant because of low fertility rates. Further compounding the challenges to labor supply is the high youth unemployment rate of 30.9 percent (2019), compared to the 16.6 percent average for Europe and Central Asia. Employers also report a lack of critical skills among graduates, especially from vocational education and training.
Moreover, high out-of-pocket costs for individuals are leading to an avoidance of healthcare use. The health system is still aimed at emergency rather than preventive care, which does not appropriately treat non-communicable diseases. In addition, socioeconomic inequities persist. A new direction is needed, therefore, to ensure that economic development is also human development for all Georgians, especially in a post-COVID world.
At the World Bank, we have identified, in consultation with relevant policymakers, feasible ways to help boost human capital development in Georgia. They include:
To increase education quality and relevance, we recommend expanding high-quality early childhood education and care; improving the quality of teaching and learning in general education; and increasing the labor market relevance of post-secondary education, especially in vocational education and training.
Health and nutrition
To improve the healthcare system’s response to chronic diseases, we recommend re-orienting from hospital and emergency care to preventive and primary care services; using the universal healthcare program to further reduce the impact of out-of-pocket expenditures; and increasing the efficiency of health spending.
Social protection and labor
To reduce poverty and promote active labor market participation, we recommend digitizing and integrating the social protection delivery system to better serve all beneficiaries; and creating the right incentives to encourage and enable inactive people to participate in the labor force.
Failing to take action to build human capital would be costly. Amidst the COVID-19 crisis, Georgia faces the prospect of losing the momentum that it has worked so hard to build in recent decades. The country must therefore seize the opportunity to achieve a resilient recovery as it navigates and emerges from the crisis through targeted human capital investments.