the economic effects of labor market regulations georgia survey results – brief overview

7/28/2019 The Economic Effects of Labor Market Regulations Georgia Survey Results Brief Overview

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The project is implemented in the framework of The East-West Management Institutes (EWMI) Policy, Advocacy, and Civil Society

Development in Georgia (G-PAC) Program, funded by United States Agency for International Development (USAID).

The study is made possible by the generous support of the American people through the USAID.

The content is the responsibility of the PMC Research Center and do not necessarily reflects the view of USAID, the United States

Government, or EWMI.

ANNEX #1 Survey Results Brief Overview

1.1. Conclusion of the contract/Probationary period 1.1.1.Statement #1

Statement #1 - Labor contract shall be concluded in written form in case if laborrelations continues for more than three months.Figure #1 - The conclusion of an agreement in a written form and its possible impact on thecompany

Sample sizeN=251

2.6%

10.6%

59.2%

27.5%

0.1%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

87%

13%

1.7%

10.0%

26.0%

44.6%

17.7%

Very nagative

Nagative

No effect

Positive

Very positive62%

38%


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Annex 1Survey ResultsBrief OverviewPMC Research Center

2

1.1.2. Statement #2

Statement #2 - Employer has the right to conclude a fixed-term contract withemployee only in certain circumstances. In particular when the work is related to:

(1) performance of the work of particular volume; (2) seasonal work; (3) temporaryincrease of the volume of work (4) substitution of the employee, who is not

working temporarily, on the bases of suspension of labour relations (5) due to other

objective circumstances.

In any other case the employer has no right to conclude fixed term labour

contract.

Figure # 2 - Fixed term contract and the potential impact on the com pany

Full combination of selectiveN=251

1.1.3.Statement #3Statement #3 In case of collective agreement the employer has no right toconclude individual contract with the employee for the same position, with worse

contract term than provided in collective agreement

Figure # 3 - Collective agreement and its possible impact on the com pany

2.5%

19.6%

68.1%

7.2%

2.6%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

75%

22%

1.4%

16.8%

24.6%

52.5%

4.7%

Very negative

Negative

No effect

Positive

Very positive57%

18%

4.2%

30.7%

56.2%

8.0%

0.9%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

64%

35%

2.6%

32.6%

26.5%

34.4%

3.9%

Very negative

Negative

No effect

Positive

Very positive38%

35%


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3

Sample size N=251

1.1.4.Statement #4Statement #4 In case of collective agreements employer, within the frame ofcompanys material and financial capacity, is obliged to provide trade unions withconditions necessary for their operation (provide premises, equipment,communication means) at companys own expenses.

Figure # 4 - Collective agreement and its possible impact on the com pany

Sample sizeN=251

1.1.5.Statement #5 Statement #5 - An employer shall reimburse the probation period. The amount ofreimbursement shall be determined by agreement between employer and

employee.

Figure # 5 - Probationary period and its possible impact on the com pany

Sample sizeN=251

7.2%

45.3%

40.7%

3.7%

3.1%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

44%

53%

6.3%

41.5%

21.9%

26.5%

3.8%

Very negative

Negative

No effect

Positive

Very positive30%

48%

2.1%

17.0%

63.4%

15.6%

1.9%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

79%

19%

1.2%

15.1%

25.6%

45.2%

12.9%

Very negative

Negative

No effect

Positive

Very positive 58%

16%


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4

1.1.6. Expected impact of the initiated amendments, evaluationbased on all statementsFigure 6 expected impact of the initiated amendments on the company

Sample sizeN=251note: total responses are more than 100 %, because more than one answer was permitted

Figure #7 measures taken by the com pany in case of changes/problems

note: total responses are more than 100 %, because more than one answer was permitted

10.5%

9.1%

29.2%

47.8%

13.1%

Additional staff will be required

Legal costs will increase

Administrative costs will increase

Nothing will change

I dont know

Will reduce office expenses

Will reduce employee benefits

Will reduce salaries

Will reduce employees

Will abolish the bonus system

Will reduce the corporate event costs

Will refrain from requiring new staff

Will reduce marketing/PR costs

Won't change anything

Do not know

15.8%

7.5%

18.0%

18.5%

15.5%

15.9%

25.0%

13.3%

8.4%

16.7%


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5

1.2.Overtime Work1.2.1.Statement #6

Statement 6 - Employees shall work for no more than 40 hours per week, excludingbreaks and holidays. Working more than 40 hours is considered as overtime work.

Figure # 8 Definition of overtime definition and its potential impact on the com pany

Samle sizeN=2511.2.2.Statement #7

Statement #7 - An employer shall reimburse employee additional overtime work orprovide him/her with an additional vacation time.

Figure #9-Compensation for overtime work and its potential impact on the company

Sample sizeN=251

1.2%

20.4%

60.7%

15.4%

2.3%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

76%

22%

2.7%

20.6%

26.6%

38.7%

11.4%

Very negative

Negative

No effect

Positive

Very positive50%

23%

0.6%

15.4%

69.5%

13.8%

0.7%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

83%

16%

1.4%

18.3%

22.8%

47.1%

10.4%

Very negative

Negative

No effect

Positive

Very positive57%

20%


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6

1.2.3.Statement #8Statement #8 - In case of employee dismissal, if s/he has unused vacation, anemployer shall compensate it at his own expanses, proportionally to labour

relations.

Figure # 10 Compensation for unused vacation and its potential impact on the company

Sample sizeN=2511.2.4. Expected impact of initiated amendm ents taken into consideration all statementsFigure # 11 The expected impact of initiated amendm ents on the company

Samle size N=251note: total responses are more than 100 %, because more than one answer was permitted

3.9%

19.5%

65.7%

8.3%

2.6%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

74%

23%

2.3%

22.0%

20.5%

48.2%

7.0%

Very negative

Negative

No effect

Positive

Very positive

55%

24%

31.6%

5.6%

12.4%

52.9%

0.1%

0.1%

0.7%

6.1%

Salary expenses will increase

Legal expenses will increase

Administrative expenses will increase

Nothing will change

The number of staff will increase

Some expanses will be balance

Refused to answer

Do not know


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7

Figure # 12 - measures taken by the com pany in case of changes/problems


Will reduce office expenses

Will reduce employee benefits

Will reduce salaries

Will reduce employees

Will abolish the bonus system

Will reduce the corporate event costs

Will refrain from requiring new staff

Will reduce marketing/PR costs

Will do nothing

Will stop activities

Do not know

15.5%

6.8%

26.6%

14.4%

20.2%

24.1%

25.0%

18.1%

15.8%

0.5%

14.4%


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8

1.3.Employm ent contract suspension/termination

1.3.1.Statement #9Statement #9 an employer shall not dismiss an employee but suspend the labour

relationships if an employee is temporarily unable to work, for not longer than 40

calendar days consecutively and 60 calendar days in total, during 6 months

Figure # 13 Termination of employee contract in case of temporary incapacity and its possibleimpact on the company

Sample sizeN=251

1.3.2.Statement #10 Statement #10 The employer can terminate labour contract with an employeeonly in case of flagrant violation, however if there is no flagrant violation and the

employee violated any of obligations, in order to dismiss the employee, the

employer should already have used any disciplinary measure against him/her (for

example warning)

The employer shall not dismiss the employee for ordinary violation, if warning is

not used at least once.

1.2%

27.4%

61.3%

9.4%

0.7%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

71%

29%

2.7%

28.7%

23.4%

38.8%

6.4%

Very negative

Negative

No effect

Positive

Very positive45%

31%


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9

Figure # 14 Termination of em ployee contract in case of flagrant violation and its possible impacton the company

Sample sizeN=2511.3.3.Statement #11

Statement # 11 The employee has right to request for written justification ofhis/her dismissal, which should be issued by the employer within 7 calendar days

upon submission of the request.

The employee has right to appeal the decision on termination of labour contract at

the Court, within 30 calendar days upon the receipt of written justification

Figure # 15 Employees right to appeal against his dismissal in court and its possible impact on thecompany

Sample sizeN=251

2.0%

13.9%

71.6%

12.6%

Do not agree at all

Do not agree

Agree

Completely agree

84%

16%

1.7%

17.1%

28.6%

45.5%

7.1%

Very negative

Negative

No effect

Positive

Very positive53%

19%

4.5%

19.7%

68.7%

6.9%

0.2%

Do not agree

Do not agree

Agree

Completely agree

Do not know

76%

24%

4.1%

24.9%

28.3%

39.2%

3.5%

Very negative

Negative

No effect

Positive

Very positive

43%

29%


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10

1.3.4.Expected impacts of chan ges taking into consideration all statementsFigure # 16 expected impacts of changes on the company


Figure # 17 measures taken by the com pany in case of changes/problems


17.5%

16.9%

10.8%

55.0%

0.1%

0.7%

8.1%

Additional staff would be required

Legal costs would increase

Administrative costs would increse

Nothing would change

Company costs would increase

Resufesd to answer

I do not know

We would reduce office expenses

We would reduce employee benefits

We would reduce salaries

We would reduce employees

We would abolish the bonus system

We would reduce the corporate event costs

We would refrain from requiring new staff

We would reduce markeing/PR costs

We would do nothing

We would accomplish all of the above

Refused to answer

Do not know

17.4%

8.8%

8.4%

11.6%

17.3%

24.7%

23.6%

17.9%

9.4%

0.4%

2.1%

20.1%


11/17


11

1.4.Mass dismissal1.4.1.Statement #12

Statement #12 In case if the employer wants to implement collective dismissal(dismiss at least 50 employees within 15 calendar days) s/he shall notify the

ministry in written form. The term for notification depends on number of

employees in the organization and ranges between 15-30 days. If the management

of the company with 100 500 employees wants to dismiss 50-100 employees, the

Ministry shall be notified 15-30 days prior.

Figure # 18 mass dismissal and its possible impact on the com pany

Sample size N=251

Figure # 19 Business leaders attitude to increasing the role of State in employee-employerrelations

Sample sizeN=251

13.5%

35.6%

44.7%

4.4%

1.8%

Do not agree at all

Do not agree

Agree

Completely agree

Do not know

49%

49%

13.0%

31.3%

22.5%

29.9%

3.3%

Very negative

Negative

No effect

Positive

Very positive33%

44%

8.2%

29.2%

22.6%

32.1%

0.5%

0.7%

6.6%

Very negative

Negative

Neutral

Positive

Very positive

Refused to answer

Do not know

37%

33%


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12

1.5.Dismissal1.5.1.Statement #13

Statement #13 - After termination of labour relations, the use of experience obtainedduring employment period by the employee for benefit of competitor employer is

prohibited by the Law.

Figure # 20 Dismissal and its possible impact on the com pany

Sample size N=251Figure # 21 - The expected impact of changes on the company


7.0%

27.8%

58.0%

7.2%

Do not agree at all

Do not agree

Agree

Completely agree

66%

35%

6.9%

29.0%

25.6%

33.5%

5.1%

Very negative

Negative

No effect

Positive

Very positive

39%

36%

36.0%

8.6%

59.6%

0.7%

1.6%

The risk of flowing the information would increase

Internal procedures would complicate

It would not be dangerous for the company

Terms,how long it is forbidden to use the knowledge

for the other companies,would be set

Do not know


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1.6.2.Statement #15Statement #15 The Ministry has right to get involved in collective dispute asmediator at own initiative, without the parties request, in order to support the

parties in reaching agreement.

Figure # 24 Government interference in collective disputes and its possible impact on thecompany

Sample size N=2511.6.3.All the possible impact of changes in total provisionsFigure # 25 - The possible impact of changes on the company

Sample size N=251note: total responses are more than 100 %, because more than one answer was permitted

19.6%

52.8%

24.1%

1.2%

2.3%

Absolutely do not agree

Do not agree

Agree

Absolutely agree

Do not know

25%

72%

19.2%

44.2%

18.5%

17.0%

1.1%

Very negative

Negative

No effect

Positive

Very positive 18%

63%

29.6%

18.5%

35.9%

5.2%

20.6%

5.6%

0.1%

0.7%

0.7%

7.4%

The probability of corruption would increase

Manufacturing process would interrupt

Business environment would deteriorate

Business environment would improve

Employee rigths would be more protected

nothing would change

Excessive bureaucracy

Changes would positively reflect on both sides

Refused to answer

Do not know


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15

1.7.Strike/Lockout1.7.1.Statement #16

Statement #16 The employees or employers have right for strike or lockout onlyafter 21 days upon notifying the Ministry in written. Conciliation procedures will be

conducted within these 21 days, in which the mediator nominated by the minister

can also participate.

Figure # 26 The right of strike/lockout and its possible impact on the com pany

Sample sizeN=251

1.7.2.Statement #17Statement #17 Before starting strike or lockout the parties shall not later than 3days prior to strike or lockout notify the Minister in written form regarding place

and nature of strike or lockout

Figure #27 The right of strike/lockout

Sample sizeN=251

11.4%

41.0%

42.6%

3.7%

1.3%

Absolutely do not agree

Do not agree

Agree

Absolutely agree

Do not know

46%

52%

12.5%

37.0%

18.1%

29.3%

3.1%

Very negative

Negative

No effect

Positive

very positive

32%

50%

13.80%

36.50%

43.70%

3.50%

2.50%

Absolutely agree

Do not agree

Agree

Absolutely agree

Do not know

47%

50%

12.40%

35.00%

21.40%

28.80%

2.40%

Very negative

Negative

No effect

Positive

Very positive

31%

47%


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16

1.7.3. All the possible impact of changes in total provisions

Figure #28 Position about increasing the role of the government in the same relations

Sample sizeN=251

1.8.General assessmentFigure # 29 expected impact on the business environment and creating new jobs

Sample sizeN=251

Annex 1Research Methodology

11.9%

32.5%

20.4%

29.3%

1.5%

4.4%

Very negative

Negative

Neutral

Positive

Very positive

Do not know

44%

31%

Very negative

Negative

No effect

Positive

Very positive

Do not know

7.5%

25.6%

12.5%

32.7%

2.6%

19.1%

9.9%

21.2%

19.6%

3.3%

21.0%

33%

35%

31%

28%

3.3%


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Quantitative research was conducted using face to face interviews. 251 managers of business organizations

were interviewed (See Table 1: Description of Research Methodology).

Note: Data were weighted according to enterprise size.

Table1 Description Research Methodology

Research method Quantitative research

Research technique Face to face interview

Target sampleManagers of small, medium and large-sized

enterprises

Research area Tbilisi

Sample size 250 enterprises

Sampling method Quota sampling

Sampling error 6-7%

Average length of interview 20 minutes

Period of Research April 2013

Overall, 1339 enterprises were contacted by telephone. 315 of them agreed to be interviewed. Face to face

interview was conducted with 251 organizations. Enterprises were grouped in a following way: (See Table 2:

Group of enterprises)

Table 2Research Methodology

Non-Financial Financial

Small-sized enterprise 97 3

Medium-sized enterprise 72 3

Large-sized enterprise 73 3Total 242 9

Interviews were conducted mainly with Executive/Managing Directors (73%), relatively small

number of respondents were Financial and Operational Directors (11%-11%). Presidents, Deputy

Directors and HR Directors were also interviewed (4%).

83% and 13% of participating organizations are limited liability companies and individual

entrepreneurs relatively. Only a small number of joint stock companies and general partnerships

were interviewed (4%).

More than half of enterprises interviewed by telephone are service providers (54%), every third of

the respondent companies operates in commerce sector (29%), only a small number of manufacturing

and construction companies participated in survey (7-8%). Interviews were conducted with financial

organizations in compliance with quota sampling methodology.

the economic effects of labor market regulations georgia survey results – brief overview

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