Reform equals deregulation. That was the conventional wisdom in Eastern Europe for over a generation. But something is changing. For the first time in the Eastern Partnership region, a country is reflecting on its labour code.

The discussion about labour rights in Georgia is crucial in making a qualitative leap forward. The country aspires to join the ranks of developed nations sooner rather than later, and that requires a global value proposition that goes beyond location, low-red-tape, effective justice and market access. Increasingly, being in the “big league” of nations is all about talent: a workforce that is trained, healthy, safe, enjoys home-work balance, has open horizons, and is creative.

Georgia is serious about becoming a global investment destination. In 2006 the government launched a massive labour market deregulation process, aiming at eliminating corruption, creating an investor-friendly environment, and boosting job creation. The country is now reviewing this strategy. We talk with one of the MPs that has been behind this “rethinking process.”

Dimitri Tskitishvili is a political economist with studies in Georgia and the United States with experience both in foreign affairs and labour politics. He also chairs the working group on labor code reform of the Parliament of Georgia. Tskitishvili has just under twenty years of involvement in European Social Democratic politics, advocating for a social partnership approach to labour market reforms. He was elected in Parliament in 2016, and he has played a significant agenda-setting role in the current debate, initially as a ruling party MP and then as an independent.

European Interest: Is deregulation of the labour market making Georgia a more attractive investment legislation?

Dimitri Tskitishvili: Theory and practice are not always aligned. The Saakashvili government in 2006 undermined collective bargaining and all but eliminated labour rights. Georgia was of course following the conventional wisdom of an easy-hire-easy-fire economy. As soon as these were introduced, unemployment surged from 12-to-15% as firing became substantially easier, but job-creation is not automatic. Worse yet, the quality of work deteriorated. Occupational hazards proliferated. Many people were literally injured or even died at work.

We must also remember that the economy is a means to an end and that we are ultimately accountable to “the labour force,” which has certain rights. That is part of what we now call “quality of life”

We tend to read into statistics what fits our theoretical preconceptions. The authors of deregulation say that the effects of reform are not linear and make part of a broader “value proposition.” Those who see the quality of work as part of a development strategy would argue that the degradation of the quality of work sooner or later undermines the quality and productivity of our workforce and the overall competitiveness of the economy. With more than fifteen years behind us, we now have facts, and it is now time to fundamentally rethink our model. This is a pertinent and timely question.

The Georgian government has acquired a reputation for no-nonsense reformist zeal. Do you mean to say that the country has thus far failed to be informed and learn by the effects of its policy

Again, we tend to assimilate the part of reality that fits our preconceptions. And no policy is a complete failure or complete success. We need to review the system to create a balance that is matching the current state of our economy. But we must also remember that the economy is a means to an end and that we are ultimately accountable to “the labour force,” which has certain rights. That is part of what we now call “quality of life.”

The situation did improve in 2013 when the labour code was amended to restore some collective bargaining rights. As part of Georgia-EU Association Agreement reforms in 2015, Georgia created an office of labour inspection but with a very limited mandate. From 2017 onward, we launched an intensive parliamentary debate over occupation hazards and safety, resulting in a significant step forward in 2019 with a bill on Occupational Safety. Progress is never linear, but this Parliament and this Government have been able to see both sides of the argument.

Governance is not only about decisive deregulation. Regulation drives innovation and progress. That is the essence of European politics

So would you say Georgia has put in place a truly “European” working rights regime, whatever that means?

Much remains to be done. There are still gross violations of workers’ rights and occupational hazards in different industries. This reality has been marring Georgia’s overall positive image abroad, as local and international civil rights groups have been submitting successive damning reports. We need to strike a new balance, and we are very far from reaching this objective.

It should be recalled that a fully-fledged and functioning labour inspection unit is an international obligation entailed in the Georgia EU Association Agreement and DCFTA.

What’s the next step?

The draft bill which is submitted to the Parliament transposes 11 EU directives that are all part of the Georgia EU Association Agreement and, therefore, of strategic significance to Georgia.

We started the work on a draft bill at the beginning of 2019 in close cooperation with the ILO, UNDP, USAID, GIZ. We followed a process of bargaining between social partners: employees, employers, and government. We have bridged differences and reached compromises.

We have now reached a point in which we are ready to turn a page and make an informed decision. The draft bill we have drafted is sponsored by representatives of the parliamentary majority and by independent MPs. As always, there are dissenting views by MPs who view their role as defending special interests. But we must move now.

It should be recalled that a fully-fledged and functioning labour inspection unit is an international obligation entailed in the Georgia EU Association Agreement and DCFTA

Due to the coming elections in October 2020, there is no much time left to make this step. The Parliament must debate and vote before the process kills the bill. We must uphold Georgia’s right name for decisive politics. Governance is not only about decisive deregulation. Regulation drives innovation and progress. That is the essence of European politics.

European or not, what will these reforms consist of?

To be clear, this is neither a revolutionary program nor a threat to Georgia’s attractive investment environment. This is a basic set of reforms with four pillars:

  • First, a basic antidiscrimination law that guarantees equal pay for equal pay for all, while taking special measures for disabled people.
  • Secondly, there is a fundamental time regulation, providing for overtime work and setting standards of renumeration.
  • Thirdly, the bill institutes the principle of social dialogue, providing for structured negotiation between employers and employees, which in my view will save us from future social unrest and prolonged strike action.
  • Last but not least, the bill envisages a labor inspection directorate, with independence and a strong mandate to uphold fundamental standards of work.

The bill also regulates internship, to ensure that is a genuine value-added relation between an employer and a young person that improves the quality of our workforce without being abused.

Why is this important to you?

Ultimately, this is a matter of values. As a social democrat, my political worldview is all about social cohesion. I believe that the country develops when we create a society of mutual respect, which includes fundamental workers’ rights. Asserting these rights is why I became a Member of Parliament.

Frankly, I believe that this value-based society is also the foundation for a competitive economy. We do not need work place discrimination, harassment, and other forms of anti-social behavior to be “attractive” to international investors.

We need a new culture of social and labor relations, to avoid social upheaval and create an investment environment in which every investor can count on a highly skilled workforce and a better working environment.

We need a new culture of social and labor relations, to avoid social upheaval and create an investment environment in which every investor can count on a highly skilled workforce and a better working environment

You told me you started working on this legislation as a majority MP and in the process you left moved to the opposition. Do you think it is realistic that you can rally enough support? And talking about social partners, how is the business community taking this?

Yes, I started working on this legislation a year ago, when I was a member of the majority but in November last year I left the ruling party, but remained a part of the negotiations and enjoyed some support among the leadership of the majority.

This draft legislation is signed by influential members of the ruling party and I do hope we manage to gain bipartisan support. But this is not a personal issue. During the drafting process, I worked closely with the Minister of IDP, Labor, Health and Social Affairs, Ekaterine Tikaradze. Of course, not everyone is a convert to a European-type social dialogue and much will depend on the Prime Minister’s, Giorgi Gakharia, position. This legislation is in many respects a litmus test for him, as it is his responsibility to ultimately strike a balance between workers rights and business interests. In the long run, if we do want to follow a European political trajectory, which should see that these two interests coincide, or should be made to coincide.