The Average Wage is Increasing: What is Its Impact on the Average Employee?

According to data from the National Statistics Office of Georgia, in the third quarter of 2024, the average monthly nominal wage increased by 10.9%, reaching 2,057 GEL. This figure maintains a growth trend over the years; however, its real impact remains inconsistent. Significant differences are observed based on gender and economic activities. The average wage for men was 2,451 GEL, which is significantly higher than the average wage for women, which stood at 1,651. GEL. Although wages increased annually for both genders, gender inequality remains visible and is mainly tied to sector-specific characteristics. Overall, the highest wages were recorded in sectors such as information and communication (3,977 GEL), construction (3,198 GEL), and financial and insurance activities (3,187 GEL). Despite this growth, for many employees, the improvement is barely noticeable, which can be explained by a combination of various factors.

One of the key factors is inflation, which directly impacts the purchasing power of the population. While inflation in 2024 stands at a relatively low rate of 1.3%, during the previous few post-COVID years, inflation was particularly high, significantly reducing the real effect of wage growth. For the average consumer, an increase in wages delivers less benefit than the numbers suggest, as rising costs for food, utilities, and transportation quickly consume this additional income. For example, although the average wage has risen to 2,057 GEL, the real improvement in purchasing power remains limited when measured against the speed of price increases.

It is also essential to consider the difference between average and median wages. The average wage creates a distorted picture because individuals with higher incomes skew the overall figure upwards, hiding the reality of lower earners. In 2023, for example, the average wage was 1,767 GEL, while the median wage was only 1,238 GEL. This means that more than half of the population earned less than the median figure. The median wage is a better indicator of what the “average employee” actually earns, whereas the average wage provides a statistical illusion. As a result, while wage dynamics appear positive, rising inequality keeps a significant portion of the population in the low-income bracket.

Taxes also play a substantial role in comparing nominal and real wages. Official data on wage growth does not account for income taxes. In Georgia, the 20% income tax significantly reduces take-home pay. For instance, from an average wage of 2,057 GEL, employees receive only around 1,645 GEL after taxes, further exacerbating the gap between statistical figures and real earnings. This factor is particularly severe for middle- and low-income earners, for whom the nominal wage increase provides little relief due to tax deductions.

Ultimately, despite the upward trend in wages, the perception of growth among the population varies greatly. Inflation, taxes, and the low level of the median wage significantly hinder real improvement. At the same time, gender and sectoral inequalities highlight that wage increases appear positive only statistically but fail to translate into tangible improvements for the majority of employees.