12.01.2015 / 18:50

How Georgians’ salaries increased since 1970

According to Georgia’s National Statistics Office, in 1995 the average salary was 13.5 GEL, when the lari officially became the country’s national currency, while today it is 773 GEL. However, it’s also true that when we gained independence, products in Georgia were cheap, but then inflation hit the country hard.

Ambebi.ge sat down with coin collector and Doctor of History Niko Javakhishvili to find out how inflation has affected the average Georgian and whether salaries have actually increased so substantially.

- Let’s first talk about Georgia’s Democratic Republic of 1918-21. Georgia went through hard times in those days, with many Georgians in poverty; however, unlike Russia, Azerbaijan and Armenia, Georgia’s economic standing was far more stable. When Georgia joined SU, the value of Georgian maneti was much higher than that of the currencies of other states. Georgia was a transit country; Republics of Central Asia purchased European goods via Poti and Batumi. Value-wise, the Georgian currency was worth 25 times more than a Russian ruble.

- According to Georgia’s National Statistics Office, the average salary kept increasing from 1970 to 1991. Was life really improving then?

- Inflation in Georgia was commonplace in those days. Depreciation of our currency became apparent from the 1980s, since the USD was gaining value on the black market. Official exchange rate of 1 USD was 0.6 maneti; however, its unofficial exchange rate was much higher. In some Moscow shops, you could buy foreign goods at a rather favorable price if you paid for them in dollars. You could not manage this with SU currency. This already means that Georgia was in crisis back then. People’s salaries increased, but products became more expensive as well.

The country was in a desperate situation. Oil was cheap, utility prices were minimal. However, if you wanted to buy decent clothes, you had to pay big money. In 1960-70s, it became apparent that the country could not meet the people’s requirements.

-In 1991, the salary was 270 maneti, while in 1992, it increased to 1,528.

- The depreciation of Georgian currency picked up speed later. In 1991, hyperinflation hit the state. Then they introduced a transitional form of money, followed by introduction of the lari, which managed to more or less maintain its standing in the country, finally becoming a rather stable currency.

The GEL was much more stable before 1998, it started depreciating only later. This tendency continued.

For example, according to GeoStat’s official data, an average monthly salary of 113 GEL is 773 GEL today.

- Of course, products’ prices have increased. There are no big changes when it comes to USD, but I remember that it was possible to buy a pig for 25 GEL 15-20 years ago while today it is impossible to do the same, as it costs approximately 100 GEL. Prices have tripled and even quadrupled. Products that cost 100 GEL back then cost 300 GEL now. Salaries have also increased. Products were cheap before, but people had no income. Pension was 25 GEL. However, the global trend tends to become better. People now have salaries, family members started working. Likewise, demands have also increased. Earlier, satisfying basic demands was all they could do. People thought about surviving, but today we think about development. Naturally, it is better.

- What will happen to GEL exchange rate in the future? Will inflation increase or not?

There is a world crisis. Even leading currencies such as the Euro and USD have problems. Time has confirmed that those who had invested their capital in real estate ended up profiting. Even gold has not been successful, as its price started falling lately. Presumably, everything will be fine in the future; it’s just that the people forgot that there was no electricity, gas or access to other modern conveniences not so long ago.

Ambebi.ge offers you statistical data from Georgia’s National Office that shows how the average salary changed in Georgian from 1970 to 2013.

1970 – 106.1 maneti

1975 – 118.9 maneti

1980 – 145.2 maneti

1985 – 167.6 maneti

1986 – 170.6 maneti

1987 – 177.2 maneti

1988 – 186.9 maneti

1989 – 197.7 maneti

1990 – 214.0 maneti

1991 – 270.3 maneti

1992 – 152.8 maneti