Former Italian Prime Minister Silvio Berlusconi’s recent fall from power garnered lots of media attention in Georgia. Like Italy, Georgia seems to fancy outsized political personalities. And like Italy, it suffers from high unemployment. But unlike Italy, Georgia has hit on a quickie political solution for this problem. It’s called television.
Over the past seven years, Georgia has won international acclaim for economic reforms that have streamlined bureaucracy, overhauled labor and tax legislation, and eased the regulatory framework. At the same time, the country’s unemployment rate of 15.5 percent has remained stubbornly high. It is even three percentage points higher today than in 2004, when Mikheil Saakashvili assumed the presidency. There is data that indicates the unemployment rate is even higher than the officially reported figure: 67 percent of 2,425 respondents in a September survey by the National Democratic Institute characterized themselves as not employed.
(The category includes students, homemakers and pensioners who may not be looking for work. Thirty-one percent of those who identify themselves as not employed are unemployed and actively
looking for work, according to the poll. )
With Georgia’s parliamentary elections less than a year away, one might expect that the lack of jobs could spark a political crisis or an Occupy Tbilisi protest. Instead, it has spawned a televised spectacle.
Broadcast each week on the pro-government national broadcaster Rustavi2, the “Employ and Be Employed” show features Tbilisi Mayor Gigi Ugulava, Saakashvili’s closest political protégé, along with the heads of three government-friendly national banks. Together they review loan applications for new businesses. Contestants deemed to have sound plans are then bankrolled by the Tbilisi city government.
The banker trio includes ex-Prime Minister Vladimir Gurgenidze, now chief executive officer of Liberty Bank; Bank of Georgia General Director Irakli Gilauri, brother of Prime Minister Nika Gilauri; and TBC Bank General Director Vakhtang Butskhrikidze. As loan-officer-in-chief, the smiling Ugulava, who is widely expected to run for president in 2013, when Saakashvili’s final term ends, leads the bankers through the loan interviews; in some cases, offering applicants avuncular advice about their applications. “That’s a very big burden for a young girl at the start of life,” he counseled one contestant.
Once a business proposal is approved, funding for the loans is provided by the city out of a 1-million-lari ($600,000) municipal fund.
Tbilisi State University political scientist Koba Turmanidze sees a political motive behind the program, noting that it plays into Georgian voters’ “smart calculus” about whom to support at the polls. “Voters are not stupid at all, even in partially free elections,” Turmanidze said. While an opposition politician may offer voters “free this, or free that,” voters have no way of knowing whether those promises would ever be fulfilled, he said. Employ and Be Employed creates a vehicle that allows Ugulava to show viewers/potential voters that he can create tangible job opportunities. “So his promise has much more credibility,” Turmanidze added.
The program features promotional spots that highlight other spheres of the mayor’s activity. On the November 27 broadcast, for example, Ugulava took an enthusiastic Rustavi2 hostess on a car tour of Tbilisi to show off the city’s new electronic bus schedules, an under-construction hillside emergency call center and explain how a new highway project will reduce travel times within Tbilisi. Rustavi2 provided a dose of cheerleading, praising all of the projects that Ugulava showcased.
Turmanidze described the television program as a “pre-election treat.” City Hall scoffed at that notion, denying Employ and Be Employed has anything to do with the looming parliamentary presidential elections. Zviad Archuadze, the official in charge of municipal economic development programs, maintained that the show is merely a continuation of a five-year-old business-loan program, and is intended to illustrate how banks award loans. “Over 20” loan applications have been approved since the show’s start in November, he added.
The terms of the city’s broadcast agreement with Rustavi2, a privately owned company, have not been released.
Economist Vladimir Ugulava (no relation to the mayor), head of the Economic Policy Research Center, noted that the show does hit on one real “constraint” for job growth -- the lack of affordable loans. In 2010, the annual weighted average interest rate on lari-denominated loans stood at 22.6 percent, according to the National Bank of Georgia.
Addressing the issue requires something more than Mayor Ugulava and three bank CEOs chatting briefly with loan applicants. “It is better if these three banks will go back and issue the start-up loans [to create new businesses],” he said.
Economist Davit Narmaia contended the government’s employment programs would be more effective if they were more focused on the longer term. “The government is reforming different spheres and directions, but for a very, very short-term period,” Narmaia said. “For business and investment, it is very important to have long-term stability to plan implantation of business and to plan the business policy.”
This story was updated on December 8, 2011 to correct the number of respondents in the NDI poll, and to clarify the break-down of respondents who identified themselves as not employed.