Combating Poverty in Georgia: Assessing the Efficacy of Georgia’s Forms of Social Assistance

This article is part of our collaboration with International Policy Review at IE University. Photo Credits: The Borgen Project.

Abstract

The Republic of Georgia gained European Union candidate status in 2023, but it remains one of the poorest countries on the continent. With the deadline of the Sustainable Development Goals fast approaching, set for 2030, it is important to assess how the small republic is addressing poverty within its borders as it prepares for EU membership. This policy review will show how a lack of wage employment poses an important challenge alongside traditional factors such as disability, poor health, etc… It will be argued that the current system of social assistance, headed by the Targeted Social Assistance (TSA) programme, has been inadequate at reducing poverty rates which have lately stagnated. The policy review will further suggest that Georgia should implement a more universal TSA programme complemented by reforms in the employment, vocational training, and education sectors while expanding its early childhood education and care programmes. These reforms would help the Transcaucasian republic reach Sustainable Development Goal no. 1 by 2023.

1. Introduction

The Republic of Georgia is a small Transcaucasian middle-income country that is on the rocky road to European Union membership. Despite concerns over the state of the nation’s rule of law, the country officially gained candidate status in 2023, although accession talks were halted following the latest elections in the republic. Nevertheless, Georgia remains a potential future member of the bloc, which merits paying attention to its development. If the country were to join the Union today, it would become its poorest member with a GDP per capita that is less than half – 42.5% – of the EU’s. In fact, the current poorest country, Bulgaria, is 1.5 times richer than Georgia by the same metric. For this reason, it is worth taking a look at poverty and its causes in the Transcaucasian republic, what its causes are, through what policies it is combatted, and what the way forward may be. This is especially important in the context of the UN Sustainable Development Goals (SDGs), of which the first aims to “end poverty in all its forms everywhere” by 2030. This leaves a mere 5 years for Georgia to act.

Poverty, a measure of which is the national poverty rate according to the SDGs, stood at 11.8% in 2023, and has been steadily declining at around a 2% rate for the past decade. According to Georgia’s  national government, the main tool of combating poverty in the country is through its Targeted Social Assistance (TSA) programme, which uses proxy-means testing – which will be elaborated on later – to establish criteria for eligibility. This aid receives the biggest share of social protection spending, preceded only by pensions. The country’s Child Benefit Programme (CBP) has additionally been expanded to include more families, and the amount of benefits increased. This system however overlooks certain dimensions of poverty in Georgia. Targeting and means testing aim to ensure that only those in need of social assistance receive it – but it can also be incredibly exclusionary. Thirty-three percent of households below the national poverty line did not even apply for TSA. Reforms of the TSA testing system in 2015 had no noticeable effect on poverty, as the poverty rate actually grew the next year and dropped by only 0.3% in the following 5 years, suggesting that the impact of TSA is limited.  

The contradictions of Georgia’s social aid system merit an in-depth analysis. If the goal of Targeted Social Assistance is combating poverty, both in the short and long runs, one must evaluate its performance in doing so; especially as the government considers TSAs as its “primary mechanism for supporting poor families.” This paper will discover the dimensions of poverty in the Republic of Georgia, identifying the factors that increase the risk of poverty in the country. It will also examine whether targeted social assistance policies are effective in poverty reduction,   how the TSA system works, and what its drawbacks are.  This paper will convey the pitfalls of the policy, and argue for a more universal approach that expands coverage rather than increases the payouts to current beneficiaries. Complementary needs, such as labour market or inequality concerns, as well as the state of Georgia’s educational system,  shall also be addressed in the context of poverty.

2. Poverty and the Sustainable Development Goals in Georgia 

The sustainable development goals, or SDGs, were agreed upon and proclaimed in 2015 in the United Nations resolution Transforming Our World: The 2030 Agenda for Sustainable Development. Its preamble reads: “We recognize that eradicating poverty in all its forms and dimensions […] is the greatest global challenge and an indispensable requirement for sustainable development.” The agenda sets out 17 goals and 169 targets with an indicator corresponding to each of the latter. SDG no. 1 – the subject of this policy report – reads as follows: “End poverty in all its forms everywhere.”

According to this goal, Georgia  must eradicate extreme poverty and its other forms by 2030 – i.e., in the next 5 years. Being a middle-income country with consistent GDP growth since 2015 at an average of 5.12% annually, the country is well-positioned to do so. Additional efforts are however required. Most recent data on poverty rates is derived from 2023, when the proportion of the population living under the national poverty line was 11.8%. Based on the data of the National Statistics Office of Georgia from 2010 to 2023, if current trends were to continue, the national poverty rate would drop to around 3.25%. Moreover, the extreme poverty rate, defined as living under $2.15 (2017 PPP) a day (Target 1.1), is currently at 4.3% in the country. In the Voluntary National Review, the government states that this metric could be pushed under the 1% mark with “more active economic and social policy.” These initial statistics  illustrate that the country has a realistic chance of achieving its commitments set out by Sustainable Development Goal no. 1. To understand how the Transcaucasian Republic needs to transform its social protection system in order to reduce poverty at a faster rate,  this paper will firstly examine the dimensions and causes of poverty in Georgia.

3. Characteristics and Causes of Poverty

Poverty in Georgia has been an issue for decades. During its time in the Soviet Union, it was one of the poorest  eastern European republics of the USSR. Poverty in Georgia worsened following  the country’s  transition to a market economy post-independence in 1991, and due to ensuing conflicts with Russia over Abkhazia in 1992, and South Ossetia in 1991 and 2008. These conflicts with regional separatists, backed by Russia, internally displaced around 311,000 (8.4% of population) Georgians since 2008 alone. Absolute poverty measured at $2.15/day peaked at 23% in 2001. Among Eastern European post-Soviet states, only Moldova experienced higher levels of poverty by the same metric, whereas Georgia has consistently maintained the highest rate since 2002.

The prevalence of certain forms of poverty, detailed below, shed light on Georgia’s most vulnerable groups, while also indicating the many dimensions of the problem, such as education, employment, old age, etc. Chronic poverty, which indicates how large portions of the population shift in and out of poverty, is significant. Between 2009 and 2017, 70% of the population reported to be below the national poverty line at least once, with this figure being higher for those living in urban areas. The rate of chronic poverty, defined as reporting to be under the national poverty line 5 times in the survey period, was moreover 4% nationally. Child poverty stands at 16% according to the national poverty line – 4% more than the national average. Factors including having children, disability or poor health in the household were also found to increase the risk of poverty or social exclusion in the country. These important household characteristics are included in the proxy-means testing criteria of Targeted Social Assistance, highlighted later in this report.

The interesting characteristic of poverty in Georgia is how the type of employment of household members influences the risk of poverty. Naturally, the most important source of income is, or should be, wage employment. According to a UNICEF analysis, one more employed person in the household decreases the risk of poverty by a mere 1.8%. When breaking down this figure according to employment types, it was conversely found that one extra household member in wage employment decreases the risk of poverty by 8.7-7.3% depending on the model, whereas one additional person in self-employment has no statistically significant effect. 10.5% of Georgia’s population is moreover involved in subsistence farming, while not being employed elsewhere. Given the importance of wage employment in the reduction of risk of poverty, self-employed Georgians and those in subsistence agriculture constitute a vulnerable group that should be targeted by social policy.

In Georgia, traditionally vulnerable groups, such as children or the disabled, are also identified as at risk. There are however other, more unique factors that contribute to the prevalence of poverty, such as the type of employment. The following section examines the manner in which these characteristics of poverty are addressed by social policy in the republic, particularly in regards to the Targeted Social Assistance programme, the Child Benefits Programme, old-age pensions, and unemployment benefits.

4. The System of Social Aid Policies in Georgia

The government of Georgia stipulates that its Targeted Social Assistance programme is the country’s main tool against poverty, and is its second-largest social assistance programme after pensions. The policy uses a so-called proxy-means testing mechanism to establish eligibility. This is based on a combination of household characteristics such as the number of household members; land, vehicle and life stock ownership; the number of children, pensioners and disabled persons in the household; household income, etc… Upon application, a social worker assesses the household and assigns it a score to indicate its need, and, if eligible, registers the household in the Unified Database for Socially Vulnerable Families. Social assistance is determined based on this score. Allocated benefits range from 10-60 Georgian lari (GEL) or 9.90-19.70 EUR per month per household member for households with a score between 0 and 100,000. (To provide some  perspective, it must be mentioned that the maximum possible amount of 60 GEL was 20% of the average per-capita income in 2015, when the amounts were last adjusted. Today, the same ratio stands at 11%). Additionally, households with a score of at most 120,000 receive 150 GEL for each child under the age of 16. This latter is called the Child Benefit Programme (CBP).

Although this programme is admittedly the cornerstone of Georgian social protection, at least from the government’s perspective, it faces numerous issues within its targeted social policy schemes. There are firstly ethical and normative problems. Social aid recipients are often stigmatised: they are perceived as lazy, or not willing to work. Narratives such as “the welfare queen” stem from this view. Normatively, the question of where to draw the line in terms of welfare provision is also problematic. In every case, there is an arbitrary boundary created for such systems that will exclude  Georgians who may appear equally deserving by a different standard.

Secondly, these systems produce an issue of uptake; in other words, eligible people may not apply for the assistance. In 2020 in Georgia, 12.3% of the population was receiving TSA but 33% of the households below the national poverty line did not even apply for the service. Moreover, 37% of children under the national poverty rate were not receiving TSA. It should be noted, however, that thanks to the reforms in 2015, coverage of the targeted groups increased: after the reform, 53% of the bottom quintile of the welfare distribution were covered compared to 47% before. When it comes to coverage, and targeting, the Georgian TSA system performs better than other countries in the Europe and Central Asia statistical region since the reforms. Nevertheless, the issue of uptake of aid remains a problem in the country.

Lastly, the issue of work incentives, which accompanies any social aid policy, is largely present. This criticism argues that providing monetary aid to the population disincentivises the latter to work or seek employment. In the case of the Georgian Targeted Social Assistance scheme, results concerning work disincentives are mixed at best, but mostly point to no changes in labour market participation. A World Bank analysis found that a disincentive to work is only statistically significant for women at a 7-11% reduction in the likelihood to be economically active, while there has been no statistically significant work disincentive found for men. A 2019 UNICEF report moreover conversely found no reductions in labour market participation for either sex. These findings suggest that there are no obvious work disincentives associated with TSA, and the ones that may be present affect only women who may be more likely to stay home with children or the elderly as their primary care-takers, if the household is receiving financial aid – a reality that can be addressed through other policy means, such as more public care for children and the elderly.

Beyond Targeted Social Assistance, old-age pensions play a somewhat perverse role in the Georgian social protection system, and have discouraging implications for poverty. Pensions have the largest share of Georgia’s social protection expenditure, and are paid automatically to every woman above the age of 60, and to every man above the age of 65. Once a household member begins to receive pensions, the household’s risk of poverty drops by around 4%, and its income increases by 30%, indicating that pensioners continue working. This is somewhat worrying, as the only measured variable that is more effective at reducing the risk of poverty and increasing income is having one extra person in wage employment. This demonstrates how old-age pensions in Georgia are, intentionally or unintentionally, part of the effort for poverty reduction.

5. The Business-as-Usual Scenario

According to Target 1.2, the national poverty rate in 2015, at the time of the adoption of Sustainable Development Goals, should be halved by 2030. In 2015, 21.8% of the population lived under the national poverty line, and this rate dropped to 11.8% – almost by half – by 2023. 

Depending on the analytical model and based on data from 2004 to 2023, by 2030, the national poverty rate should drop below 5%. The target however requires the same level of reduction in poverty among men, women, and children. Table 1 illustrates that the country is still on track to achieve Target 1.2. By 2023, the country has halved the poverty rate among people above 65 and should achieve the same according to the estimates.  

Table 1.ARIMA estimations for poverty rates of different groups
Group	In 2015	In 2023	Estimation for 2030	Target
National	21.63%	11.80%	3.52% (0-15%)	10.82%
Urban	17.05%	9.42%	0% (0-16%)	8.53%
Rural	26.45%	15.62%	inconclusive	13.23%
Women	21.29%	11.47%	3.11% (0-15%)	10.65%
Men	21.00%	12.17%	3.98% (0-16%)	10.50%
Children	24.22%	16.04%	8.06% (0-21%)	12.11%
Above 65	16.37%	8.01%	0% (0-10%)	8.19%
Autoregressive Integrated Moving Average (ARIMA) analysis. The 95% confidence intervals are in brackets. Targets are half of the 2015 value. 2015 and 2023 data from GEOSTAT, estimations are the author’s.

Regarding Target 1.1, which aims to eradicate extreme poverty, the ARIMA model proved inconclusive. According to a simple linear regression model which ignores fluctuations in data, the international poverty rate of  $2.15 should hit zero by 2028 (Figure 1 in the Appendix). This implies that due to the volatility of the data, it is difficult to predict how the metric will change in the future. Despite this,  the simple linear prediction hints at further reductions. A 2023 UNDP report confirmed this, implying the expectation of a slowing drop in the national poverty line. 

As illustrated through the data, despite there being a downward trend of poverty lines, there is great uncertainty about the upcoming years. In terms of Target 1.1, the average change in the $2.15-poverty rate was -0.225% since 2015 – a significant slow-down compared to pre-2015 years. Target 1.2, which explores national indicators, shows more optimistic national poverty rates in all categories (age groups, sex, etc.). These rates are already close to the target values, and have been steadily decreasing since 2020 (see Figure 2). In essence, if current trends of national poverty lines remain, Georgia may be expected to achieve the 50% reduction in national poverty rates that is necessary for achieving Target 1.2. Yet, the same may not be said about extreme poverty (Target 1.1), whose rate has been stagnant since the baseline year of 2015. Therefore, in order to achieve Sustainable Development Goal One, Georgia cannot afford to follow a “business as usual” scenario and must implement significant policy changes to achieve its commitment under the SDGs.

6. Policy Recommendations

6.1. A More Universal Social Assistance Programme

Rather than augmenting the amount of current per-household social assistance, the accessibility of the programme should be increased; in other words, social assistance programmes in Georgia should become more universal. This would provide several advantages.

Firstly, more universal programmes tend to reduce inequalities, an area that is also addressed by SDG no. 10. Income inequality in Georgia has been relatively high since 2015. Relative poverty, the share of the population living under 60% of the median consumption, has remained stagnant at 21-19% in the past two decades while the economy conversely grew. Implementing reforms that also target inequalities  is crucial.

Secondly, a more universal scheme would eliminate issues stemming from the lack of uptake of social assistance in the country. As previously illustrated in Section IV, a significant part of Georgians below the national poverty line who would be eligible for TSA never applied. The announcement of a more universal programme, i.e., lower criteria of entry would encourage more people to apply for social aid. Universalising social aid programmes in the country would thus increase the number of people applying for social aid, ensuring that those who are eligible may all benefit from the social assistance provided by the state.

Thirdly, an increasingly accessible  social protection system is also associated with less work disincentives than targeted ones. It has already been shown that the TSA system does not produce significant work disincentives, but other forms of aid might. The authors who found that the TSA system creates work disincentives argue that a more universal system of social assistance policies would reduce or eliminate such disincentives.  Extending the coverage of social assistance programs, or of TSA itself, would therefore foster labour market participation and reduce Georgia’s reliance on non-productive sources of income.

Due to the lack of available raw data, this paper will rely on other studies to approximate the effects of a more universalised approach to social assistance. A UNICEF report found that the expansion of the TSA programme to provide benefits to households with a score of at least 100,000 would not be more effective at reducing poverty rates than the alternative of raising benefits for current recipients. This was due to the persisting lack of uptake.  This study however does not detail an expectation for more people applying for TSA because of the lower criteria, as previously argued. It moreover found that a fully universal child benefit programme would have significant effects in reducing child poverty, as well as poverty among the entire population. Although this study does not fully account for every effect listed above, it illustrates that the effects of universalisation would be positive. 

6.2. Strengthening Other Areas – A Long-Term Approach

Poverty is an incredibly complex issue, whose causes vary from country to country. In order to sustainably eradicate poverty, it is not sufficient to only provide monetary assistance to poor families  as the TSA and CBP do. In such a system, monetary transfers simply treat the symptoms of a larger problem. The data collected illustrated that those who had obtained tertiary education, wage employment, and a pension reduce the risk of poverty and social exclusion the most. To decrease poverty rates in the long term, it is imperative to focus on sustainable methods – employment and education. This implies the creation of a system which addresses every aspect of poverty. It is important to note, however, that the effects of labour and education policy reforms would likely be delayed and not affect poverty rates by 2030 – the deadline for achieving the Sustainable Development Goals.

There is evidently, in Georgia, a strong correlation between the type of employment and the risk of poverty. In this respect, it is necessary to maintain labour market conditions that incentivise wage employment among the Georgian population. Despite the national unemployment rate decreasing from 21.9% in 2015 to 13.9% in 2024, this rate remains above the 10% average of the Europe and Central Asia statistical region excluding high income countries. Long-term unemployment was moreover found to have been increasing in the country over the past three years. Currently, 40% of Georgia’s unemployed population have been without work for more than 12 months, amounting to 6.5% of the labour force. Given the systematic issues surrounding employment, Georgia should implement reforms, incentivise job creation, and invest in vocational training to sustain life-long learning among the population. This ensures that those who are chronically unemployed can re-enter the workforce. This would help eradicate poverty that stems from the lack of wage employment.

Additional investment in education is moreover crucial in overcoming structural issues that lead to poverty in the country. Georgia spent 3.7% of GDP on education in 2023, which is below the average of the Europe and Central Asia statistical region (excluding high-income countries), which stands at 5%. As shown above, obtaining tertiary education is associated with a 8.3% reduction in the risk of poverty. This factor’s effect is the most significant, second to maintaining paid employment. More and more experts have advocated  for  the importance of early childhood education and care (ECEC) on child outcomes. Higher enrollment in ECEC programmes may generally have significant health and educational benefits, shown later in the child’s life. This will also encourage the primary caregiver of the family – usually the mother – to re-enter the labour force. In Georgia, however, enrollment in Public Pre-School Education and Care Institutions has been declining: this is shown in a decrease of 15.6% between the 2017-2018 and 2024-2025 academic years. Given these statistics, it is vital that Georgia invest more in its education system, as doing so would help overcome systematic issues of poverty in the long run.

7. Conclusion

In the context of the approaching 2030 deadline for the accomplishment of the UN SDGs, and Georgia’s stated intentions of joining the EU, it is crucial to examine the Republic of Georgia’s progress in reducing poverty in line with SDG no. 1. This policy review firstly collects and describes the characteristics and causes of poverty in the republic, identifying wage employment, tertiary education, and a pension as the most important factors that reduce the risk of poverty. This is followed by a discussion of the government’s social assistance system – namely the TSA and CBP programmes. These showed that issues such as an uptake or reliance on pensions stifles the efforts of social protection, and that poverty may not be entirely eliminated in the ‘business-as-usual’ scenario. This policy review lastly argues that the Georgian social protection system must be expanded and become more universally available. The system must also be complemented by reforms in other sectors, such as the labour market and early childhood education and care. Fighting poverty is an incredibly complex task that requires the coordination of many fields. The issues tackled in this review, such as the causes of poverty, chronic unemployment, or social exclusion, should be investigated from the perspective of health (SDG no. 3), education (SDG no. 4), inequalities (SDGs no. 5 and 10), the labour market (SDG no. 8), and institutions (SDG no. 16).

8. Appendix

The Sustainable Development Goals

“Goal 1. End poverty in all its forms everywhere

Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Goal 3. Ensure healthy lives and promote well-being for all at all ages

Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Goal 5. Achieve gender equality and empower all women and girls

Goal 6. Ensure availability and sustainable management of water and sanitation for all

Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all

Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

Goal 10. Reduce inequality within and among countries

Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable

Goal 12. Ensure sustainable consumption and production patterns

Goal 13. Take urgent action to combat climate change and its impacts*

Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

Goal 17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development  

* Acknowledging that the United Nations Framework Convention on Climate Change is the primary international, intergovernmental forum for negotiating the global response to climate change.”

Goal One: End poverty in all its forms everywhere.

“1.1 By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day.

1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

1.3 Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable

1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

1.5 By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters

1.a Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions

1.b Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions”

Figure 1.

International absolute poverty rate at $2.15 2017 PPP between 2004 and 2022; and linear predictions. 

Based on data from GEOSTAT, predictions are the author’s. 

Figure 2.

National poverty rates by categories (age groups, urban/rural, sex) between 2004 and 2023. Based on data from GEOSTAT.

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World Bank. “Unemployment, Total (% of Total Labor Force) (National Estimate) – Europe & Central Asia (Excluding High Income), Georgia.” Accessed April 21, 2025. https://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?locations=7E-GE. World Bank Open Data. “Government Expenditure on Education, Total (% of GDP) – Europe & Central Asia (Excluding High Income).” World Bank. Accessed April 21, 2025. https://data.worldbank.org/indicator/SE.XPD.TOTL.GD.ZS?locations=7E.

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