Georgia: Striving to Find a New Balance Between Workers’ Rights and Business Flexibility

Georgia is serving as a proving ground in establishing new boundaries for workers’ rights in the Globalization Age.

Since coming to power in 2004, President Mikheil Saakashvili’s administration has been an ardent advocate of economic de-regulation. Administration supporters say Saakashvili’s reforms have succeeded in transforming Georgia into one of the world’s most business-friendly environments. But critics contend the changes are shortchanging workers.

The debate over labor rights in Georgia has been building since September 15, when police used force to break a steel workers’ strike in the industrial city of Kutaisi. The labor action aimed to get the factory’s managers to address a variety of complaints, from unpaid wages to dirty toilets. Authorities took about 40 striking workers into custody during the incident. Three strikers ended up serving 10-day administrative sentences for resisting arrest.

The strike at the Hercules metallurgical plant, an Indian-Georgian concern, had threatened to dent Georgia’s heavily promoted image as a go-to destination for foreign investors. While business advocates maintain the police response was justified, international labor unions and human rights groups continue to denounce the crackdown as a violation of the right to strike, which is protected by the Georgian constitution.

The International Federation of Chemical, Energy, Mine and General Workers’ Unions called the arrests an “embarrassment” for Saakashvili’s administration and a “serious stain on Georgian trade and commerce.” Business ombudsman Giorgi Pertaia sought to contain the PR fallout, underlining that, while the law allows Georgians to join labor unions, overly aggressive unions can discourage investment. "If you want to keep a competitive advantage in something, [you] should keep the competitive environment,” Pertaia said.

Levan Ramishvili, chairperson of Tbilisi’s Liberty Institute, a government-friendly, libertarian think-tank, described the outcry over the striking workers’ arrests as “just media hype.” Labor unions are “something from the past and it doesn’t fit [in]to the current reality,” Ramishvili said.

As elsewhere in the former Soviet Union, trade unions are generally weak in Georgia, where they have suffered from the elimination of government-mandated union fees for workers. Strikes are rare; that fact is a function of high unemployment –16.3 percent in 2010, according to official data -- and a 2006 labor law that enables employers to dismiss workers at will.

Tamaz Dolaberidze, president of the Trade Union of Metallurgy, Mining and Chemical Industry Workers of Georgia, acknowledged the limitations on labor unions in today’s Georgia, but argues that the Kutaisi strike highlights a growing gap between the government’s desire for investment and citizens’ right to fair employment practices.

“There is a gap between what the government is doing and what society wants,” Dolaberidze said. “The main priority has to be citizens’ rights. … The labor code … is very unbalanced. Employers have a lot of rights and employees lack rights.”

Georgia’s labor code authorizes unions and strikes under a set protocol, but does not address unlawful dismissals – a situation that leaves workers who strike or join a union vulnerable to punitive action, labor activists argue. Employers are obliged only to pay a one-month salary to a dismissed employee.

While Hercules management eventually agreed to most of the men’s demands, including payment of back wages, and rehired workers who wished to return, Dolaberidze called that success “short-term” since those who returned to work have agreed not to unionize, he said. Hercules management could not be reached for comment.

“I am certain the problems with the salary and conditions will start again,” Dolaberidze said.

Kari Tapiola, a special adviser to the International Labor Organization (ILO) director general in Tbilisi, agreed that the Georgian labor code does not provide workers with adequate protection against discrimination, adding that it hindered collective bargaining.

Business ombudsman Pertaia, however, insisted that the code, as currently written, gives Georgia its best chance to attract investment. “Business brings the jobs -- not the European Union, or the government of Georgia,” he said. “If we had a labor code like Spain or Holland, the cost of labor would be as high here as it is there.”

The ILO’s Tapiola challenged Pertaia’s logic, saying that the ombudsman’s argument implies that “you would first have to be rich” before respecting workers’ human rights. “Having proper labor relations should help build the economy,” Tapiola said.