The paradox of over-education in Georgia
Georgia is not as abundant in human capital as the number of university degrees held by people suggests.
Visitors to Georgia are often fascinated by the fact that young shop assistants and middle-aged taxi drivers may brandish not only a couple of engineering degrees, but also educational backgrounds in law, business, or international relations.
While it is easy to assume that the country is abundant in human capital, the reality is very different.
According to the 2016 Global Competitiveness Report, an inadequately educated workforce is the number one inhibiting factor for doing business in Georgia. Despite achieving tremendous success in fighting crime and corruption, the country is yet to properly educate its labor force.
The flip side of the problem is that educated workers have a hard time finding decent employment. Many are forced to take jobs well below their (formal) qualifications like as taxi drivers, receptionists, or shop assistants.
The over-education phenomenon can be partly blamed on the structure of the economy, but also on the sub-optimal educational choices of Georgian youth, who often want to just get a university degree without considering alternatives.
Why do so many of them aspire to receive university diplomas despite the high risk of being unemployed or underemployed later on?
The root cause may be the nature of university education itself.
Universities do not only educate students. They also filter applicants, test their abilities and certify their qualifications, providing important information for the labor market.
This was certainly the case before 1991, when Tbilisi State University was the only institution providing economics education to about 250 select students per year. Soviet economics education was not great, but a university diploma was a strong signal of academic excellence, leadership skills, and social capital.
The situation changed quite dramatically after the collapse of the USSR in the 1990s, when the education system broke down, and some Georgian universities became diploma mills to make money.
Paradoxically, university enrollment skyrocketed. Getting a modestly priced piece of paper was better than getting none at all. By 2005, almost 47% of Georgians aged 18 to 21 were “studying” in a private or public “university”.
Even more paradoxically, the quality of the university student pool did not much improve after the sweeping reforms of 2005, when Georgia revoked the licenses of dozens of universities suspected of being diploma mills and introduced nationally-administered tests (NAEC) which set a (very low) cognitive quality threshold for university enrolment.
Although the establishment of the NAEC was crucial to fight corruption in university admissions, universities are still largely self-governed and not mandated to set higher quality bars and more rigorous testing and certification systems.
Driven by short-term funding incentives, Georgian universities cared more about increasing the number of tuition-paying students, not their brand and reputation.
Low return on TVET education
Today, practically any high school graduate with a NAEC score above a minimum threshold can get into university. Accepting and retaining large numbers of barely qualified applicants inevitably lowers the quality of education throughout the system.
Why, then, do Georgian youth continue to flock to low-quality higher education programs?
First, even though diplomas are nowadays under suspicion, young Georgians are encouraged by the affordable tuition fees and extremely little effort required to graduate.
Second, not having a degree can become a social stigma that signals you belong to the bottom half of the ability distribution. This results in lower wages and few job opportunities.
In fact, preliminary ADB research indicates that the return on credible technical and vocational education and training (TVET) education in Georgia is quite low, only 8% above the average wage of someone with general education.
At the same time, the return on higher education is about 50-66% higher.
Lastly, Georgia’s education system lacks a TVET component. Most TVET schools attract low-quality candidate, thus reinforcing their poor reputation with potential future employers.
The challenge is how to reform the system so only high-skilled individuals enroll in universities, and the rest sign up for TVET programs. To achieve this goal, Georgia needs a multi-pronged approach based on sound economics.
One possible solution would be to require public universities to set a higher bar for admissions, for instance by increasing the minimum score requirements on the NAEC-administered Unified National Exam.
Tougher entrance exams would be part of an overall strategy to weed out "weak" universities through a combination of stricter quality requirements, better monitoring, and enhanced transparency.
Another possible solution is to make funding of public universities contingent on strengthening investment in the quality of faculty and programs, as well as for public universities to compete for the best students. This could be achieved by revoking government scholarship money if a student fails to consistently perform.
If professors are independent and grade impartially, universities will be interested in accepting only students who are likely to perform consistently well.
Finally, Georgia can establish good alternatives to university education by involving the private sector in TVET programs. Establishing new and rebranding existing private TVET schools seems like a good idea, and would be aligned with government efforts to reform the education system that ADB supports.
Could these reforms break the vicious circle of low-quality over-education in Georgia? We invite the readers to weigh in.