Journal number 1 ∘ Lali Chagelishvili-Agladze ∘ Vasil Kikutade ∘ Tamta Lekishvili ∘
Global Challenges and Educational Market Development Trends in Georgia

DOI: 10.52340/ekonomisti.2026.01.06

Annotacion. Education holds a central role in the  Sustainable Development Goals adopted by UN, where the fourth Goal  – Quality Education –  is directly linked to poverty reduction, good health and well-being, decent work and economic growth, as well as the reduction of inequality. In today’s global context, education functions as the driving force of competitiveness, while educational institutions bear the responsibility of delivering high-quality human capital that meets labor market demands. These institutions must align with national policies in order to promote socio-economic development and ensure the country’s long-term sustainability.

The purpose of this research is to identify the key factors influencing the dynamics of Georgia’s education and labor markets, to reveal weaknesses in higher education institutions, and to outline strategies for their improvement. Based on empirical research, the study analyzes the current state of Georgia’s education system, evaluates labor market demands and trends, examines ongoing processes within the educational sphere, and proposes solutions for ensuring the provision of quality education.

The objective of the study is to define the parameters of educational development and its harmonization with the labor market, and to formulate recommendations for guaranteeing high-quality education. To achieve this objective, five main tasks were defined, which are addressed sequentially in the paper.

Against the backdrop of reforms, the evolution of Georgia’s educational market is presented in a historical context, with each stage accompanied by the author’s interpretations. Through a review of the literature, the study identifies the key questions that structure the analysis.

Drawing on both primary and secondary data sources, the research examines major trends in both the educational and labor markets. A combination of quantitative and qualitative methods was employed, with particular emphasis on factor analysis. The results of this analysis are presented in the form of key findings. Finally, the paper concludes by offering recommendations to address existing weaknesses in Georgia’s education market, thereby contributing to the system’s resilience in the face of new challenges.

Key words: Higher  Education; Labor Market; Human Capital; Quality; Reforms; Georgia 

Introduction

Contemporary global development relies on the resources available to each country in terms of economic, technological, and human capital. Within this three-dimensional system, education occupies a special place as one of the most significant instruments for achieving sustainable development. Education is not merely a mechanism for transmitting knowledge but also the foundation for a country’s socio-economic transformation. This premise is strongly emphasized in the United Nations Sustainable Development Goals, where the fourth goal—“Quality Education”—is considered a transformative factor in reducing poverty, improving health, ensuring economic growth, and promoting social equality.

The importance of high-quality education is further underlined in the priorities of the “Europe 2020” strategy, where the development of a knowledge- and innovation-based economy is named as the first priority. The second priority emphasizes fostering a green and competitive economy, while the third highlights inclusive growth. Achieving these goals is possible only through high-quality education and human resources equipped with relevant knowledge.

Education thus becomes the foundation of national competitiveness and sustainable development. Today, it serves as the driving force of competition. Consequently, the primary challenge of the past decade has been the development of education, which is inseparably linked to the creation of new knowledge, achieved through innovation and research.

Innovation and an educated society create new industries, fields, and products, serving as a guarantee for employment, income growth, and socio-economic resilience. Every country in the world, regardless of its socio-economic development, is equally engaged in this challenge. The irreversible process of globalization has made it critical for Europe and the world to direct strong competitive mechanisms toward the development, expansion, and effective utilization of intellectual capital.

Despite the common framework that Europe proposes in this regard, for each country to progress successfully within the European educational space and receive positive feedback, it is necessary to design and implement a competitive strategy suited to its national context. The outcomes of such strategies are directly reflected in the demand for qualified personnel in the labor market.

In the case of Georgia, the development of education and its harmonization with the labor market constitute one of the significant challenges. Against the backdrop of economic transformation, the demand for labor-market-oriented professionals is increasing, necessitating a functional and strategic rethinking of higher education institutions..

Literature Review

For more than two decades, the development of education has remained one of the central challenges of the modern era. During this period, numerous scholars and international organizations have dedicated their research to the expansion of education and the enhancement of its quality.

Some studies have focused on the global challenges shaping the fundamental trends of the educational market. These can be grouped into five categories:

1. Educational reforms and the education market
2. The impact of the pandemic on education
3. Digitalization and hybrid learning
4. Internationalization and the dynamics of global education
5. Inclusivity and SDG4

The analysis of existing literature was conducted according to these categories, highlighting the gaps that remain in the development of educational quality and in ensuring social well-being.

From the very beginning of reforms, emphasis was placed on the harmonization of Georgian and European educational systems. In this respect, the issue of investing in human capital became a central concern.

Back in the middle of the 20th century, Nobel Prize–winner in Economic Sciences T. Schultz developed the concept of human capital, linking the growth of investments in human capital to productivity (Schultz, 1961;p.15). His ideas were later developed by G. Becker of the Chicago School. Nevertheless, the role of human capital as one of the main resources for wealth creation also appears in the theoretical works of A. Marshall and subsequently R. Campbell, McKinnes, and others. Within these conceptual frameworks, the significance of human capital in the socio-economic development of a nation is justified, with a particular emphasis on the individual as a source of knowledge.

The same issue was brought to the forefront in the early 21st century in the works of Georgian scholars such as L. Chikava, L. Chagelishvili, L. Totladze, M. Khuskivadze, G. Tutberidze, T. Verulava, and others. Each of them addressed the problem from different perspectives. For example, in L. Chikava’s work Innovative Economy, human resources are presented as an essential source for the creation of innovation.

Knowledge is an integral part of education, and through its transfer and application, societies achieve socio-economic outcomes. Knowledge-based economies represent the principal tool of national competitive advantage. What are the key problems in this regard in Georgia? Which factors influence them? How can the purposeful and effective use of knowledge be achieved? These questions are addressed in L. Chagelishvili’s study The Knowledge Economy and Knowledge Development Issues in Georgia (2014; p.234). Based on comparative analysis, the author presents recommendations for overcoming the identified problems.

The exploration of knowledge economy issues continued in the author’s later work ‘’Contemporary Aspects of the Innovative Economy’’ (2014, p.268), which analyzed the World Bank’s K4D approach to measuring development indicators. Through comparative analysis, the study assessed the possibilities and pathways for knowledge economy development in Georgia.

Knowledge economy and intellectual capital development are also examined in L. Chagelishvili’s work Knowledge Management and the Concept of Organizational Development (2012p.138). The study reviewed and analyzed knowledge management challenges and, through factor analysis, proposed a conceptual model of organizational development.

Important aspects of educational marketing and the formation and functioning of knowledge management systems are addressed in L. Chagelishvili and K. Chagelishvili’s work Modern Approaches to the Development of Education(2012,p.34). In the modern era, knowledge acquisition and education have become widely accessible. Artificial intelligence is increasingly entering social life, raising new questions about knowledge management and requiring specific actions from educational institutions. Based on marketing research, the authors propose a general model of educational development in the form of a “knowledge map.”

In their work Challenges of Measuring Human Capital and New Approaches (2023, p.6), G. Tutberidze and G. Ugulava analyze the measurement and accounting of human capital. Their proposed theoretical model replaces traditional methodologies with inductive, data-driven approaches.

The issue of human capital measurement is also addressed in the study by L. Totladze and M. Khuskivadze Conceptual Aspects of Human Capital Measurement (2019, p.9). They examine the problem in the context of sustainable and inclusive growth, where human capital is considered the foundation of such development.

Relying on the challenges caused by the Russia–Georgia war and the pandemic, the authors, through empirical analysis, explore the uncertainties affecting human capital measurement.

The sectoral dimension of human capital development is represented in T. Verulava’s work Health Capital as a Factor of Sustainable Development (2018p.3). Here, investments in education are discussed in conjunction with investments in healthcare, which, at both the micro and macro levels, serve as sources of socio-economic growth.

In the literature review section, the research of  A. Papiashvili and T. Bezhanidze, Higher Education and Social Justice (2022,p.17) in note worthy.This study evaluates the accessibility of higher education, along with its barriers, problems, and prospects, from the perspective of students. It also presents a situational analysis of higher education and the labor force in Georgia. The conclusions emphasize that higher education plays an important role in increasing income and employment levels.

In this study, the analysis of statistical data is largely descriptive, without correlations among factors, which renders the conclusions more general.

Therefore, we can conclude that research on the development of education and its role as a social catalyst in Georgia has been predominantly theoretical. While some studies have addressed specific problems of education at the conceptual level, even though empirical data on the relationship between the labor market and education has recently emerged, the analyses remain general.

Based on this, our research questions are as follows:

1. How did educational reforms unfold in Georgia?
2. What are the labor market demands of employers?
3. Which factors influence the employment of graduates?
4. What challenges does the Georgian educational system face?

Methodology

The study employed historical analysis, statistical analysis, quantitative and qualitative research, and factor analysis.

The aim of the research is to determine the parameters of educational development and its harmonization with the labor market, as well as to formulate recommendations to ensure the provision of high-quality education.

To achieve this aim, the following tasks were defined:

• Analysis of reforms carried out in Georgia’s educational sector;
• Analysis of current trends in the Georgian educational market;
• Identification of factors influencing quality education and labor market dynamics;
• Determination of weaknesses in higher education institutions;
• Development of recommendations to ensure high-quality education.

The object of the research is Georgia’s educational market and labor market, while the subject of study includes the aspects of their harmonization that have a significant impact on the country’s social and economic development.

Ethical standards of research were ensured through the informed consent and participation of respondents, along with the preservation of confidentiality.

The research was carried out in two stages, based on both primary and secondary data sources. In the primary stage, focus groups were selected using a non-probability sampling method, specifically the purposive sampling technique. In total, 10 entities from the educational market and 8 entities from the labor market were included in the research. Among the 204 respondents who participated, both public and private higher educational institutions were represented.

Separate interviews were also conducted with employers, accounting for 30% of the total sample.

The second stage of the research was dedicated to the analysis of statistical data and studies conducted by various international organizations. Based on this triangulation, conclusions were drawn and recommendations were formulated

Findings

The analysis of the labor market revealed the following:

• The demand for specialized and highly qualified professionals is steadily increasing, particularly in the fields of information technology, engineering, and healthcare.
• The persistently high level of unemployment among young people, especially within the first one to two years after graduation, highlights the mismatch between the education system and labor market needs.
• According to employers, the shortage of “soft skills” remains one of the primary problems among recent graduates.

Systemic Challenges of Higher Education

Based on interviews and documentary analysis, several weaknesses were identified within the higher education sector:

• Outdated curricula and teaching content;
• Lack of mechanisms for monitoring labor market needs;
• Insufficient cooperation between the public and private sectors.

Discussion

Modern economic theories increasingly view education not only as a prerequisite for individual income growth but also as the foundation for an innovative economy, social stability, and the strengthening of democratic processes. Education is also recognized as a multiplier that influences health outcomes, reduces crime, promotes gender equality, and enhances civic engagement.

Within the theoretical framework of sustainable development, education acquires special significance. According to UNESCO and OECD data, high-quality educational systems create inclusive economic models, reduce the risk of social marginalization, and enhance a country’s ability to adapt to global challenges.

In this context, education is seen as a catalyst of well-being: it transforms human resources into productive forces, shapes social capital, and establishes conditions for long-term development. Sustainable development and competitiveness, however, can only be achieved under conditions of quality education, supported by sufficient resources. This proved to be a challenge for Georgia during the transition to a new formation, when systemic reforms were being implemented.

Reforms in the Education System and Educational Market Trends

Globally, programs for the development of education have been implemented since the late 20th century. Between 1995 and 2000, the system of indicators developed by the United Nations assigned significant importance to measures related to the knowledge economy. The World Bank introduced the Knowledge for Development (K4D) program [www.worldbank.org], in which two aggregate indicators served as the basis: Gross Domestic Product (GDP) and the Human Development Index (HDI). Within this framework, knowledge economy indices were also calculated, which included such measures as: the number of research institutions, the number of scientific and technical personnel, the number of internationally published scientific works, and publications in journals with an impact factor, among others(2014).

For Georgia, ensuring these indicators proved impossible, as at that time the country lacked full access to innovative resources. The educational space was not sufficiently open due to the restricted development of scientific and technological progress. This confirmed the need for systemic reforms in higher education.

Europe’s first major challenge in this direction was the Bologna Process, founded on the 1999 Bologna Declaration. In 2005, Georgia, along with Azerbaijan, Armenia, Moldova, and Ukraine, joined the group of countries that had signed the declaration. This was followed by the Lisbon Strategy in Education (2000), the Prague Communiqué (2001), the Berlin Communiqué (2003), the Bergen Communiqué (2005), the London Communiqué (2007), and the Leuven Communiqué (2009) [www.create2009.europa.eu].

Each of these documents agrees on the basic requirements for creation of a unified European educational space, emphasizing the following: the introduction of comparable academic degree systems; the implementation of research-oriented teaching; the development of pre- and post-diploma education; the European Credit Transfer and Accumulation System (ECTS); cooperation in quality assurance; the development of educational programs; collaboration among institutions; the facilitation of mobility; the creation of integrated teaching and research programs; and the establishment and improvement of lifelong learning (LLL) systems.

In Georgia, developments accelerated immediately after joining the Bologna Process. Reforms in higher education began promptly, marked by the implementation of unified national entrance examinations. This was followed by comprehensive reforms of the higher education system, one of which involved a reduction of research potential. Paradoxically, while reforms were undertaken to improve educational quality, the closure of research institutes, the dismantling of laboratories, and the dismissal of large numbers of scientists from universities significantly reduced scientific capacity. This raised the question: what is the purpose of obtaining an education if reforms result in the underutilization of intellectual potential? Should education merely serve basic or intermediate levels? Such questions led to a significant outflow of intellectual resources abroad—an entirely predictable reaction, since for creative individuals (idea-bearers, innovators) continuous idea generation must be accompanied by adequate material incentives.

Other problems also emerged during the implementation of reforms. One such problem was the low level of general education among first-year students, which complicated higher education institutions’ ability to provide the labor market with graduates who possessed competencies required by contemporary demands.

Against this backdrop, Georgia faced two further challenges within the European higher education space:

1. The 2013 Vilnius Summit of the Eastern Partnership, which emphasized research and innovation as key drivers of socio-economic growth. The summit highlighted the need for enhanced cooperation in order to establish a common space for knowledge and technological development. In higher education and youth policy, EU support aimed to increase participation of partner countries’ institutions and students in the new Erasmus+ program, as well as to strengthen cooperation under the forthcoming Horizon 2020 initiative [http://EaPVilniusSummit.pdf, 2013].
2. The EU–Georgia Association Agreement, which envisaged the alignment of Georgian education and science policies and practices with those of the EU. The enhancement of higher education quality was expected to correspond to the EU’s Modernisation Agenda for Higher Education and the Bologna Process [EU–Georgia Association Agreement Guide in Georgia, 2014].

Across Europe, the higher education system has consistently expanded. Between 2000 and 2009, the student population in European higher education grew on average by 22% (2.7% annual growth rate) (Eurostat, 2012). This expansion was grounded in the belief that greater access to education yields benefits for both individuals and society, not only from an economic perspective (higher income, greater employment, development of human capital) but also from a social perspective (enhanced social mobility, improved stability, and overall well-being) (Machin & McNally, 2007).

Recent studies conducted by international organizations identified three key global challenges for higher education systems:

1. Ensuring a balance between the supply of and demand for human resources in the labor market.
2. Increasing the relevance of graduates’ competencies to labor market needs.
3. Strengthening the role of higher education in promoting social equality and mobility.

These objectives were also reflected in Georgia’s education development agenda for 2011–2015, which prioritized institutional consolidation and Europeanization. This stage was characterized by the full implementation of a three-level degree structure and the use of mobility/ECTS mechanisms to align reforms with the European Higher Education Area (EHEA), thereby increasing the transparency and quality of teaching.

The presence of these challenges underscores that competency mismatches with labor market demands occur not only in developing countries but also in Europe. A cross-national analysis of 25 European countries revealed that, on average, the competencies of 59% of the workforce did not match market requirements, with figures ranging from 15% in the Netherlands to 79% in Estonia (European Centre for the Development of Vocational Training, 2010).

In transition and developing economies of the OECD, emphasis has increasingly shifted toward transversal competencies—skills that are more easily adaptable to rapidly changing market needs—while technical skills quickly become outdated (Machin & McNally, 2007; Fasih, 2008). This trend has been observed in the UK and Spain, as well as in transition economies such as Bulgaria, Poland, and Russia (World Bank, 2008).

In Georgia, research has shown that universities are implementing mobility mechanisms in line with EHEA requirements and applying both internal and external quality assurance systems. However, only 2% of universities (mostly private institutions) conduct systematic evaluations of internal quality assurance mechanisms at the end of each academic year, an essential step for genuine quality improvement. The absence of a full PDCA (Plan-Do-Check-Act) cycle raises concerns, as recommendations often remain unimplemented, and without evidence of results, future planning is hampered.

The analysis of higher education institutions’ activities also highlighted issues in quality management. Interviews with respondents revealed that quality assurance mechanisms are typically activated during accreditation or authorization processes, while in other cases, they remain inactive. This raises doubts about the validity of data and negatively impacts institutional performance.

Another challenge lies in the aging academic workforce. Demographic trends show a growing need for retraining and professional development of existing personnel to meet new market requirements. Although progress has been made in private universities—where, in 2022–2023, 75% of academic staff were young professionals—public universities still face a shortage, with more than 70% of academic staff being over the age of 75.

Research revealed that this situation is largely influenced by social conditions. Low pensions (350–450 GEL) compared to higher education salaries (averaging 1,200–2,000 GEL) prevent senior academics from retiring, despite holding high scientific qualifications. This imbalance undermines alignment with European standards.

The 2015–2019 Stage: TVET Programs and Internationalization

The next stage of reforms (2015–2019) focused on the implementation of Technical and Vocational Education and Training (TVET) programs and the promotion of internationalization. Through Erasmus+ and other partnership initiatives, Georgia strengthened academic mobility and program renewal.

According to research by the Erasmus+ National Office of Georgia, during 2015–2019, Georgian academic and administrative staff cooperated with 29 countries. The largest shares of academic mobility went to Poland (16%) and Germany (17% for administrative staff). State universities accounted for 70% of mobility, while no regional universities participated.

Regionally, Telavi State University and Batumi Shota Rustaveli State University achieved the highest mobility rates (3%). By discipline, the largest shares of academic mobility were in the humanities (28%), social sciences (23%), and business and law (13%). Notably, 80% of mobility activities were teaching-related, while only 5% were research-focused.

Despite these achievements, transparency regarding the outcomes of mobility remained limited. Eighty percent of surveyed respondents stated that no feedback mechanisms were in place, with only 12% reporting that mobility results were made available through international department reports.  

Awareness of mobility outcomes

Similarly, respondents noted that few new programs or projects followed mobility experiences. Thirty percent reported having no information, while 12% believed that no new initiatives were implemented. 

Programs/projects implemented after mobility

 

Student internationalization dynamics also shifted significantly. Between 2020–2021 and 2024–2025, the number of international students in Georgian universities increased 2.5 times. By 2024–2025, the majority studied in healthcare and social protection (33,854 students), followed by the sciences, which experienced a notable increase compared to social sciences, business, and law.

The number of Georgian students studying abroad also rose by 3%, reaching 38,273 in 2025. Interestingly, more students studied abroad from state universities (748) than from private universities (401), due to the higher costs of internationalization in private institutions.

The 2016–2019 Stage: Further Emphasis on TVET

During this stage, TVET programs became central once again, with the goal of aligning professional qualifications with labor market needs. The effectiveness of these programs was confirmed by the Labour Market Status of VET Graduates in Georgia survey, in which 84.9% of respondents expressed satisfaction with their chosen program (Labour Market Studies Series No. 2).

The 2020–2022 Stage: Pandemic and Digital Transition

The period of 2020–2022 was characterized by the pandemic, which prompted a rapid shift to online and hybrid learning models.

During this period, the research we conducted provided the following picture.
In relation to the transition to electronic forms of learning, we carried out a study aimed at assessing student engagement in online education and the evaluation of offered resources. According to the results, 66% of the surveyed students (274 students) resided in Tbilisi; 33% (137 students) were located in the regions, at their respective places of residence; and 1% were abroad.

 

Of these, 70% of students were actively involved in online learning. The 30% who could not regularly attend lectures were predominantly students living in the regions, where internet access was unstable, as well as those residing abroad, who faced difficulties due to time zone differences. Nevertheless, the electronic learning system of the universities functioned smoothly for this category of students, and course materials were provided to them individually without significant obstacles.

Seventy-five percent of respondents noted the proper functioning of the ZOOM platform, 21% provided no answer to the question, while up to 4% indicated that technical problems existed with the use of the ZOOM platform.

 

Regarding the possibility of achieving learning outcomes through electronic education, 40% of students expressed support, 32% found it difficult to provide a clear answer, and 28%—while not denying the potential for attaining results through this format—still preferred the continuation of in-person, classroom-based learning.

The quality of online learning was also evaluated by professors and instructors. Academic staff participation in the survey amounted to 82.6%. All respondents (100%) confirmed full proficiency in the use of computer technologies and the necessary skills for teaching, indicating their readiness to continue the learning process in electronic form. Each faculty member possessed appropriate online devices to participate in the process.

The academic staff also emphasized that, given the prevailing circumstances, continuing the educational process through distance/electronic learning ensured the achievement of course learning outcomes. In contrast, the situation in the regions, particularly in mountainous areas, was more challenging: due to the lack of personal computers and internet access problems, students often could not attend lectures, which hindered their achievement of expected learning outcomes.

The results of a rapid study conducted in 2021 showed progress in achieving learning outcomes through electronic education. While in 2020 only 40% of respondents believed that learning outcomes could be achieved through online formats, in 2021 this view was supported by 57% of students (bachelor’s level). The current study demonstrated that both academic staff and students adapted better to online learning compared to the previous period, and technical or time-related difficulties were no longer evident. Nevertheless, both groups expressed a preference for traditional classroom-based instruction at the bachelor’s level.

According to a 2022 World Bank study, three priority goals for the development of education were identified, which are not directly connected to “digital education.” However, the strategic objectives for education emphasize the use of digital tools in order to ensure the competitiveness of education systems. The effective use of digital instruments is essential for achieving results and influencing outcomes.

The strategic goals identified in the document include:

Goal 1. Promotion of inclusive and sustainable educational services to eliminate educational inequality;
Goal2. Improvement of system efficiency (quality, relevance, and effectiveness);
Goal    3. Strengthening of teacher training and management.

The 2022–2025 Stage: Inclusivity, Lifelong Learning, and Quality Growth

The most recent stage of reforms (2022–2025) is characterized by challenges related to inclusivity, lifelong learning, and quality improvement, as reflected in the Unified National Strategy for Education and Science of Georgia 2022–2030.

Analysis has shown that challenges are universal across the globe and will continue to emerge as circumstances change.

The strategies for addressing these challenges must be specific to each country and characterized by distinctive features. The nature of such strategies depends on a variety of contextual factors. What, then, would this strategy look like for Georgia?

Based on the modern trends of the Georgian educational market, it can be observed that the system is steadily becoming more sophisticated. Whereas five years ago its development was largely limited to quantitative indicators, today the primary demand is the assurance of qualitative indicators—most notably, the competencies of graduates.

According to data from the National Statistics Office, there are 121,514 students enrolled in bachelor’s programs at higher education institutions. Student enrollment dynamics during 2018–2023 have been variable. In 2022, the number of bachelor’s students decreased by 6%, a decline that began in 2021. Compared to 2020, the decline in 2021 was 2%. This reduction was primarily attributed to the COVID-19 pandemic, during which many students suspended their academic status. However, by 2023 these figures had recovered.

An analysis of enrollment in public and private higher education institutions reveals that, by the 2023/2024 academic year, the number of students in private institutions increased to 76,649, marking a 20% rise compared to 2022/2023 and a 32% increase compared to 2021/2022.

In terms of programs, alongside the growth in bachelor’s enrollment, an increase has also been observed in master’s and professional programs. In the 2023/2024 academic year, compared to 2022/2023, the number of students in master’s programs increased by 7%.

In recent years, the number of foreign students in Georgia’s higher education institutions has also grown significantly. According to the latest data, in 2021–2022, 17,500 foreign students were enrolled in Georgia. Among them, 4,892 studied in bachelor’s programs and 12,600 in master’s programs. By 2022–2023, the number had increased by 43.2%, reaching 25,069 students.

The dynamics of student enrollment across different programs generally show a rising trend, although fluctuations remain at the level of individual disciplines. In 2024/2025, the total number of students in higher education institutions reached 187,800. Notably, the number of doctoral students has shown a declining trend: between 2020 and 2025, the average decrease was about 25%. Within this cohort, 37% were aged 35 and above, 29% were between 30–34 years, while 27.9% were between 25–29 years old. The main reason identified by 72% of survey respondents was the low remuneration of academic staff holding doctoral degrees.

Funding remains a critical issue for the successful implementation of these processes, yet it is still insufficiently regulated. Unfortunately, the private sector has not taken active steps in this regard, while the state, constrained by financial limitations, is unable to adequately fund strategic directions in education. It is therefore essential that both the state and private businesses recognize the priority of the knowledge economy in global competition and, through shared participation, ensure the sustainable development of public institutions, private entities, and educational structures.

Numerous international examples illustrate that investment in education generates multifaceted returns. Denmark, Sweden, and Norway serve as demonstrative cases, where high employment and income rates are accompanied by substantial investments in education. Israel, through the use of incubators, has managed to accumulate investments in education and innovation, thereby achieving high results in both areas. Conversely, Romania and Slovakia provide a contrasting picture, where limited investment in the system correlates with weaker returns in employment and wages.

Consequently, based on an analysis of Georgia’s educational market during 2005–2025, it may be concluded that within this period the market transitioned from a fragmented and weakly regulated legacy system toward an ecosystem harmonized with European architecture. This is evidenced by the implementation of the three-cycle degree system, quality assurance mechanisms, the ECTS operational framework, and national examinations. The period of 2005–2020 was characterized by a growing trend in enrollment and inflow of international students. However, challenges remain in terms of learning outcomes, practical skills, and digital readiness. This is highlighted by the results of PISA 2022, which show that a large proportion of students in Georgia do not reach the OECD minimum standards in mathematics and reading—a clear signal that increased enrollment does not automatically translate into quality education.

Labor Market Trends

The effective functioning of the education system is most clearly reflected in labor market trends, which in the past decade have undergone significant changes.

According to data from the National Statistics Office of Georgia, in the third quarter of 2023 the unemployment rate remained unchanged compared to the same period of the previous year, standing at 15.6%. During the same period, the number of employees increased by 3.2%, while the number of self-employed decreased by 4.8%. Nevertheless, the total number of unemployed persons rose by 0.6%.

Gender-disaggregated data show that in the third quarter of 2023 unemployment among women decreased by 0.2 percentage points, while among men it increased, reaching 17.7%. Despite the annual growth in student enrollment in higher education institutions, youth employment remains one of the most pressing challenges in the labor market.

Unemployment by gender 2019-2023

 www.geostat.ge; 15.03.2024

Statistical data confirm that unemployment is especially high among the 15–24 age group. In 2020, this indicator stood at 30.78%, and by 2023 it had only slightly decreased to 30.20%. Although marginally lower, the figure remains very high, indicating persistent difficulties in youth integration into the labor market.

By 2024, the gender gap in unemployment narrowed further: the unemployment rate among women fell to 11% compared to 14% in 2023, while for men it stood at 16.1%.

Sectoral analysis of employment dynamics reveals important shifts. In 2024, compared to 2023, the sectors with the highest employment growth were agriculture, forestry and fisheries, industry, transportation, retail trade, and education. This represented a reversal of the previous year’s trend, when construction, transport and warehousing, healthcare, and education held the leading positions—changes largely attributable to the pandemic period.

Urban–rural dynamics also illustrate important tendencies. Between 2020 and 2024, employment increased in both cities (7%) and rural areas (8%). However, the higher pace of rural employment growth is closely tied to self-employment, which accounts for 34% of the rural workforce compared to 18% in urban areas. As a result, the urban unemployment rate reached 15% in 2024, while in rural areas it stood at 13%.

Secondary research shows that 57% of employed persons in Georgia hold higher education qualifications, while 25% have completed secondary education, and 18% possess vocational education. Of these, 42% are employed in large enterprises, 39% in small businesses, and only 20% in medium-sized enterprises.

The employment rate of young graduates aged 20–34 has fluctuated in recent years:

A gender breakdown shows that in 2024 the employment rate was 58.4% for women and 60.9% for men.

The structure of employment, analyzed according to the International Standard Classification of Occupations (ISCO-08), indicates growth across all professional groups. However, recent studies confirm that the Georgian labor market continues to face a shortage of highly qualified professionals, a challenge identified as critical by employers.

A notable tendency has been the decline of medium-skill jobs and the parallel increase of both low-skill and high-skill positions. According to international standards, occupations can be grouped into four levels:

1. Low-skilled jobs requiring simple physical tasks (e.g., cleaners, assistants, fruit pickers).
2. Medium-skilled jobs requiring moderate competencies but often involving routine physical tasks  ( secretaries, accountants, seamstresses, crane operators).
3. High-skilled jobs characterized by independent problem-solving, decision-making, and analytical skills (managers, programmers, analysts, evaluators, professors/teachers).

Thus, the Georgian labor market shows both quantitative and qualitative mismatches between labor supply and demand.

Wage Disparities and Regional Inequalities

Labor market dynamics are also influenced by wages. In-depth interviews revealed that vacancies often remain unfilled due to insufficient salaries. For example, in 2024, the average monthly salary for female managers was 1,860 GEL, while for male managers it was 2,800 GEL. Among professional specialists, women earned an average of 1,160 GEL compared to 1,660 GEL for men.

One of the most persistent challenges remains the unequal distribution of employment across regions. In 2023, as in previous years, 62% of employed persons were concentrated in the capital city. No other region accounted for a double-digit share. Enterprise size also reflected similar disparities: 40% of employees worked in small enterprises, 40% in large enterprises, and 20% in medium-sized ones.

Contemporary Labor Market Trends

Labor market dynamics in recent years have also been shaped by the pandemic and the rise of Generation Z. The pandemic accelerated digitalization processes, which Generation Z quickly adapted to. Values and expectations shifted, forcing companies to adapt to these new realities. Increased competition—both locally and internationally—has made it necessary to reconcile and address the interests of both employees and employers.

For Georgia’s economic development and the resolution of social problems, the effective functioning of the labor market is crucial. Research shows that balancing labor market supply and demand and addressing skill shortages are essential to reducing the risk of declining demand for professionalism among employers. It is also necessary to prevent the spread of low-wage employment, which itself remains a systemic challenge.

The education sector plays a decisive role in meeting the contemporary demands of the labor market, by preparing specialists who possess both high-quality theoretical knowledge and practical skills.

Employers’ Assessments and Skills Alignment

Interviews conducted with employers revealed that only 20% of graduates possessed skills fully aligned with labor market demands. Approximately 68% were assessed as partially meeting requirements, while the remaining share did not correspond to employers’ expectations.

A significant number of employers emphasized the importance of foreign language proficiency, with 65% identifying it as a necessary condition for successful employment. Moreover, the vast majority (87%) noted that they independently undertake retraining of employees through various in-house or external training programs.

Recruitment Practices

The study also explored recruitment methods and hiring practices in Georgia. The findings showed: The most widely used method was the job interview (80.7% of cases).Recommendations from referees played a significant role (62.4%). Recruitment through personal information and testing held nearly equal shares (37.3% and 37.2%, respectively).

Compared to 2020–2021, there has been a shift in recruitment preferences. During those years, personal information (79%) played a larger role after interviews (88%), while in 2022–2023 the importance of recommendations increased, ranking second after interviews.

By 2024, the share of employers using multiple methods in combination reached 8.3%, compared to only 4% in 2021. This shift demonstrates employers’ growing demand for professional staff, whose competencies cannot be adequately assessed through personal information alone.

The Role of Soft Skills

Modern employers place particular emphasis on soft skills, considering them just as important as technical knowledge. The most valued competencies include: Analytical thinking, Flexibility and adaptability, Teamwork, Communication skills, Critical thinking, Time management, Problem-solving and decision-making abilities

These skills were repeatedly mentioned by employers as key factors influencing graduates’ employability and long-term professional success.

Generation Z in the Labor Market

Employers also noted generational changes in labor market dynamics. Generation Z employees increasingly prefer the private sector, particularly in outsourcing arrangements, and are less inclined toward employment in the public sector. For them, flexible work schedules, informal work styles, and higher salaries are particularly attractive.

Employers emphasized that the pandemic significantly shaped these preferences. Remote and flexible work mechanisms adopted during this period have persisted in the post-pandemic era, becoming a dominant expectation among young professionals.

The research revealed the following tendencies:

• University-centered education structure — the weak development of vocational and technical education remains a systemic problem.
• Excessive concentration of graduates in law, humanities, and business disciplines, which leads to an oversupply of professionals in these fields on the labor market, while creating a shortage of specialists in technological, engineering, and agricultural sectors.
• Weak linkage between education and practical work experience — in higher education institutions, the practical component is insufficiently integrated into curricula.
• Constant need for curriculum (module) renewal — interviews with employers revealed that a significant portion of existing study programs do not meet modern requirements and must be revised and aligned with new trends.
• Weak cooperation between employers and higher education institutions— the study highlighted the necessity of establishing closer and more diversified partnerships between employers and universities.

Recommendations

The conducted research, supported by both theoretical frameworks and empirical analysis, makes it clear that education in Georgia plays a pivotal role as a catalyst for social and economic well-being. However, the study also identified a number of systemic shortcomings that prevent the education sector from fully meeting the demands of the modern labor market.

Based on the results of the study and the established theoretical framework, the following recommendations have been formulated to improve the functionality of Georgia’s education system and enhance its synchronization with the labor market: 

Strengthening the Education–Labor Market Link

• Establishment of cooperation platforms between universities and employers;
• Development of work-based learning models;
• Systematic program analysis and adjustment based on labor market data.

Reducing Regional Inequality

• Strengthening regional universities both infrastructurally and academically;
• Supporting the qualification enhancement and motivation of teachers in the regions;
• Development of distance and hybrid learning technologies.

Introduction of Data-Driven Management

• Strengthening modern systems of educational statistics;
• Designing results-oriented funding models;
• Improving internal evaluation and monitoring mechanisms within universities;
• Enhancing TQM systems to ensure implementation of outcomes and recommendations, including effective monitoring and reporting;
• Ensuring compliance with all standards of ISO 9001:2015 in the regions and preparing the groundwork for ISO 27002:2022;
• Implementation of ISO 27002:2022 standards in higher education institutions.

Integration of Soft and Transferable Skills

• Communication, critical thinking, and teamwork as mandatory components;
• Development of innovative and entrepreneurial thinking among students;
• Inclusion of non-formal education formats within the academic process.

Strengthening the Monitoring of Quantitative and Qualitative Indicators

• Monitoring quantitative indicators of the higher education system (number of graduates; diploma holders), assessing compliance with labor market demands, identifying mismatches, and forecasting future trends;
• Monitoring qualitative indicators of the higher education system (graduate competencies), assessing compliance with labor market requirements.
  This process can be carried out using the resources of individual universities (e.g., quality development offices, career management services for graduates, marketing departments).

Alignment of Graduate Competencies with Labor Market Demands and Expansion of Practice-Oriented Learning

• Encouraging and promoting practice-oriented research;
• Ensuring the active involvement of employers not only in curriculum design but also in practical training (conducting external seminars in business, economics, public sector, governmental and state institutions; providing internships and placements; delivering master classes; engaging students in research projects carried out by different organizations);
• Development of incubators, including educational incubators.

By addressing these issues in a systematic and evidence-based manner, Georgia can strengthen the role of education as a true catalyst for well-being, transforming human capital into productive social capital and laying the foundation for sustainable development.

Conclusion

Against the backdrop of global challenges, the role of education is significantly expanding, transcending its traditional social function. It is transforming into a catalyst for well-being, directly shaping the pace and direction of societal development. An analysis of the educational market in Georgia revealed that, despite some institutional progress, the system still requires substantial substantive and structural reform in order to adequately respond to labor market demands and the challenges of global competitiveness.

The research identified several critical aspects: imbalances in workforce distribution, the weakness of practical components, regional inequality, insufficient synchronization with employers, and weak quality management. These factors have hindered the transformation of education into a tool capable of stimulating large-scale social mobility and economic growth.

The proposed recommendations—including curriculum modernization, strengthening links with the labor market, and implementing data-driven management—establish a foundation for the sustainable development of the education system. Looking forward, it is desirable to conduct deeper sectoral analysis (for example, in STEM, agricultural education, and technical specialties) and to apply quantitative modeling of the economic efficiency of education.

The functional strengthening of the education system implies not only addressing educational challenges but also providing a solid basis for the country’s long-term prosperity and sustainable development 

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