Wages and Prices
Until 1991 Georgia's price system and inflation rate
generally coincided with those of the other Soviet republics.
Under central planning, prices of state enterprise products were
fixed by direct regulation, fixed markup rates, or negotiation at
the wholesale level with subsequent sanction by state authority.
The prices of agricultural products from the private sector
fluctuated freely in the Soviet system.
Once it forsook the artificial conditions of the Soviet
system, Georgia faced the necessity for major changes in its
pricing policy. Following the political upheaval of late 1991,
which delayed price adjustments, the Georgian government raised
the prices of basic commodities substantially in early 1992, to
match adjustments made in most of the other former Soviet
republics. The price of bread, for example, rose from 0.4 ruble
to 4.8 rubles per kilogram. By the end of 1992, all prices except
those for bread, fuel, and transportation had been liberalized in
order to avoid distortions and shortages. This policy brought
steep inflation rates throughout 1993.
Beginning in 1991, a severe shortage of ruble notes
restricted enterprises from acquiring enough currency to prevent
a significant drop in real wages. In early 1992, public-sector
wages were doubled, and every Georgian received an additional 40
rubles per month to compensate for the rising cost of living.
Such compensatory increases were far below those in other former
Soviet republics, however. In 1992 the Shevardnadze government
considered wage indexing or regular adjustment of benefits to the
lowest wage groups as ways of improving the public's buying
In mid-1993 the majority of Georgians still depended on state
enterprises for their salaries, but in most cases some form of
private income was necessary to live above the poverty level.
Private jobs paid substantially more than state jobs, and the
discrepancy grew larger in 1993. For example, in 1993 a secretary
in a private company earned the equivalent of US$30 per month
while a state university professor made the equivalent of US$4
Data as of March 1994