Institutions failing to play their role in the Southern Mediterranean job market

In two separate studies, the Euro-Mediterranean Network for Economic Studies (EMNES) has analysed the effect of institutions' actions on the job market. These investigations have revealed their inefficiency in stemming both unemployment and the parallel economy. Version française

The level of education is a factor in getting a job, it is not a passport to the highest positions (photo : F.Dubessy)
The level of education is a factor in getting a job, it is not a passport to the highest positions (photo : F.Dubessy)
Creating an environment conducive for foreign or local investment and combatting unemployment and inequality require good economic and political governance. Yet the two reports published by the Euro-Mediterranean Network for Economic Studies (EMNES) point out that, in the MENA Region, "state failure has become the norm rather than the exception" and "the impact of institutions on employment is still largely unclear". The research, which looked at the effect of policies implemented on the job markets in Egypt, Jordan, Morocco and Tunisia, pointed to a lack of "will or capacity to enforce law and order in a fair and indiscriminate manner".

This is especially challenging in countries where the hardest hit by unemployment are young 15-24 year-olds (from 20.4% in Morocco to 36.1% in Tunisia in 2015), mainly young women (up to 57.1% in Egypt and 56.7% in Jordan, against 20.2% in Morocco and 35% in Tunisia), with rates above national averages.

According to the reports' authors, if the level of education is a factor in getting a job, it is not a passport to the highest positions, which clearly illustrates the gap between supply and demand -and brings us back to the failure of employment policies.

Institutions have no issue with the informal sector

The Mediterranean economists' work highlights the huge impact of informal employment in the Southern Mediterranean. As the authors note, "Tax evasion, by reducing government revenue, weakens its capacity to intervene in the economy and to invest in public assets and social security." The underground economy employs 58.8% of Egyptian female and 40.1% of Egyptian male workers and almost half of all Jordanian and Tunisian workers, while in Morocco it accounts for 43% of GDP.

These figures are put down to a lack of relevance or poor implementation of labour laws and regulations in these four countries. Consequently, many companies do not give their staff employment contracts in order to avoid redundancy payments and social security contributions. The employees are prepared to accept this state of affairs because they save their own social security contributions, which represent a considerable part of their salary. Moreover, they see no benefit in contributing to a health or retirement scheme.

A significant source of income, jobs in the informal sector are mainly held by illiterate workers (30% in Egypt and Tunisia, 6% in Jordan), those who can barely read and write (13% in Jordan, 5% in Egypt and 23% in Tunisia) or those with a basic education (50% in Jordan, 41% in Tunisia and 21% in Egypt). The parallel economy therefore employs only very few people with a post-secondary or university education and practically no graduates (1% in Jordan, 0% in Egypt and Tunisia).

Frédéric Dubessy

Monday, April 23rd 2018

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