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OPINION January 12, 2021

In Georgia, Human Capital Investments are the Key to Resilient Growth in the Era of COVID-19


The report Survive, Learn, Thrive: Strategic Human Capital Investments to Unlock Georgia’s Potential - a collaborative effort by the government of Georgia and the World Bank - highlights the current state of human capital outcomes in Georgia, explores the challenges that remain to building and activating human capital, and provides evidence-based strategies for building human capital.

Fadia M. Saadah, World Bank Human Development Regional Director for Europe and Central Asia, reflects on the opportunity to "build back better" in the era of COVID-19 by focusing on the formation activation of human capital in Georgia.

Q. What do you see as the main challenges facing human capital formation and activation in Georgia?

Georgia has made incredible progress in recent decades. But it still struggles with unlocking its full human capital potential. The country's Human Capital Index is 0.57, meaning that a child born today in Georgia would be 57 percent as productive as she could be as an adult if she enjoyed full health and benefited from a complete education. Most students in Georgia do not acquire basic proficiency in reading, math, or science. As a result, they performed nearly one school year behind other students in the Europe and Central Asia (ECA) region on the on the Programme for International Student Assessment (PISA) test 2018.

The youth unemployment rate is also above average for ECA, and the World Economic Forum’s 2019 Global Competitiveness Report cites ill-equipped human capital as the greatest challenge to doing business in Georgia. The health system is still aimed at emergency care - rather than preventive care - and high out-of-pocket costs lead people to avoid healthcare altogether. Socioeconomic inequities also persist, despite a reduction in poverty. The COVID-19 pandemic will magnify these problems. As a result of the pandemic, Georgia’s real GDP growth is projected to shrink by 6.0 percent in 2020.

Q. Georgia faces the dual challenge of recovering from the COVID-19 pandemic and strengthening health, education, learning, and employment services to facilitate growth. What strategic investments do you recommend for the human development sector in the short and medium terms?

Human capital is a significant component of wealth. Investing in it provides a clear path to building resilience in the face of crises and boosting shared prosperity. If Georgia ensured complete education and healthcare, its long-run per capita gross domestic product could be 1.64 times higher than it is today. Strategic investments in human capital can prepare the workforce for the highly skilled jobs of the future, allowing the people of Georgia to compete in the global economy.

To mitigate the impact of COVID-19 and prepare for future pandemics, Georgia needs to increase its investments in human capital using a 'whole-of-society' approach. In the health sector, it must develop a comprehensive, evidence-based, and adequately-resourced national surveillance strategy that can rapidly assess and respond to potential health risks. It must also establish contingency plans to maintain essential services and supplies, especially for vulnerable populations. As schools reopen, measures will be needed to mitigate - and eventually remediate - learning losses.

Georgia will need to ensure that schools follow health protocols to reduce their risks of becoming the source of group infections; provide students with financial and non-financial incentives not to drop out of school - including academic remediation and psychological and career counseling; and equip schools and train teachers to better manage in-person and distance learning. Expanding social assistance and enhancing active labor market programs (ALMPs) can help Georgians bounce back and become more competitive in the global economy over the long run.

Q. The World Bank has partnered with Georgia on landmark reforms since independence. This partnership is reflected in the ambitious Country Partnership Framework for FY19–22. How do you see the engagement evolving over the next few years?

Survive, Learn, Thrive: Strategic Human Capital Investments to Unlock Georgia’s Potential provides a starting point for developing, planning, and financing an intersectoral agenda to harness human capital. The next phase of the human capital policy dialogue should focus on putting this agenda into practice, through investments in human capital. We are pleased to partner with the government on this agenda. We have been engaging through several investments and continue to explore additional ways to support human capital. We highlight important areas of engagement in education, health, social protection, and jobs below.

Education: The recently launched Innovation, Inclusion and Quality Project (I2Q) supports the government’s efforts to expand access to preschool education and improve the quality of education and learning environments. It will support the government’s efforts to improve the learning environment in schools by investing in infrastructure and teachers at target schools. Improving teacher quality in vocational education will contribute to the development of human resources for vocational education and training (VET).

This program, financed by a trust fund supported by the Department for International Development, represents the first attempt by Georgia to address multiple policies that affect teachers in VET simultaneously - such as setting clear expectations for teachers, introducing international best practices in recruitment and in-service and pre-service professional development, and improving remuneration. The International Finance Corporation (IFC) is exploring opportunities to support companies that provide on‐the‐job training; finance providers of private higher education, including global and regional institutions; and explore the potential for developing viable public–private partnership schemes in education.

Health: At the behest of the government, the World Bank Group launched an emergency project to help prevent, detect, and respond to COVID-19 and strengthen the preparedness of Georgia’s national public health system. The project is also supporting the government’s efforts to provide social protection benefits for vulnerable groups and temporary income support for people who lost their jobs as a result of the pandemic. Over the course of two years, the project will increase Georgia’s ability to handle health crises.

The World Bank Group will continue to support the government in reorienting Georgia’s health system toward primary care; improving the integration and coordination of care among providers; and modernizing payment systems, to obtain better value from public health spending. Ongoing technical assistance may inform the formulation of policies that promote effective coverage and better value for money in the health sector; enhance the institutional capacity for evidence‐based policy making; and raise awareness of risk factors for noncommunicable disease, such as tobacco use.

Social Protection and Labor: The World Bank Group is supporting the government’s agenda to reduce social vulnerabilities and promote people’s investment in human capital. Through the Country Partnership Framework (CPF) agenda, the government and the World Bank Group agreed to increase the resilience of households to shocks by strengthening social safety nets, improving access to basic services, supporting labor markets, and increasing financial inclusion.

Ongoing technical assistance is supporting the government in improving the targeting of informal workers, migrants, and people at risk of becoming poor, to ensure that social protection benefits reach all those in need. The World Bank Group will continue to support the government’s actions to promote a coordinated, systems-based approach to public service delivery that is conducive to reducing inequities in human capital outcomes across regions and socioeconomic groups.

Building on previous support, the CPF aims to strengthen the efficiency of the social protection system by digitalizing implementation processes, integrating social services and benefit delivery, and helping Georgia establish a European “rights and responsibility approach” in its targeted social assistance model, in which social assistance beneficiaries will need to actively engage in requalification and job search activities to continue to receive benefits.