Over-Educated Georgians and a Mismatch in the Labour Market

Over-Educated Georgians and a Mismatch in the Labour Market

Over-Educated Georgians and a Mismatch in the Labour Market

The FINANCIAL -- Georgia continues to face problems of an ineffective, low quality and exam-oriented education system with credential inflation; low-skilled labour force with a mismatch in the labour market; irrelevant job requirements and over-education at the same time. The mismatch between curriculums and the labour market; imbalance of general and professionally-oriented education; against making students independent decision-makers, able to adjust to changing demands - are believed to be key factors that could contribute to creating a Georgian education system focused on labour market requirements.

The majority of Georgians are employed in the agricultural sector, whereas in terms of formal education, the majority of Georgians are lawyers or economists, meaning that they do not have corresponding education or practical skills. The main challenge of the education system and recommendation to the Government of Georgia is to implement policies that will stimulate graduates’ creative and individual ways of thinking, encourage competition in the education system, make state universities more autonomous, follow the experience of AgriUni and stimulate professional non-degree programmes with better equipment, labs and trainers; change old Soviet curriculums and adjust them to the demands of the labour market, make schools and universities attractive in terms of wages, for smart and qualified job-seekers. Finally, just stop being afraid of unqualified teachers and professors, schedule a test date, take a high minimum score (because students deserve to have qualified teachers), give them time to be prepared, and if they fail, just let them rest in peace. Do not be afraid because they will no longer support the Government at elections, because no foreign investment or income from tourists can survive the future of Georgia, but an Education System that creates a qualified, productive domestic labour force.

The sheepskin effect is a well-known hypothesis that the awarding of an educational degree would yield a higher income than the same knowledge without possession of a certificate. Many economists investigate the signalling effect of the possession of such a certificate. However, education is one of the ‘Holy Trinity’ that everyone is supposed to want more and better of. Economists assume that education is to build human capital, and it is also a rare example of an issue where economists and the public agree that existing investment in education is not sufficient.

When getting education in Georgia, the main issue students face is that most courses do not teach job-related skills. An ordinary 24-year old Georgian with a Master’s degree, having graduated from the so-called “number one university in the Caucasus region” can’t find a job that is corresponding to his formal education. If he is lucky enough, he will find a job, let’s say, as a data analyst in a private company of a micro business sector that in fact does not need a university degree at all. A school education and some 6-month training in Excel would be sufficient to do such reporting tasks. Despite this, no employer would prefer a candidate certified in Excel without a diploma, in place of a BA degree-holder in Economics from a well-known state university, even though the latter has never studied Excel. In fact, it does not matter whether he has a BA or MA degree in terms of job skills. However, employers still require graduate degrees even though they know that no matter the diploma, the majority of jobseekers do not have practical skills. Here arises the issue of the skill and qualification mismatch in the labour market of Georgia.

The managing partner of employment website Work.ge, Temo Todua, says that often employers have excessively high education requirements for jobseekers and make themselves additional artificial barriers to finding compatible candidates. “Sometimes they are even asking to be sent a CV for the position of ‘office-cleaner’ in Zestafoni. It would definitely be better to make less connection barriers and make requirements more relevant,” Todua told The FINANCIAL.

According to Todua, in the private sector the majority of vacancies are for the positions of: sales manager; distributor; product development manager; consultant or cashier in a supermarket, etc. So why do these employers require university diplomas, and why do these kinds of jobseekers waste their money in formal education, when none of the Georgian universities teach one how to be a good sales manager, consultant or cashier. They would definitely have higher salaries in the event they were the recipients of adequate education. Research papers discuss income inequalities in terms of education, asserting that the returns of over-education are positive but lower than the returns of years of adequate education.

Over-education causing a reduction in workers’ return to higher education, is attributed to an increased supply of more educated people in the labour market. Over-educated workers are those who report the education required by their jobs to be below the level of education they have attained. Some research papers state that over-education has negative externalities balancing out any positive externalities, or even imply that the Government is wasting money, subsidizing useless education.

Rational employers should know that an employee who feels himself to be over-educated for a particular position is less productive, less concentrated on the job and is constantly looking for new opportunities. Well, it is more likely that, in reality, he is not qualified and skilled enough, but still believes that he deserves more, due to 18 years of education. Thus, the alternative costs of employing a person that is over-educated are pretty high. In such cases it would definitely be more beneficial for employers to hire people with lower formal education, who would be satisfied with their job and salary and as a result, more productive.

Now, what’s wrong with the Georgian education system and how could it be transformed to create a skilled labour force? The former Minister of Education and Sciences of Georgia, Alexandre Jejelava, emphasized the importance of not traditional, formal education, but the matter of critical thinking and creativity in the education system (‘Komble’ as a manager. etc). The other issue is how that could practically be implemented in the Georgian education system, but the vast majority of society did not get that what actually matters is that education should give students creativity and an individual way of thinking, not only diplomas and certificates.

The majority of employers estimate that Free University graduates are expected to be some of the most qualified candidates in terms of job-related practical skills. The rector of Free and Agricultural Universities, Vato Lejava, says that 95% of students are already employed as soon as they graduate. He emphasizes the three main factors of their education system’s success: First, curriculums are based on the demands of the labour market and are adjusted as time passes; students study what is actually required by employers. Second, there is an exact balance between general and professionally-oriented education with a high share of subjects that are focused on practical skills. Third, the studying process is organized to make students independent decision-makers and able to adjust to changing demands. “It is impossible to gain skills now that will be required ten years on. In order to remain competitive, the main skills students should have, are adaptability and the ability to study new cases in practice,” Lejava told The FINANCIAL.

The unemployment rate in Georgia is 11.8%. That is not extremely high as a number. It is much higher in Greece, Armenia, Spain etc. However, if we elaborate more briefly, out of all employed people, 57% are self-employed, meaning that the majority of them are in the agriculture sector (83% of self-employed people), owning small farms just to feed themselves and earn some money. However, according to a survey of Transparency International Georgia, only 17% of the population want to be employed in the agriculture sector. Thus, it seems that people are obliged to work in the agriculture sector, because they cannot find a job corresponding to their education. By the way, the lowest wages in Georgia have people employed in agriculture (GEL 575) and the education system (GEL 537).What if we check how many people have university diplomas or professional certificates in farming, agriculture? The majority of BA, MA and non-degree-programme students study social sciences, business and law. The lowest number of students among non-degree programmes study agriculture and education sciences. For instance, only 2.3% of Bachelor’s students study agriculture and 2.5% education sciences. Thus, students’ preferences are corresponding to wage rates in these sectors. If smart and well-educated people do not have an incentive to apply for a job in the education system, for instance as a teacher, then how could the Government of Georgia imagine that any other investment in the education system would be effective. Therefore, it could be stated that the main challenge for the Georgian education system is to make schools and universities attractive in terms of wages, for smart and qualified jobseekers.

Lejava states that in order to create an education system that provides a qualified labour force, the Government of Georgia should work with respect to the Hippocratic Oath’s “First, do no harm”. “The Government does not know better what is needed in the labour market. The Government should stimulate or at least should not hinder competition in the education system. When universities face the concrete demands of the labour market, competition is key to making the right decisions with regard to the balance of quality and price of education. Furthermore, the Government of Georgia should abolish unreasonable expenses and barriers that ultimately are directly or indirectly passed on to students and make the education system less flexible and less affordable,” said Lejava.

“Agricultural University is an obvious example of how with an effective and straightforward policy it is possible to transform the lowest-ranked university to one of the leading universities in Georgia. In order to be successful and competitive, state universities should be less privileged, however with higher autonomy and corresponding responsibilities,” Lejava told The FINANCIAL.

In addition, Lejava considers that there are unnecessary barriers for non-degree professional programmes. “The success of the Culinary Academy of AgriUni proved that non-degree professional education can be prestigious and affordable as well. Recently, we added wine and veterinary studies that will be as successful as already-existing programmes, I believe,” said Lejava.

For sure, Georgians face problems of an ineffective education system, low-skilled labour force and over-education at the same time. However, it is optimistic that over-education is not a problem of only developing countries. It was first detected during the seventies and still remains a challenge in as developed a country as the USA. According to research released by the University of Chicago Press, the education system in the US is failing to educate students. Based on students’ surveys before and after college education, authors claim: “How much are students actually learning in contemporary higher education? The answer for many undergraduates, we have concluded, is not much.” In addition, it makes optimistic expectations that Georgian students studying within BA, MA, or non-degree professional programmes in education sciences are doubled in the year 2016 compared to 2011. Now the challenge is to make these programmes attractive in terms of wages and future prospects – to not only those students who could not enter other prestigious faculties but also for smart students who really want to become professional teachers, trainers or professors, contributing human capital development and making the future of Georgia much better.