Jobs for Shared Prosperity

Transcription

1 continues to be crucial for economic well-being and social cohesion in the Middle East and North Africa. Jobs for Shared Prosperity: Time for Action in the Middle East and North Africa uses a jobs lens to systematically analyze the dynamics of private sector, labor market institutions, and skills and training systems. It shows how several underlying distortions prevented a more productive use Public Disclosure Authorized Public Disclosure Authorized Jobs for Shared Prosperity I n the aftermath of the Arab Spring, the question of jobs unfairness and exclusion. This report proposes medium-term policy options that could promote the robust and inclusive growth needed to tackle the structural employment challenge for the region. Just as important, it discusses the political economy mechanisms that could trigger this reform process. ISBN SKU Public Disclosure Authorized Time for Action in the Middle East and North Africa labor market outcomes, with an associated sense of Public Disclosure Authorized of human capital and led to inefficient and inequitable v4 Jobs for Shared Prosperity Time for Action in the Middle East and North Africa

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5 Jobs for Shared Prosperity Time for Action in the Middle East and North Africa Roberta Gatti, Matteo Morgandi, Rebekka Grun, Stefanie Brodmann, Diego Angel-Urdinola, Juan Manuel Moreno, Daniela Marotta, Marc Schiffbauer, and Elizabeth Mata Lorenzo

6 2013 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC Telephone: ; Internet: Some rights reserved This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties. The risk of claims resulting from such infringement rests solely with you. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) creativecommons.org/licenses/by/3.0. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution Please cite the work as follows: World Bank Jobs for Shared Prosperity: Time for Action in the Middle East and North Africa. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 Translations If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: ; pubrights@worldbank.org. ISBN (paper): ISBN (electronic): DOI: / Cover design: Bill Pragluski, Critical Stages. Cover photos: Top left, Dana Smillie / World Bank; all others, Arne Hoel / World Bank. Library of Congress Cataloging-in-Publication Data Gatti, Roberta. Jobs for shared prosperity : time for action in the Middle East and North Africa / Roberta Gatti, Matteo Morgandi, Rebekka Grun, Stefanie Brodmann, Diego Angel-Urdinola, Juan Manuel Moreno, Daniela Marotta, Marc Schiffbauer, and Elizabeth Mata Lorenzo. pages cm Includes bibliographical references. ISBN (alk. paper) ISBN (ebk.) 1. Middle East Economic conditions 21st century. 2. Africa, North Economic conditions 21st century. 3. Labor market Middle East History 21st century. 4. Labor market Africa, North History 21st century. 5. Manpower policy Middle East. 6. Manpower policy Africa, North. I. Title. HC G dc

7 Contents Foreword xix Preface xxi Acknowledgments xxiii Abbreviations xxv Main Messages xxvii Executive Summary xxix Overview Introduction Labor markets in MENA: Inefficient and inequitable Who are the most affected by the low-productivity equilibrium in labor markets? Where are the barriers? Is growth a problem? The private sector: A dynamic based on privilege A regulatory environment that reinforces the status quo in the labor market Skill gaps and asymmetric information in job search What policy options? The political economy of inclusion Conclusion: Time for action in the Middle East and North Africa Notes References v

8 vi CONTENTS PART 1 Labor Markets in the Middle East and North Africa: A Low-Productivity Equilibrium Inefficient and Inequitable Labor Markets: A Low-Productivity Equilibrium Main findings Labor markets in MENA: Key facts MENA labor markets: Inefficient and inequitable Notes References Women, Youth, and the Working Poor Main findings Women Youth The Working Poor Notes References PART 2 Where Are the Barriers? Introduction A Long-Term View of MENA s Economies and Labor Markets Main findings Introduction A long-term view of growth and economic trends Contribution of growth to employment generation Demographic challenges An unfinished reform agenda Annex 3A Macroeconomics Annex 3B Demographics Notes References Privileges, not Competition: The Dynamics of the Private Sector in the Middle East and North Africa Main findings MENA s lack of economic dynamism Lack of creative destruction Firm dynamics and employment creation Explaining the lack of economic dynamism in MENA The employment price of privilege Notes References MENA s Institutional Framework: Reinforcing the Status Quo Main findings Insiders and outsiders in MENA s labor markets How does segmentation between insiders and outsiders arise? Why does segmentation persist in MENA? What happens if segmentation persists? The unsustainable status quo

9 CONTENTS vii Notes References Unemployable and Unemployed: Skills Gaps and a Meritocracy Deficit in MENA Main findings Becoming employable in MENA: A matter of educational quality and relevance Barriers to employability: Why are there skill gaps? Public sector as the main client of the educational and training system A logic of selection over a logic of learning The second transition: From employability to employment Importance of informal channels Employers and informal hiring networks A meritocracy deficit? Role of public employment services in job matching Role of active labor market programs in facilitating the transition to work The employability challenge Notes References PART 3 Policy Options Introduction Aligning Incentives to Invest, Innovate, and Generate Employment Main findings Introduction Strategies to remove distortions that repress labor demand Strategies for competing and investing Facilitating innovation for high-productivity employment Sustaining low-skilled entrepreneurs and promoting the potential of the highly skilled Realigning the incentives for employment and productivity Notes References Regulatory Framework of the Labor Market: Overcoming Segmentation Main findings Segmentation in MENA s labor markets How much do labor regulations matter for job creation compared to private sector regulations? Towards more dynamic labor markets Notes References Educational and Training Systems: Realigning Incentives for Skills That Matter and Making Employability Count Main findings Overcoming skills gaps, mismatches, and unmeritocratic hiring practices Closing the information and knowledge gaps Replacing the logic of selection with a logic of learning A renewed partnership between educational and training systems and the private sector A role for active labor market policies

10 viii CONTENTS Skills as drivers of success in the labor market Annex Notes References Spotlight 1. An Overview of Policy Options and Their Sequencing References PART 4 The Road Ahead The Political Economy of Inclusion Main findings A complex legacy Revisiting the political economy of private sector dynamics Organized labor: Partners in and challengers of the status quo Challenges and opportunities in the post Arab Spring Enabling a broad reform process: Examples of successful transitions Including broad-based change in the political agenda Building stakeholder buy-in based on shared benefits of change Reforming for broad-based employment growth in a post Arab Spring MENA Leveraging new social forces for a renewed and inclusive social dialogue Improving access to data and information Generating credible interventions with early measurable gains Time for action in the Middle East and North Africa Annex Using data and dialogue to tackle a politically difficult reform: Social insurance in Jordan Notes References Boxes Appendix: Main Data Sources The dissimilarity index Women in MENA want to work Productivity gains and contribution to growth from early reforms in Tunisia Structural change and employment outcomes in the Arab Republic of Egypt, Jordan, and Morocco Employment miracles A.1 Factors contributing to higher total factor productivity The conventions collectives in Tunisia Perceptions of the main constraints to the education-to-work transition in the West Bank and Gaza Private sector involvement in skill development systems in the Arab Republic of Egypt, Jordan, and Tunisia TVET end-of-year examination examples from the Arab Republic of Egypt Transition paths in the Tunisian educational and training system Employers hiring practices in Jordan and the Arab Republic of Egypt Hiring criteria of headhunters and private recruitment firms Agricultural employment and subsidies in the Syrian Arab Republic

11 CONTENTS ix 7.2 Liberalizing entry into professions: Accounting in Morocco and Tunisia Jordan s pharmaceutical sector and trade reforms Improving financial access for women Liberalization, investment, and job creation: The telecom sector in MENA From emerging role models to innovation clusters: The experience of firms in Lebanon and Morocco The International University of Rabat Lebanon s Berytech Technology Park Diaspora-led intermediation of talent and entrepreneurship Common characteristics of successful research universities Enhancing university autonomy: The case of Shanghai Jiao Tong University Entrepreneurship training in Tunisia Wage reform in the Netherlands, 1980s Jordan NOW: The New Opportunities for Women pilot program Stakeholders perceptions of Jordan s new social insurance law on opening up employment opportunities for women Expanding child care options in India The Arab Regional Agenda on Improving Education Quality and the Regional Network for Education Research Initiative Career counseling and guidance: The example of Sweden Mechanisms for overcoming the equity challenge in tertiary education Don Bosco in Egypt Tunisian Association for Communication and Technology Introduction of a labor market information system in the United Arab Emirates Wage subsidy programs in Jordan and Turkey An employment guarantee scheme to build infrastructure in rural Maharashtra The impact of infrastructure investments on employment Supporting early childhood development and home care services in South Africa Social orders and economic management Structural reforms under broad-based politics: Turkey s Justice and Development Party in the 2000s Lessons from Turkey s reform in the 1980s Data access in the Russian Federation Labor market observatories in Poland Improving statistical capacity through regional peer learning: The MECOVI project in Latin America Improving learning through parents participation: Strengthening school councils in Morocco Figures O.1 Composition of the working-age population in MENA and two other regions, O.2 Rates of female labor force participation, by region, O.3 Youth unemployment rates in the Arab Republic of Egypt and Tunisia by education level, ages 15 29, O.4 Youth unemployment rates by region, ages 15 24, O.5 Work status of employed individuals in selected MENA economies,

12 x CONTENTS O.6 Expected wage by years of education in the Arab Republic of Egypt, 2006, and Jordan, O.7 Levels and trends in regional unemployment in Tunisia, O.8 Decomposition of the dissimilarity index by circumstance and effort for men ages in the Arab Republic of Egypt, Jordan, and Morocco, 2009 and O.9 Share of workers with high-paying or protected jobs among the working-age population in the Arab Republic of Egypt, Jordan, and urban Morocco, 2009 and O.10 Preference for public sector employment among youth ages in selected MENA economies, O.11 Percentage of individuals and households with desirable jobs in the Arab Republic of Egypt (2009) and Jordan (2010) O.12 A framework for interpreting the labor market disadvantage O.13 Youth NEET rates in selected MENA economies by education level, individuals ages 15 24, O.14 Unemployment rates in selected MENA economies by education level, individuals ages 15 24, O.15 Female participation in the labor force in five MENA countries, by education level, various years, O.16 Women s decision-making on whether they can work and labor force participation, by marital status and age, Morocco, O.17 Male-female wage gap in selected MENA economies, various years, O.18 Informality rate by quintile of per capita consumption in selected MENA countries, O.19 Probability of being in a poor household by education and geographic location among the employed population in Jordan, O.20 Education level of unskilled rural workers as a percentage of the working population, O.21 Five-year moving average of real GDP growth rates in GCC and in Non-GCC MENA countries, O.22 Total annual employment growth in selected regions of the world, O.23 Growth in employed and working-age population in non-gcc MENA countries, O.24 Changes in the composition of GDP in selected world regions, and O.25 Sectoral contribution to annual employment growth in a typical MENA country and other selected countries, average 2000s O.26 Private sector gross fixed-capital formation as a percentage of GDP in selected countries, average O.27 Structure of foreign direct investment in selected MENA countries and the EU, O.28 Average firm entry density for selected emerging economies, O.29 Relation between firm size and age in Brazil (2009) and Jordan (2006) O.30 Labor taxes and contributions as a percentage of base salary in world regions, O.31 Labor taxes and contributions as a percentage of base salary in MENA economies, O.32 Average employment shares in the public sector in MENA and selected comparator economies, averages 2000s

13 O.33 Percentage of labor force contributing to social security in MENA and other regions, O.34 Quality of education as measured by TIMSS and PISA, 2011 and O.35 Share of firms identifying inadequately educated workforce as a major constraint to growth, by region and selected countries, O.36 Mismatches in hard and soft skills of newly hired graduates in selected MENA countries, O.37 Distribution of university graduates by field of study in MENA economies, O.38 Perceptions of youth in selected MENA economies of the constraints to getting a job, O.39 World scores on proxies of meritocracy in hiring, O.40 Toward more and better-quality jobs in MENA O.41 Linking short-term measures to medium-term objectives Composition of the working-age population in the Middle East and North Africa, Latin America and the Caribbean, and Eastern Europe and Central Asia, Labor force participation rates of the working-age population in selected economies in MENA, by gender, Unemployment rates in various world regions, by age group and gender, Unemployment rates in MENA, by age, Unemployment rates by education in selected economies in MENA, Percentage of the unemployed by education in selected economies in MENA, Informality in MENA and other regions, Informality rates for selected non-gcc economies in MENA, Distribution of work status across regions, Distribution of employment status by educational attainment in selected economies in MENA, Work status of employed males in the Arab Republic of Egypt, Jordan, and Morocco by household per capita wealth and consumption quintile, Employment composition by sector in selected economies in MENA, Expected wage by years of education in the Arab Republic of Egypt, 2006, and Jordan, Preference for and attainment of public sector employment among youths ages in selected economies in MENA, Male-female wage differentials by sector in the Arab Republic of Egypt and Jordan, 2006 and Education and wage differentials among migrants and nationals in the United Arab Emirates, Levels and trends in regional unemployment in Tunisia, Decomposition of the dissimilarity index by circumstance and effort for men ages in the Arab Republic of Egypt, Jordan, and Morocco, 2009 and Decomposition of the dissimilarity index by circumstance and effort for women ages in the Arab Republic of Egypt, Jordan, and Morocco, 2009 and Share of workers with high-paying or protected jobs among the working-age population in the Arab Republic of Egypt, Jordan, and urban Morocco, 2009 and CONTENTS xi

14 xii CONTENTS 1.21 Percentage of individuals and households with desirable jobs in the Arab Republic of Egypt and Jordan, 2009 and Female participation in the labor force in three world regions by age, Unemployment rates by gender in selected economies in MENA, Educational specializations in countries in MENA, Male-female wage gap in selected economies in MENA, various years, Female participation in the labor force in selected countries in MENA by educational attainments, Main reason given by females ages in Morocco for not wanting to work, Female participation in the labor force, by marital status and number of infants in the household, in the Arab Republic of Egypt, Iraq, Jordan, and Tunisia, Women s decision making and labor force participation by marital status and age in Morocco, Female participation in the labor force, by employment status of the household head and spouse, in the Arab Republic of Egypt, Iraq, Jordan, urban Morocco, and Tunisia, Framework for interpreting the labor market disadvantage NEET and unemployment rates in selected economies in MENA for individuals ages Labor market status of NEET youth in selected economies in MENA, by gender, Gap between school and work for young men in the Arab Republic of Egypt, Jordan, Tunisia, and the West Bank and Gaza, Prevalence of refusing a job in selected economies in MENA, by educational level, Reason for refusing a job in resource-rich and resource-poor economies in MENA, by education and gender, Average self-reported reservation wages for males and females ages in Morocco, by educational level, Relation of reservation wages to actual wages by gender, males and females ages in Morocco, Male and female age cohorts by labor force status in the Arab Republic of Egypt, Percentage of youth ages that prefer private sector jobs and gap between youth and adult preferences for private sector employment in selected economies in MENA, Share of workers in the Arab Republic of Egypt, Jordan, and Morocco who live in poor households, by urban or rural location, Education level of unskilled rural workers as a percentage of the working population in selected economies in MENA, Prevalence of nonwage employment among rural unskilled workers in selected economies in MENA, Percentage of those entering entrepreneurship in selected economies in MENA because of no suitable job in the wage labor market, by educational level, Five-year moving average of real GDP growth rates in GCC and non-gcc MENA countries, Growth volatility in MENA and other regions, B3.1.1 Contribution of total factor productivity to growth in Tunisia,

15 3.3 Decomposition of growth in GDP adjusted for human capital in selected countries in MENA, 1990s and 2000s Changes in the composition of GDP in selected world regions, and Changes in the composition of GDP, excluding mining, in GCC Countries, to Unemployment rates in selected world regions, 1980s 2000s Employment creation in MENA by sector, Sectoral contribution to annual employment growth in a typical country in MENA and in Brazil, Indonesia, and Malaysia, average 2000s B3.2.1 Structural change in Morocco, B3.2.2 Structural change in the Arab Republic of Egypt, B3.2.3 Structural change in Jordan, Total annual employment growth in selected regions of the world, Growth in employed and working-age population in non-gcc countries in MENA, Demographic trends in MENA, Difference between GDP growth and GDP per capita growth, Arab Republic of Egypt and Morocco, Labor market developments in the Arab Republic of Egypt, Median age and dependency ratio in selected subregions in MENA, B3.3.1 Incidence of employment miracles by region, B3.3.2 Predictors of the incidence of employment miracles Trade restrictions in selected countries in MENA, Structure of foreign direct investment in selected countries in MENA, in China, and in the European Union, Private sector gross fixed-capital formation as a percentage of GDP in selected countries and regions, average A.1 Intensive and extensive margins of exports, excluding oil products, in various world regions, A.2 Main trends in selected macroeconomic indicators for MENA since the 1990s Evolution of the productivity content of exports in selected regions and countries in Asia and MENA, Knowledge economy innovation score and GDP per capita for selected world regions and countries in MENA, Average entry density for selected emerging economies, Firm turnover and sector growth in Moroccan manufacturing, Relationship between firm size and age in Brazil, 2009, and Jordan, Relationship between the contribution of net entry and incumbents to productivity growth Firm turnover and productivity growth in 24 industrial and developing countries, various years, Distribution of firms in Tunisia by size and share of employment, Labor productivity, wages, and firm size in Moroccan manufacturing, Employment growth in selected countries in MENA, Energy use per US$1,000 of GDP in selected countries and regions, Capital intensity in three manufacturing sectors in the Arab Republic of Egypt and Turkey, CONTENTS xiii

16 xiv CONTENTS 4.13 Energy use of firms in the Arab Republic of Egypt by firm age and ownership, 2004, 2007, and Doing Business rankings for economies in MENA and for selected dynamic emerging economies, Share of credit-constrained firms in selected countries in MENA, various years, Foreign ownership of banks in selected countries in MENA, Percentage of nonperforming loans in banks in OECD countries and in various world regions, Percentage of survey respondents in selected economies in MENA disagreeing that interpretations of regulations are consistent and predictable, Minimum wage as a share of value added per worker in selected countries in MENA and in selected comparator countries, Hourly wage distribution and minimum wage in the Arab Republic of Egypt and Jordan, Labor taxes and contributions to social insurance as a percentage of the base salary in world regions and the OECD, Labor taxes and contributions to social insurance as a percentage of the base salary in selected economies in MENA, Wages and job protection by employment sector in Tunisia, Cost of redundancy in selected regions in the world and in selected economies in MENA, Types of work contracts in all sectors in the Arab Republic of Egypt, Jordan, Tunisia, and the West Bank and Gaza for the last available year, Duration of unemployment for male and female first-time job seekers in selected economies in MENA, Percentage of the labor force contributing to social security in MENA and other regions of the world, Months of contributory and noncontributory spells of social insurance for men and women in Chile (2008) and Jordan (2010) Life-cycle earning profiles according to sector of employment and the generality of sector-specific pension benefits in Morocco Age-specific composition of the labor force across pension system contributors, employed noncontributors, and the unemployed in Jordan, Percentage of those who have voiced an opinion to a public official in the past month in selected world economies, Educational attainment in secondary and tertiary education in MENA, Gross enrollment in secondary and tertiary education by gender in selected world regions, Gross enrollment in tertiary education in selected economies in MENA by GDP per capita, Selected economies in MENA, the region as a whole, and the OECD benchmarked against the international median in mathematics, 2007 and Quality of math education in selected countries in MENA as measured by TIMSS and PISA, 2011 and Dropout rates by highest level of education attained in the Arab Republic of Egypt, B6.1.1 Perceptions of the main constraints in transitioning from education to work in the West Bank and Gaza

17 CONTENTS xv 6.7 Share of firms identifying inadequately educated workforce as a major constraint to growth, by region and selected countries, Most problematic factors for doing business in the Arab world Mismatch in hard and soft skills of newly hired graduates in selected countries in MENA, Proportion of graduates employed below their level of qualification, by field of specialization, in Tunisia, 2005 and Distribution of university graduates by field of study in selected economies in MENA, Incidence of job training by selected economies GDP B6.4.1 Transition paths in the Tunisian educational and training system Enrollments in technical and vocational training in MENA and worldwide, 1999, 2000, and Percentage of the employed who found their job through friends or relatives in the private sector in selected countries in MENA, Percentage of the unemployed using informal networks in their job search in selected economies in MENA, Percentage of the unemployed using friends or relatives in their job search in selected economies in MENA, by level of education, Ways university graduates found public and private sector jobs in Tunisia, Importance of personal networks in finding a job in Jordan, by firm size, B6.6.1 Signals important for hiring Perceptions of youth about constraints to getting a job in selected economies in MENA, World scores on proxies of meritocracy in hiring, Employer-reported skill shortages versus reliance on professional recruitment in selected countries in MENA and in countries outside the region, Distribution of active labor market programs by program type, 2008 and Active labor market program targeting as a percentage of all programs, B7.2.1 OECD restrictiveness index for accounting services in selected countries, B7.5.1 Mobile and broadband growth in MENA, B Characteristics of a world-class university Share of employed individuals whose household head is an entrepreneur, by work status, selected economies in MENA, Main constraints to starting a business in MENA, by level of education, Transition matrix of self-employed and employers ages in the Arab Republic of Egypt and Jordan, by work status, and Linking the barriers to the transition from education to work to long-term policies B9.9.1 Estimated jobs creation through infrastructure investment per billion U.S. dollars of investment in MENA, B9.9.2 Cost of creating a direct job in road and bridge construction relative to other sectors in the Arab Republic of Egypt, Civic freedom indicators for world regions and OECD countries, various years Number of publications on labor markets with data from six world regions in the EconLit Directory, Growth in GDP forecast for non-gcc countries in MENA, Lessons from successful transitions: Steps in enabling a broad reform process Short-term policies and reform objectives

18 xvi CONTENTS Tables O.1 Employment transition matrix in the Arab Republic of Egypt, 1998 and O.2 Heterogeneity in MENA economies Composition of urban employment by industry in the Arab Republic of Egypt, Iraq, Jordan, and Tunisia, Employment transition matrix in the Arab Republic of Egypt, 1998 and Employment transition matrix in Jordan, 1999 and Monthly employment transitions of the working-age population in Lebanon, Percentage increase in female labor force participation in selected economies in MENA by age group, Basic unemployment profile of women ages for the Arab Republic of Egypt, Jordan, Morocco, and Tunisia, Job search methods used by young people in the Arab Republic of Egypt, Reasons for being out of the labor force among working-age individuals in the Arab Republic of Egypt, Iraq, urban Morocco, and Tunisia, Summary of legal restrictions on women in selected economies in MENA, Ratio of unemployment rates of tertiary educated and secondary educated in several economies in MENA, Heterogeneity in economies in MENA Decomposition of growth in MENA, 1960s 90s A.1 Decomposition of average GDP growth rates in selected countries in MENA, , by decade A.2 Economic growth and its volatility, A.3 Policy indicators affecting trade in selected countries in MENA B3A.1.1 Correlates of total factor productivity growth B.1 Population increase, net migration, and rate of population change in selected economies in MENA, mid-1980s mid-2000s B.2 Demographic variables defined B.3 Reproduction rates and average annual population growth in selected economies in MENA, mid-1980s mid-2000s Mobility among size categories for firms in Morocco and Tunisia, Averages and dispersion of firms waiting days for regulatory services in selected developing countries, various years, Relationship between delays in policy implementation and demands for bribes in MENA, various years, Effect of policy implementation uncertainty on competition and firm growth in Jordan and the Arab Republic of Egypt, Share of employment by sector in selected economies in MENA for the latest available year, Standard open-ended contract packages in the public and the private sectors in selected countries in MENA, Job turnover in the past year as a share of those currently working in the private sector in selected economies in MENA, Pension design parameters of mandatory formal sector schemes in MENA, Unemployment benefit programs in MENA, Public employment services in selected countries in MENA,

19 6.2 Performance of public employment services in selected countries in MENA, Credit registry infrastructure in MENA Programs promoting entrepreneurship in MENA Programs for small-scale entrepreneurs in various developing countries A.1 Selected short- and medium- to long-term educational policies and measures for MENA S1.1 Policy options by context S1.2 Overview of constraints by country and policy area Historical structure of unions in selected countries in MENA Access to and quality of survey data in MENA Extraordinary policy measures implemented during the Arab Spring in MENA, B Main differences between the two types of labor market observatory in Poland CONTENTS xvii

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21 Foreword A job has always meant more than a salary. As a basic form of social engagement, it can be a critical source of self-fulfillment and self-worth. By that same token, unemployment and underemployment can have a significant psychological as well as economic impact. They can be a source of deep frustration and humiliation. The Arab Spring, and its call for jobs and dignity, made this connection explicit. The revolutions were also a stark lesson in how pervasive unemployment and underemployment can fuel instability. Along with the demand for more political inclusion, young people in particular took to the streets out of frustration with the lack of opportunities to put their skills and talents to productive use. Identifying and lowering the social and economic barriers that have idled large segments of the population continue to be one of the most significant policy challenges in the Middle East and North Africa region. This report focuses on jobs as the key to understanding the many layers of exclusion that have produced the world s highest youth unemployment rate and left three out of every four working-age women outside the labor force. Each chapter unpacks one of the multiple factors that affect labor markets in the region, ranging from the educational system to government policy and the current governance of the private sector. The main message is that the current regulatory environment, by protecting certain markets and a few privileged insiders, stands in the way of a dynamic private sector and the more and better jobs it could provide. The rules need to change to ease the entry of new fi rms, supported by better access to credit. This adjustment would increase competition and serve as a vital catalyst for the innovation and investment that ultimately lead to more demand for labor. The current incentives that affect decisions about where to work and when to hire also need to be addressed. This effort would include phasing out the fuel subsidies that encourage investment in machines over the hiring of workers and diminishing the pull of the public sector to allow labor to flow to where it would be most productive. Easing employment regulations, coupled with a strong and well-targeted social safety net to protect the unemployed, would facilitate both hiring and mobility. An educational system more in tune with the needs of the private sector would also be another vital source of growth and jobs, equipping students with the skills and knowledge required by innovative businesses. xix