GEOSTAT considers stopping subsistence minimum calculations

The Executive Director of GEOSTAT Gogita Todradze does not rule out that the methodology for calculating the subsistence minimum is revised or canceled altogether.

There is no standardized norm at the international level to measure the subsistence minimum, and this number is only counted in post-Soviet countries, Todradze told IPN.

He said concrete steps are not yet planned, but he did not rule out negotiations with partner institutions and stakeholders to review or eliminate the subsistence minimum calculation.

“In developed countries, there is no practice of calculating the subsistence minimum. The subsistence level is calculated mainly in the countries of the former Soviet Union. GEOSTAT bases the calculation on the minimum food basket set by the Ministry of Health,” said Todradze.

The head of the National Statistics Office of Georgia further explained how the calculations are made and noted that changing the methodology isn’t in the competence of his office.

“With the existing methodology, which I believe was developed in 2003, the prices of the minimal food basket is observed and the subsistence minimum is calculated. Changing the methodology for calculating the subsistence minimum is not only within the competence of GEOSTAT. The methodology is changed by a Government decree and can be initiated jointly by GEOSTAT and the Ministries of Health, Economy, and Finance,” he added.

16 years have passed since 2003 and the economic and cultural situation has changed drastically in the country. Some methodologies can remain the same for decades, however, the particular set of guidelines that the Statistics Office uses to determine the subsistence minimum is too old and need updating to reflect the reality.

For example, the final number is reduced by 14%, to reflect the ‘bargaining coefficient’. Bargaining in 2003 was a common practice which people used while shopping, however in today’s reality it is practically unimaginable to ask for a price to be reduced, therefore the deduction of the abovementioned 14% doesn’t make sense.

This is only one of the main flaws that the calculation has and the fact that the Office is recognizing this is a step forward to create a comprehensive, systemic methodology of calculating the subsistence minimum that fully reflects the reality in which the Georgian citizens have to live.

The studies show that household expenditures have increased in recent years, however, the economy remains the main concern for people in Georgia.

The latest summer 2019 CRRC-NDI survey asked questions about household expenditure that give a sense of what people spend money on in Georgia and who spends more on different categories of goods and services.

The survey has found that most of the families in Georgia spend everything they earn. Once asked about the largest monthly household expenses, the everyday essentials came out on top, while only a few named expenditures linked to recreation. Household expenses, food, and utilities are on top regardless of gender, age, type of settlement in which they live, or economic situation.

“The data show that in all demographic groups in Georgia subsistence related expenses occupy the main position in household expenditures. Food, utilities, and medicine are the top expenditure categories for young and old, well-off and poor, men and women, and people in cities and rural areas,” reads the survey.

Food and utilities have been named twice as often as any other expense. While this may not be a surprise, it is worth noting that medicine expenses came in third, with more than one out of three naming it as one of their largest monthly household expenses.

Spending on medicine is one of the most interesting issues identified by the survey. It is the third-highest on the list, meaning that one-third of the population spends as much or more on medicine as food. Also, the elderly and those in poorer economic conditions are more likely to identify medication as one of their biggest monthly expenses.

In such a setting, the food basket defined by the government officials can’t even begin to cover the true subsistence minimum, with so many people spending everything they earn on life-saving medications.

As of September 2019, the average subsistence minimum of a working-age man is 189.9 GEL, or an average consumer it’s 168.2 GEL, and for the average family, the amount is 318.6 GEL.