Recently ILO developed a proposal for establishing Unemployment Insurance system in Georgia. I was honoured to be among the invited group of experts who offered their independent review on the proposal.

In this brief commentary I conclude that introduction of the Unemployment Insurance system in Georgia has a strong potential for improving workers’ income security and supporting the decrease of informal employment. Nevertheless, the impact on low wage earners, which constitute large share of the Georgian workers, needs to be examined more carefully. More precisely, there is a risk of the system not producing attractive enough benefits for the (informal) workers to opt for low-paying formal sector jobs. Considering that the contributory insurance system will replicate existing income inequalities on the labour market it is important that low wage earners are given extra support. This can be achieved, for instance, by reintroducing the system of minimum non-taxable income as practiced in Georgia several years ago. This would decrease the non-wage cost of job creation and increase the redistributive capacity of the UI system. Last but not least, once the system is well-established additional measures should be taken to include self-employed and other types of atypical workers whose inclusion in the system is not envisaged at the initial stage.  

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