Monday, August 19, 2013

Material deprivation and quality of life in the South Caucasus

Quality of life and life satisfaction has been a central topic in social science research, as well as an increasingly popular area of interest for many policy makers. Balanced development is especially important in developing societies where political and economic changes can impact social inequality, as well as material wealth and health. This post uses data from the Caucasus Barometer (CB) 2012, as well as the Life in Transition (LIT) 2010 survey (carried out jointly by the European Bank for Reconstruction and Development and the World Bank) to explore issues detrimental to the general quality of life in the South Caucasus region. These issues include the material situation of households (as reflected in the consumption of goods and services), and its impact on health-related indicators and general life satisfaction across the region.

According to the 2010 LIT survey, the average amount of monthly savings was 1628 dram ($4) in Armenia, 7 manat ($9) in Azerbaijan and 10 lari ($6) in Georgia. However, the standard deviation from the mean was high for all 3 countries, which means there were substantial differences between the amounts of money saved by different individuals. This is also reflected in relatively high values of the GINI coefficient for income in these countries. The coefficient measures inequality in income distribution within a population. Across the region the values of the GINI index were 31.3 for Armenia (2010), 33.7 for Azerbaijan (2008) and 42.1 for Georgia (2012), as reported by the World Bank.

Unequal income distribution and material deprivation are also apparent in differences in food consumption across all households included in the CB 2012. The survey asked about which of the following products households limits due to financial reasons: bread and pasta, butter and milk, poultry, beef, pork, fish, fruit and vegetables, potatoes, sweets and chocolates. From this list, 80% of households in Armenia, 66% in Azerbaijan and 74% in Georgia cut down on the consumption of at least one type of food products due to financial constraints.

In terms of the purchases of goods and services such as electricity and gas, slightly more than half of Armenians (55% and 58%, respectively) and Georgians (52% and 55%, respectively) limit their consumption of these items due to financial reasons. Azerbaijanis seem slightly less likely to do so with 49% cutting down on electricity or gas use, yet the difference between the values reported for Azerbaijan and Georgia is within the margin of 3% error. 

Material deprivation, both in the case of limited food consumption or utilities (electricity, gas) is significantly higher in the rural areas. These differences are highest in Armenia and lowest in Azerbaijan, where the difference between material deprivation in the capital and other urban areas is non-significant. 

Living conditions, including material difficulties, can have a substantial impact on overall life satisfaction. An examination of the effect of food limitations on life satisfaction, while controlling for type of settlement (urban, rural and capital), gender, and age shows that across all three countries the necessity to cut down on food consumption has a significant negative impact on the general quality of life. Multivariate regression analysis shows that a cut in each additional food item results in a significant drop in the average life satisfaction level. No cutback on food is used as a reference category in the model, while the other options included 1 to 9 indicating the food items. Gender is not found to affect the level of life satisfaction in any of the countries. Settlement type has an impact in Armenia and Azerbaijan where people living in the capitals declare, on average, significantly higher levels of life satisfaction than in the countryside.

Life satisfaction is not the only variable strongly related to material conditions. Depending on the economic situation of the household (e.g. those that need to limit food consumption, or other expenditures), the subjective assessment of individual health varies. People from poor households are significantly more likely to consider themselves to be in very poor or poor health. Causality is not established here though as poor health might be both the result as well as the reason for material deprivation.

The relationship between health and material deprivation is not a surprise and it has been well-researched in the social science. However, it deserves strong emphasis, taking into account the high number of households that needs to restrict their food and utilities consumption in the South Caucasus.

Monitoring changes in the material situation of households is thus of major importance. Analysis of a LIT 2010 question “My household lives better nowadays than around 4 years ago” shows substantial regional differences in this respect. According to the subjective individual assessment, the quality of life in Armenia and Georgia seems to have deteriorated rather than improved compared to around 4 year ago, whereas in Azerbaijan the assessment of the change in the household situation was more positive. 

As the most recent LIT data come from 2010, the situation and standards of living in Armenian, Azerbaijani and Georgian households might currently be different. Yet, as the CB 2012 shows, most households still face material problems that force them to limit consumption of basic products such as food. Since there is a significant positive relationship between the financial situation of a household and individual health and wellbeing, all of these factors require special attention and long-term monitoring in the region.

For more information on the current social and economic situation in the South Caucasus see our online database

Monday, August 12, 2013

Gender inequality in the South Caucasus

Societies in the South Caucasus are conservative with respect to gender roles within and outside the family. This conservatism also affects men and women in the labour market which is now facing many problems in the region, including high unemployment and low wages (see our previous blog on this topic). The realm of paid work has been subject to substantial gender inequality both in terms of labour force participation and the employment profile in Armenia, Azerbaijan and Georgia. The situation, however, seems to be changing within some areas. According to the 2012/2013 Wages and Equitable Growth report by the International Labour Organization (ILO), wage gaps between genders in the region have declined over the past few years. Other disparities are still apparent, such as the paid-versus-unpaid work ratio. Time-use data collected by the National Statistical Service of Armenia in 2008 (thus far the only country in the South Caucasus where such a study was conducted) show significant differences in the time-spent patterns of men and women, one of them being a grossly uneven share of domestic work. 

According to the CB 2012, 35% of women in Armenia, 26% in Azerbaijan and 35% in Georgia are working – either as employees, or self-employed (excluding pensioners, students and disabled, who remain outside of the labour force). Around twice as many men in Armenia (74%), in Azerbaijan (68%), and in Georgia (56%) have paid jobs.

In the South Caucasus, women’s participation in the labour force is substantially lower than men’s, but the realm of unpaid work remains a female domain. The virtually non-regulated sphere of domestic activities remains subject to great gender inequality. For example, time-use data collected in 2008 by the National Statistical Service of the Republic of Armenia (ARMSTAT) on a representative sample of the Armenian population tracked class and gender differences in lifestyles and behaviour. The data covers all activities taken up over the day (recorded in a time-use diary form) and shows substantial disparities in the way men and women spend their time over the average weekdays. This includes their participation rates in paid employment and unpaid (mostly domestic) work. 

Figure 1: How men in Armenia spend time during the weekdays

Figure 2: How women in Armenia spend time during the weekdays

Source: Armstat/ National Statistical Service of the Republic of Armenia) Report on Time Use Sample Survey in the Republic of Armenia, 2008. 

Lower involvement in paid work comes together with a substantial share of unpaid domestic labour being done by women. This work is not accounted for in official statistics, yet it is an important aspect of the labour market. 

The very structure of female employment in the region is also substantially different from that of men. Women are most likely to work in state-owned organizations, especially in the case of Azerbaijan, while men are more likely to be self-employed. The number of men working in small or medium enterprises (SME) and similar size organizations are also higher than for women, except for in Georgia where they are close to equal.  

Differences between genders in the labour market also have far-reaching consequences for the financial resources available to women. In general, women earn less than men, but the gender pay gap (i.e. the difference between the average wage of men and the average wage of women) is decreasing according to the ILO’s 2012/2013 report, Wages and Equitable Growth. Change in the gap is the average of the gap between 2008 and 2011 minus the average of the gap between 1997 and 2007. The decrease in the pay gap between these two time periods in the South Caucasus has been one of the highest in the world. Azerbaijan ranks first among a list of 52 countries with the highest decrease in gender pay gap. Armenia ranks second and Georgia ranks tenth. Despite the positive trend, this decrease might be due to deterioration in the situation for men in the labour market rather than due to an improvement in the position of women. In light of the employment problems in the region, the former is highly plausible. Nonetheless, in terms of relative values, the trend is unambiguous. 

Figure 3: Gender pay gap (GPG), 1999–2007 and 2008–2011

Source: International Labour Organisation 2012/2013 report on Wages and Equitable Growth. 

To a certain extent GPG across the region is also reflected in the CB 2012 data on the subjective perception of fairness of compensation for work between men and women. Low compensation seems to be the prime reason for dissatisfaction regardless of gender. Most people are dissatisfied in Armenia and Georgia which have the lowest wages. 75% of women in Armenia and 53% of women in Georgia claim their compensation is not fair. The respective numbers are 62% for men in Armenia and 46% for men in Georgia. Women in Armenia and Georgia are only slightly more likely than men to believe their compensation is not fair. The situation in Azerbaijan is just opposite – a slightly higher percentage of women (93%) than men (88%) say they are satisfied with their remuneration. It is important to point out that average wages in Azerbaijan are also substantially higher than in Armenia and Georgia, especially as Azerbaijan is a middle-income country.

Compared to men, the number of women having a paid job is still relatively low in the South Caucasus, and most of the domestic (unpaid) work is done by women. Yet, the GPG has decreased over time, possibly also due to fewer men having well-paid jobs because of the difficult economic times. 

For more information on social differences within the South Caucasus region, see our online database.