The functioning of the labour markets in the Mediterranean Region by fOv6AREI


									  Employment policy reforms in the
Mediterranean region: selected issues on
  and labour market the functioning
                in the
                                           Comment [p1]: I was confused by references to
 MEDA region of the labour markets         the ‘broader’ Mediterranean region, when the report
                                           refers to a limited number of Med countries, all part
                                           of MEDA. Therefore, I have referred to MEDA
                                           whenever these few countries are referred to.

            17 November 2006
                              Table of Contents


Executive Summary

Chapter 1. Labour market indicators: a review
1.1. Data sources
1.2. Key labour market variables
1.3. Concluding remarks

Chapter 2. Education investment, employment and economic performance
2.1. Investment in human capital
2.2. Education investment returns
2.3. The transition from school to work
2.4. Concluding remarks

Chapter 3. Labour mobility and segmentation
3.1. Which sectors are growing?
3.2. The informal sector
3.3. Sectoral mobility: the case of Egypt
3.4. International migration
3.5. Concluding remarks

Chapter 4. Labour market institutions and employment policy
4.1. Policy formulation institutions
4.2. Social partnerships
4.3. Labour legislation
4.4. Active labour market policies
4.5. Vocational education and training
4.6. Concluding remarks

Chapter 5. Ways forward to labour market reform
                              Table of Contents

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Executive Summary

Chapter 1. Background: Review of labour market statistics
1.1 Review of data sources
1.2 Key labour market variables
1.3 Concluding remarks

Chapter 2. Investment in education, employment and economic performance
2.1 Investment in human capital
2.2 Return to education
2.3 Transition from school to work
2.4 Concluding remarks

Chapter 3. Labour mobility and segmentation
3.1 Which sectors are growing?
3.2 The informal sector
3.3 Sectoral mobility: the case of Egypt
3.4 International migration
3.5 Concluding remarks

Chapter 4. Labour market institutions and employment policy
4.1 Institutions involved in policy formulation
4.2 Social partners
4.3 Labour legislation
4.4 Active labour market policies
4.5 Vocational training systems
4.6 Concluding remarks

Chapter 5. Ways forward for labour market reforms

The bBilateral, multilateral and regional cooperation between the European Union (EU) and
partner countries in the Southern southern and eastern Mediterranean region haves been      Comment [p2]: Ditto.
intensified since the start of the so-called Barcelona Process was launched in 1995.
Strengthened development cooperation through the Euro-Mediterranean Partnership (MEDA)      Field Code Changed

programme, the progressivegradual adoption of sector- wide support programmes, and the
new European Neighbourhood Policy have provided both a framework for a strongergreater
cooperation and and given a new perspective for on integration with the EU EU’s internal
market. This new agenda bringswill a perspective of improvencreased human capital
integration and createas well as pose new challenges for in terms of employment and human
resources development policies infor the southern the countries of the Mediterranean
regioncountries. To get obtain a better understanding of the key features governing this
process, the European Training Foundation (ETF) has carried out a project oncommissioned a
project to report on employment and the functioning of the labour markets in the
Mediterranean MEDA region through analysing some selected issues.

The project focuses largely on five countries - (Egypt, Jordan, Lebanon, Morocco, and
Tunisia), ; butalthough when relevant data was available, developments in other countries in
the region have also beenare also discussed where data has been available. The report does
not include the mMacro-economic perspective ofs on employment policy are not covered by
this report, ; the focus, rather, and instead the focus is on some structural issues affecting
thelabour market functioning of the labour market and on assessing the appropriateness of
policy responses to address these structural issues. Following aAn introductory background
chapter which reviews data sources in for the five countries and presents compares key labour
market indicators in a comparative perspective, the. The remainder of the report discusses
three main issues covered by the report are thee relationships existing between: investment in
education, /training,, employment and economic performance, ; labour mobility and labour
market segmentation, ; and labour market institutions and employment policy. The Since the
report does not aim to provide a complete thorough descriptionpicture of the labour markets
in the Mediterranean MEDA countries as, certain some major issues— such as gender
perspectives or the effects of the labour force growth and the gender perspective of the labour
market—are only dealt with in passing. are not discussed in detail.

Within the framework of the ETF project, two sets of two kinds of country-specific
background papers have werebeen produced for each of the five countries included in the
project. The first set of country reports reviewed covered the following topics: main data
sources and, presented basic background information on key labour market variables,, and
discussed investment in education, employment and economic growth, and labour mobility
and labour market segmentation. The second set of country reports focused on the regulatory
framework of thegoverning labour market institutions and employment policy, the five
countries and also looked atexamined, in some detail, the institutions involved in policy
formulation, labour legislation, social partnerships, active labour market policies, and the
vocational training education system.

This report—compiled by Ummuhan Bardak, Henrik Huitfeldt and Jackline Wahba on the
basis of the country background reports—provides a regional perspective on the information
collected on selected labour market issues affecting (mainly) Egypt, Jordan, Lebanon,
Morocco and Tunisia, and implements a basic analysis of the corresponding implications for
the future of these countries. This report is the end-product of a project outlining selected
labour market issues in a regional perspective. It has been prepared by Ummuhan Bardak,
Henrik Huitfeldt, and Jackline Wahba on the basis of country background reports. Unless
specified All otherwise, all country- specific information in the report has beenwas taken
obtained from the background reports unless the source is specified otherwise. The
background papers have beenwere produced by local experts from the five countries studied,
namely: : Mona Amer (Egypt), Nader Mryyan (Jordan), Makram Maleeb and Najib Issa
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(Lebanon), Mohammed Bougroum (Morocco) and Mongi Boughzala and Mohammed
Chemingui (Tunisia). It is a compilation of the country information in a regional perspective
and some basic analysis for the future implications.

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                                   Executive summary
Developments in the lastrecent decades have put placed employment high up on the political
agenda in the MEDA region and have forced governments to take measures forimplement
employment job creation measuresin the Mediterranean region, given that u. Presumably, it
willnemployment will probably continue to berepresent one of the mosta key important
economic and social challenges in the region over the next coming decades. Increasing A
growing interest in employment issues has created not only created a political rhetoric and
launchedsome reform initiatives at national levels, but has also led to a growing interest in
donor cooperation. However, the The challenge is still aheadremains , however, to build
comprehensive and interwoven strategies          that coordinatewhich are interlinked and
coordinated between different fields of policy areas (e.g. labour market, economy, education
and training, and social policy, etc.) in the MEDA countries.

Despite its increasing importance, the issue of employment has received relatively little
attention from the Euro-Mediterranean PartnershipMEDA agenda since 1995 and . No no
high high-level meetings of labour ministers/experts took place yet betweenbetween EU and
Meda MEDA labour ministers/experts, for example, have taken place countries (Martin,
2006). In fact, eEmployment creation has, in fact, implicitly been taken asconsidered to be a
logical outcome a by-product of the economic growth that is assumed to be the result ofbe a
spin-off from economic reformss and gradual trade liberalisation with the EU. With anGiven
a young and ever-growing young labour force, and a and given the lack of initiative in regard
to massive and immediate job creation of programmes jobs (large-scale, immediate, and
ensuring decent employment conditionsnot low-skilled, low-wage informal jobs, but decent
formal jobs), the employment problem issue poses aposes the most serious challenge with.
Moreover, this challenge, if not confronted, will have many negative implications for
individual the MEDA countries as well as for and for the region as a whole.

This project has been inspired by the information needs of the European Commission and
partner countries dearth of information on the functioning of the MediterraneanEDA labour
markets. Labour market analyses are crucial for to informed policy-making in both national
and regional contexts as well as, as also to the partnership implied by MEDA Euro-Med
partnership. Although mMacroeconomic conditions are certainly important, but labour market
structures and policies play a major role in shaping employment patterns of the countries. The
Although this report tries represents an attempt to shed some light on some commoncertain
issues common issues of to the MedaMEDA labour markets, but morefurther analytical work
needs to be doneis required in the future in order to assess the role of played by labour market
policies and institutions on in terms of labour market participation and employment properly.
The main conclusion of this work is that correct labour market functioning is crucial to to
obtaining wide-ranging benefits (including the reduction of unemployment) from economic
reforms and increasing increased investment in education and training in form of increasing
employment, the functioning of the labour market is fundamental.

Below follows a A brief short summary of each chapter of the report is provided below. It
should be emphasised that although the each issues covered included inby this report is are
immediately relevant to understanding how the functioning of the MedaMEDA labour
markets function, each is dealt with independently and can be viewed in isolation from the
other issues. but they are self-standing independently and not necessarily linked with each
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The first cChapter 1 starts withprovides essential background information for this report and.
It summarises the main characteristics of the labour markets in the MEDA region through in
the form of presenting key labour market statistics. The aim is first to review existing labour
force surveys in for the countries in the region, and second to present the data collected on
labour force the activityparticipation rate, employment rate, and unemployment rates, broken
down by gender, age, and educational attainment for the countries included in the study.
These data are accompanied by some The chapter also includes a basic analysis and a
discussion of the major challenges in facing the Mediterranean MEDA labour markets. Of
note are

The chapter highlights the low labour force participation rates for non-university-educated
among youthyoung people and women with secondary education or less, the role of played by
education for in successful labour market integration, and the high unemployment rate for
young university graduates. It is however noted that theSince labour force survey definitions
and interpretations of employment in labour force surveys are sometimes ambiguous and that,
it is suggested that longitudinal data would beis necessary tonecessary in order to implement a
more thorough analysis of better analyse the functioning of the labour market in functioning
in the Mediterranean MEDA region.

Chapter 2 discusses iInvestment in education and training, which is considered to be a major
factor force for economic growth. However, in the In the MEDA Mediterranean region, there
is growing documented evidence a growing literatureof a weak suggests that the relationship
between investment in education and economic growth is weak. In the second chapter,
weThis chapter discusses the fact that are discussing why large investments in education and
training have failed to be to a large extent not have been transformedlated into economic
growth and higher employment levels. and economic growth in the Mediterranean region. The
chapter Analysedlooks in particular at are trends in education investment in education,
returns to on education, and where thethe destination of young people exiting the education
system, and graduates go after leaving the education system, at whatthe opportunities and
incentives exist to facilitatefor entry to the access into the labour market, and how to what
extent these influence this process. The chapter draws theIt is concluded that conclusion that
the quality of education system does not seem to have deteriorated during the period of
largeas a consequence of expansion and that individual (private) returns to on education are
substantial. Instead, However, MEDA economies seem to have not been ablehave failed to
match these large investments in education with comparable reforms in the labour market to
that make effective use of their pools the entering cohorts of educated workers to the labour

The third cChapter is 3 discussing discusses the dynamics of labour allocation in the
Mediterranean MEDA context. An important source of economic growth is is thatthe
displacement of unproductive jobs continuously are replaced withby more productive jobs.
This is the a core of element in the labour market reforms in countries where the public sector
had had a plays a dominating predominant role and where the the formal labour market has
beenlacks dynamism ( static often aiming at with a focus, frequently, on creating life-long
jobs for workers). The public sector is has traditionally been the most important employer in
the MediterraneaEDAn regioncountries. Little , and the formal private sector has typically
failed to create an adequate supply of alternative jjobs. creation is taking place in the formal
private sector. However, forFor many most people, however, both these routes are blocked
and the only jobsopportunity that exists is work in available are in theoften less productive
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informal economy jobs. At the same time,Yet another feature of the MEDA countries is poor
mobility between mobility between the different sectors is low.

The fourth cChapter 4 aims at analysingexamines labour market institutions and employment
policy framework ofies and frameworks in the MEDA region. Labour market institutions are
taken as those institutions and policies that are designed to iIntervenetions in the labour
market, in the form of policies or institutional actions, are aimed at in order to improveing the
match between labour demand and supply, protecting employment in current jobs, move
moving workers to new jobs, encourage encouraging transition of persons between different
employment statusesmobility, and help restoreensuring equality and equityof opportunity for
diverse all social groups in the labour market. In accordance with this broad definition, they
intervention can take the form of include ministerial and public employment services, labour
legislation, unemployment benefit schemes, and taxes on labour, social partnerships, active
labour market policies, and vocational training system. Labour market outcomes can be
positively influenced through the developing development and implementing implementation
of particular strategies, policies and measures in these areas by these actors.

The chapter begins with a general overview of of existing employment policy approaches
existed in at the national and regional context levels. Particular and then focuses on the
following dimensions of the the MEDA labour markets are discussed: (namely, labour
market institutions in charge of policy formulation and implementation, social partnerships,
labour legislation, active labour market policies, and vocational training systems). Therefore,,
with the aim being to most issues of labour markets are covered in the report to giveprovide a
snapshot of the institutional, regulatory and policy frameworks of in place in the MedaMEDA
labour markets to the readers. National The priorities and the quality of administrative
systems and national priorities are also evaluated, when necessary as they being instrumental
in determininge the both how measures are implemented and ation level of the rules and the
nature of the relationships between among the se main players in the labour markets. players.

Finally, the fifth chapterChapter 5 looks at ways forward in search ofterms of feasibility ofle
labour market reforms in the region. Based on the findings from of the previous chapters, —
and apart fromleaving aside the challenges facing the quality of education system (in terms of
quality, )—there would seem to be a real need for comprehensive labour market reform.
There iss seems evidence that crucial since labour markets in the region may are not be
functioning wellwell in terms of the the efficient allocation of human resources to their best
uses to the best possible use, which is. Effective allocation of resources is crucial to the
success of any policy aimed at fostering economic growth. The This final chapter gives
provides an overview of the reform initiatives of labour markets that are mostly supported by
donor-funded programmes. The role of donors, in terms of initiating and supporting change, is
substantial in the region, but real reform requires more than donor support is needed if it is to
be a real reform. The chapter ends terminates with an overall assessment of the factors that
augur well or otherwise for the favourable and unfavourable factors of change in the region
for tthe future of the reformsreform process.

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 Chapter 1. Background: Review of lLabour market statisticsindicators: a

1.1. Review of dData sources

The key data source to for analyse labour market developments analyses is was the labour
force surveys, which m. Most countries in the Mediterranean MEDA region are carrying carry
out on a regular basis regular labour force surveys (see Table 1.1). In particular, Jordan,
Morocco and the Palestinian National Authority, for example, have carried outconducted,
since the end of the 1990s, quarterly labour force surveys since the end of the 1990s. These
surveys include containing basic information data on working-age population, labour force
composition, and employment and unemployment rates, all and can be disaggregated broken
down by gender, age, educational attainmentlevel, rural/urban, economic activity and,
occupation, and rural/urban distribution. However, in mMost countries countries in the
region, however, publish little of the information from collected in theirthe labour force
surveys is published and or made make it available for research. In some countries, notably
Algeria, Tunisia and Egypt, published datainformation are is limited to a few handful of
indicators. For the purpose ofTo assist with this report, some additional information has
beenwas made available to the ETF by the statisticalal offices bodies in Morocco, Egypt,
Jordan, Syria, and Tunisia.

Table 1.1. Labour force surveys conducted in selected MEDA countries

 Algeria                  Occasional surveys. The latest, most recently in 2001, 2003,
                          2004 and 2005.
 Egypt                    Annual surveys since 1968, (more extensive detailed ones in
                          1988, 1998, and 2005).
 Jordan                   Quarterly surveys since 1999. Earlier aAnnual or biannual
                          twice-yearly surveys prior to 1999.
 Lebanon                  Last official survey in 1997. Survey by the University of Saint
                          Joseph University in 2001.
 Morocco                  Quarterly surveys covering the whole country since 1999.
                          Annual or twice-yearly surveys prior to 1999Earlier annual or
                          biannual surveys..
 Syria                    Annual surveys in for 2001- to 2004. Occasional Eearlier
                          occasional surveys.
 Tunisia                  Annual surveys in 1997 and since 1999.
 West Bank and Gaza Strip Quarterly surveys since 1995.

Even though countries may carry out similar surveys and publish the same kind of
employment and unemployment indicators, it is difficult to compare dataEven if most
countries are carrying out similar surveys and publishing the same indicators on employment
and unemployment, the statistics are difficult to compare between countries. because there
are often Small differences between countries in terms of definitions and survey questions
(and    (including also changes between different survey years in the samewithin
countrycountries from year to year), ) in definitions and survey questions used and also to
some extent how changes in how surveys are implemented, the survey is carried out and
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which changes in instructions are given to interviewers that can lead to significant differences
in the statistics published. Thus, cComparisons between different countries and between
different survey years need, therefore, to be made with should be done care. with caution. In
particularFurthermore, some difficulties indiffering defining definitions of what should be
considered as employment makes comparisons between countries difficult. Some of the main
issues to take into consideration while when comparing and interpreting and comparing
results from labour force surveys in the MEDA region labour force surveys is discussed in
the followingare discussed below.

In theory, the labour force surveys are usingapply a broad definition of employment
(including which also includes subsistence activities). The standard question used asked, in
relation to a reference week, is: “During the previous week, Ddid you work for cash or in-
kind payment for at least one hour?”. Sometimes, a Although a follow-up question is
sometimes used asked in an attempt to cover account for less standard forms of employment, .
However, in practice, the labour force surveys poorly capturereflect poorly participation in
subsistence activities, most in particularly among women. among females.

Given that the labour force surveys typically asks about employment in a reference week,
survey results are sensitive for seasonality effects in countries with that do not conduct regular
irregular surveys, the survey results are sensitive for seasonality effects. In particular, this is
aThis is particularly the case forproblem in countries with with a large agricultural sector,
where . Tthe results of a survey may be very different if it is carried out in March or in

Labour force surveys also fail to deal are not designed appropriately to cover occasional with
casual employment activities. For example, depending on whether or not a person has
worked during the reference week, a personhe/she that is occupiedmay in different short-term
labour market activities during large parts of the year be classified as employed or
unemployed. will be classified as employed if he/she has some work during the reference
week and as unemployed if he has not. Thus, the corresponding estimations estimates of
employment, unemployment, and inactivity may not capture the real dynamics of the labour
market. This problem could be overcome if o better analyse the dynamics of the labour
market, information was collected about individuals over a longer time period is needed. The
only country in the MEDA region which has collects longitudinal labour market information
for on individuals is Egypt.

Egypt is carrying outhas implemented a regular annual labour force surveys since 1968. In
1988, 1998 and 2005 extended more detailed surveys were carried outconducted in order to
better measure labour market variables. These extended surveys were carefully designed
more carefully with a to ensure better construction of the s sampling procedures and better
control over responses. Information , a more detailed questionnaire and a better control of
responses. They give was generally more detailed information and special attention was given
paid to the participation of female women in the labour force participation and, child labour,
and wages and earnings. Three different reference periods were used: a week, a month, and a
quarterthree months. The extendedse surveys also included retrospective questions, which that
makes made it possible to track changes in an individual’s labour market status over time of
individuals. In addition, the 2005 survey includes included a panel sample of individuals who
were already had previously been interviewed in 1998. As a result of the existence of the
information provided by these extended labour force surveys, much more labour market

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research on the labour markets has been done conducted in Egypt than in any other country in
the region.

According to the standard ILO International Labour Organisation (ILO) definition, a person is
considered to be unemployed if he/she did notworked for less than one work one hour during
in thea reference week, was available for work, and did had actively search forought work
during in the last previous four weeks (using some specified search methods). MEDA
countries have begun to apply the ILO definitionSome, although a lternative different
definitions for unemployment have previously been used; for in MEDA countries, but lately
a harmonisation to ILO standards has been carried out. For example, in Tunisia until 2003, a
person was defined as unemployed even if he/she did not specify how he/she was searching
for a job.

1.2. Key labour market variables

Population and labour force growth

Table 1.2. Population and labour force growth rates for selected MEDA countries in
selected MEDA countries

  Country          Population1             Annual              Annual growth           Annual labour
                   (millionsn)           population          rate ofin working-         force growth
                                       growth rate (%)         age population              rate(%)
                                                                     (%)                (aged 15-64
                                                                (aged 15-64            years)(15-64) 2
                                                                   years) 2
 Algeria                32.9                  1.40                   2.24                     2.92
 Egypt                  74.0                  1.71                   2.08                     2.19
 Jordan                  5.7                  2.16                   2.61                     3.05
 Lebanon                 3.6                  0.99                   1.50                     2.07
 Morocco                31.5                  1.36                   1.82                     1.91
 Syria                  19.0                  2.16                   2.77                     3.36
 Tunisia                10.1                  1.01                   1.85                     2.49
1. 2005
2.Estimates 2001-2010
Source: Population Division of the Department of Economic and Social Affairs of the United Nations
Secretariat., World Population Prospects (: , and; ILO., Economically Active Population
Estimates and Projections (,

Population growth rates have has been high over in the lastrecent decades in all countries in
the region, although there is evidence of . Some slowdown has taken place in thea slowdown,
last decade, in particularly in the Maghreb region. However, this This slowdown, however,
has yet to significantly impact affect the growth rate of the working-age population, which is
stillremains high in all the MEDA countries. As a result, the demographic pressures on the
labour market from new labour market entrants will continues to be high during in the
comingthe next decadesyears. In Moreover,some countries, in particular Jordan, (changed)
shifting migration patterns in some countries (in particular, Jordan) are also putting pressure
on the (internal) labour market.

Figure 1.1. Annual growth rates of for the working-age population (15-64 years) old in
selected MEDA countries                                                                                            Field Code Changed







           Algeria      Egypt        Jordan       Lebanon      Morocco        Syria        Tunisia

Source: Population Division of the Department of Economic and Social Affairs of the United Nations
Secretariat., World Population Prospects: (

Labour force participation

Another factor influencing labour forcethe growth rates of the labour force is increasing
labour force pparticipation of by women. Between 1980 and 2005, the labour force
participation rate1 for women (aged 15-64 years old) increased from 20% to 33% in the
region.2,3. Still, in all countries, That said, the women participation of women in the labour
market is veryremains low. Over the same time periodperiod, labour force participation for by
young men (and also, to some extent, also for by young women) decreased significantly as a
consequence of due to anan increase in the number of years spent in the education system.
However, although labour force entry is postponed, this is not likely to have a strong
moderating effect on labour supply is generally not affected, as as in general a higher
educational attainment level tends to increase labour force participation. Instead, labour force
entry is postponed.

Figure 1.2. Labour force participation rates by sex for the working-age population (15-
64 years) old in selected MEDA countries1

  The labour force participation rate, or activity rate, rate is defined as the share of active individuals aged 15-64
years old (employed plus unemployed) in the working-age population 15-64 years old.
  ILO., Economically Active Population Estimates and Projections,
  However, the lLabour market activities participation for women are is sometimes poorly captured by the labour
force surveys conducted in the region (as mentioned above) and data over time should be interpreted with
carefully.                                                                                                               Field Code Changed





 50.0                                                                                   Total
 40.0                                                                                   Women




           Egypt       Jordan      Lebanon      Morocco        Syria       Tunisia

1. Data for 2003, except Jordan, for which data refer to 2004.
Source: Compiled by the ETF staff using country data from MEDA country labour force surveys.

Educational attainment level plays an important role for in female labour force participation
rates for women. In Jordan, for example, the labour force participation rate for women with
post-secondary education have is only 15-25 percentage points lower labour force
participation rates than for men with a similar educational level of educational attainment (see
Figure 2.3). Labour force participation rates for prime-aged men and for higher educated
prime-aged women with higher education qualifications are high in the Mediterranean MEDA
region. In Syria, almost all working-age men older than 30 men of working-age and older
than 30 and 80% of the higher educated women with higher education participate are
participating in the labour force (see Figures 2.4-2.5).

Figure 1.3. Labour force participation rates by educational attainment level and sex for
the working-age population (15-64 years) old in Jordan (2004)

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  50.0                                                                                                                                                                                         Men












































Source: Compiled by the ETF staff using data from Jordanian labour force surveys in Jordan.

Figure 1.4. Labour force participation rates by age and educational attainment level for
the male working-age population (15-64 years old) in Syria (2001-2002)








          15        16         17      18   19        20       21        22       23          24         25          26       27       28     29       30        31    32      33   34

Source: Compiled by the ETF staff using data from the Syrian labour force surveys.

Figure 1.5. Labour force participation rates by age and educational attainment level for
the female working-age population (15-64 years) old in Syria (2001-2002)

                                                                                                                                                                                                               Field Code Changed









          15   16   17   18   19   20   21   22   23   24         25   26   27   28   29   30   31   32   33   34

Source: Compiled by the ETF staff using country data from the Syrian labour force surveys.

Employment and unemployment

Employment growth in the formal economy has failed to keep up withrespond to
demographic pressures, with the result that official resulting in increasing unemployment
rates are increasing, as also the level of employment in the and an increase in the share of job
creation in the informal economy. The public sector remains an important source of
employment and job creation. D, and despite reforms aiming at downsizing the public sector,
the evidence suggests would indicate that the share of the labour force employed in the public
sector may have increased in some countries in the last decade, as; this is largely because
private sector growth stagnatedion has placed and governments were in the position offorced
to become being employers of last resort. Employment in the informal economy is tends to be
very high, accounting as it does for 35-% to 50% of non-agricultural employment in most
countries. The informal economy isIn some countries, furthermore, the informal economy is
the most important source of creation of new jobs in some countries.

The eEmployment rates4 (as recorded by the labour force surveys) isare lower less than 50%
in all covered the MEDA countries. This is mainly due to the a low employment (labour and
labour force participation and) rate for womenemployment rate for women. Also theThe
employment rate for men is also low compared to other regions. This is, mainly as a result of
high unemployment among the large cohorts of young people in the MEDA region in the
region (and the , where demographic structures are such that with athe large weight of young
people in the wworking-age population is dominated by young people). The employment
rates for prime-age men and and—in in some countries also —for for higher educated prime-
aged women with higher education is still highremain relatively high, given that e. Generally,
the employment rates generally improve in line with educational level. increases with higher
educational attainment. In some countries with large agriculture agricultural sectors,
employment is also high for lower less well-educated individuals.

 The employment rate is defined as the share of number of employed people in the working-age population (15-
64 years old), expressed as a percentage.                                                                                               Field Code Changed

Figure 1.6. Employment rates by sex for the working-age population (15-64 years) old in
selected MEDA countries1





 40.0                                                                                                  Men




           Egypt         Jordan             Lebanon    Morocco        Syria         Tunisia

1. Data for 2003, except Jordan, for which data refer to 2004.2003, except Jordan 2004.
Source: Compiled by the ETF staff using country data from MEDA country labour force surveys.

Figure 1.7. Employment rates by educational attainment level for the working-age
population (15-64 years old) in selected MEDA countries1





                                                                                          Lower than secondary




              Jordan              Morocco             Syria               Egypt

1. Data for 2003, except Jordan, for which data refer to 2004.2003, except Jordan 2004.
Source: Compiled by the ETF using data from MEDA country labour force surveys.
Compiled by ETF staff using country data from labour force surveys

Unemployment rates, which are is generally high across the MEDA region. However, o, pen
unemployment falls largely on affects the young and well-educated new potential entrants to
the labour market. In the absence of comprehensive public social social welfare safety nets
and with given the reliance onimportance of families,y networks, most workers without with
little or no education or with only basic education cannot afford to be remain unemployed and
so have no other option than but to accept low-paying jobs in the private (informal) sector. At                       Field Code Changed

the other end of the spectrum, some educated youth young people typically prefer to await for
jobs in the formal and public sectors, which that offer better wages and more generous non-
wage benefits. Increasing cohortsGrowing numbers of higher educated well-educated young
people and combined with a stagnation of in public sector employment have both increased
the waiting times for formal jobs and generated high rates of youth unemployment rates. for
higher educated.

In most MEDA countries, tThe unemployment rates for young people aged 15-24 year olds
are is much higher than unemployment ratesthat for the older peopleage brackets in most
countries. I; in Egypt, for example, these unemployment rates are, respectively, for younger
workers is 35% , while it is less thanand below 5% for older workers. In Egypt,;72% of the
unemployed were i. Individuals with at least intermediate education represented 72% of the
total numbers of unemployed and the . The unemployment rate, in fact, tends to increases
with education reaching itsreach a peak at an intermediate education level and then
decreasinges afort higher education levels of education. In Morocco, for example, the
unemployment rates for graduates with at least secondary education school leavers are is
much higher than the rate for lower young people with lower education levelseducated (, and
is as high as reaching 30% for university graduates). However, due to lowersince the overall
educational attainmentlevel is low, this group constitutes not more than 40% of the total
number of unemployed.

In more advanced reform countries such aslike Tunisia and Jordan— where the labour market
is more competitive, —people with higher educational attainment may compete with
graduates with lower educational attainmentless educated candidates for the same (scarce)
jobs. This has generated a situation wherein which also graduates fromyoung people with
lower basic or and intermediate education have large difficulties in enteringfind it difficult to
obtain entry to the labour market. In Jordan, competition from unskilled imported
immigrantunskilled labour workers also contributes to higher unemployment for amongthe
less- well-educated and unskilled workers—a situation which does not affect than for higher
better educated workers.

In the MEDA region, uUnemployment rates are higher for women than for men, although the
rates are not strictly comparable, given in the region. However, given tthe lower overall
labour force participation by rate for women. , unemployment rates for men and women are
difficult to compare. In particular, aMore larger share of the women in the labour market has
have a higher educational level, and many are and many are waiting for to obtain a specific
kind of job—typically often in the public sector. Access toRelatively few women enter the
private formal sector. jobs is low for women.

Figure 1.8. Unemployment rates by sex for the working-age population (15-64 years
years)old in selected MEDA countries1

                                                                                                    Field Code Changed







          Egypt         Jordan       Lebanon       Morocco        Syria        Tunisia

1. Data for 2003, except Jordan, for which data refer to 2004.2003, except Jordan 2004.
Source: Compiled by the ETF staff using country data from MEDA country labour force surveys.

Figure 1.9. Youth and adult unemployment rates for the working-age population (15-64
years old ) in selected MEDA countries1









          Egypt         Jordan       Lebanon        Morocco        Syria         Tunisia

1. Data for 2003, except Jordan, for which data refer to 2004.
Source: Compiled by the ETF using data from MEDA country labour force surveys.
1. 2003, except Jordan 2004.
Source: Compiled by ETF staff using country data from labour force surveys

Table 1.10. Unemployment rates by educational attainment level for the working-age
population (15-64 years) old in selected MEDA countries1

                                                                                                            Field Code Changed




                                                                                 Lower than secondary



         Egypt       Jordan      Lebanon     Morocco      Syria       Tunisia

1. Data for 2003, except Jordan, for which data refer to 2004.
Source: Compiled by the ETF using data from MEDA country labour force surveys.
1. 2003, except Jordan 2004.
Source: Compiled by ETF staff using country data from labour force surveys

1.3. Concluding remarks

Most countries in the Mediterranean RegionEDA region regularly publish are regularly
publishing indicators on labour force participation, employment, and unemployment
indicators, based on information collected in labour force surveys. However, care needs to be
exercised in making comparisons between different countries should be done with caution,
given differences in methodologies and practices used by the different countries. In particular,
rResults are particularly sensitive to the definition of employment. To Longitudinal (or panel)
data is required in order to be better able to analyseanalyse the functioning of the labour
markets market functioningin the Mediterranean Region adequately (including the dynamics
taken place at the lower -end of the labour market dynamics), ). Such data would longitudinal
(or panel) data record ing (changes in) labour market activities and shifts for individuals over
a longer period of time is needed. The only country in the region which has collects
longitudinal information for individuals is Egypt.

                                                                                                             Field Code Changed

          Chapter 2. Education iInvestment in education, employment,
                         and economic performance

2.1. Investment in human capital

Investment in education educating and training , or human capital, is considered to be a major
component contributor toin the generation of economic growth5 (see, for example, de la
Fuente and Ciccone, (2002) for a discussion on of the theoretical and empirical literature on
human capital and growth). At the macro-level, two major factors influence the impact of
education investment on economic growthin education and training on economic growth: (i)
the quality of the investment in the education and training systems and the resulting quality of
the outputs of the education and training systems, and (ii) the allocation of how graduates
from the education and training system are allocated to jobs iinton the labour market.
Efficiency in the use and allocation of human resources Depending varies according to upon
how well the labour market functions, the level of efficiency in the use and allocation of
human resources varies. For example, a; a particular danger is when a large share of human
capital could is allocated be put into activities which do not influence growth that may not
influence growth such as redistribution (Pissarides, 2000). As a resultConsequently, both
issues related to the quality of investments and the functioning of how well the labour market
functions areis of the utmost importance in determining the effects of education investment in
education and training on both employment levels and economic growth.

Recent evidence from the MEDA countries suggests that the relationship between education
investment in education and economic growth in the region has beenis weak (Pritchett, 1999;
Keller and Nabli, 2002; Makdisi et al., 2003). Rapidly increasing numbers of school and
university enrolments have resulted in a significant expansion of in the human capital stock
and improvements in human resource quality of human capital. Average Moreover, average
years of schooling for the working-age population have doubled in the last 20 years (Barro
and Lee, 2000). However, economic growth has been disappointing (See Figure 2.1), and
given the high population growth, gross domestic product (GDP) growth per capita has been
very low across throughout the MEDAthe region.

Thus, oIn recent ver the last decades, economic growth in the MEDA region has been mostly
based on fuelled by gross capital investment and labour force growth. On the other hand,
gHowever, growth in total factor productivity—which measures economic growth that cannot
be accounted for by increases in capital and/or labour stocks— has been low, and, in some
cases, even negative (European Commission, 2006). Total factor productivity growth
measures the economic growth that cannot be accounted for by increases in the stocks of
capital and labour. In a way, itcan can be seen viewed as an approximation of a reflection of
the efficiency of the investment in human (and physical) capital. Only Egypt and Tunisia have
recorded relatively highsatisfactory total factor productivity growth rates in the last decade.

Figure 2.1. GDP growth in selected MEDA countries (1960-2000)

 Of course, eAlthough education and training may naturally have more wider societal objectives than to merely
contribution contribute to economic growth only, which this aspect is not covered inexcluded from these the
mostly primarily macroeconomic considerations on investment in education in this report.                        Field Code Changed




 10.0                                                                                          1960s
   8.0                                                                                         1980s
   6.0                                                                                         2000s



          Algeria     Egypt       Jordan    Lebanon      Morocco           Syria   Tunisia

Source: World Bank. World Developments Indicators. (,

Figure 2.2. Average years of schooling 1960-2000 in selected MEDA countries (1960-





 4.00                                                                                            1980




            Algeria           Egypt             Jordan             Syria             Tunisia

Source: Barro and Lee, (2003). International data on educational attainment.

In all countries in the regionthe MEDA countries, access to education has increased improved
substantially during in the last decades. Given the fast population growth rates (with the
numbers of young people increasing exponentially), tThis has been a major achievement
given the fast population growth and that the number of young people has been increasing
exponentially. Generally, eEducation has generally been awardedbeen a priority sector over
the periodin recent decades, although there was a with a slight downturn in the era of
structural adjustments programmes in the (the 1980s and early 1990s). In the last decadeMore
recently, educational reforms and further expansion of the sector have received given new
momentum to the sector.

Adult literacy rates have increasedmproved fast rapidly in the lastrecent decades, but they,
although they still remain are still fairly low in some countries, in particular forly among
women. The region as a whole has an average adult literacy rate of about 80%. In 2004, adult                 Field Code Changed

literacythese rates ranged from 66% in Morocco to 95% in Jordan for males men, and from
40% in Morocco to 85% in Jordan for females women (UNESCO, 2006). The region as a
whole has an average adult literacy rate of about 80 percent. Literacy has primarily been
enhanced through increasing larger cohorts participating in formal schooling. Still, much
lower shares (literate of older people are relatively few in number) are literate.

Enrolment in primary education has become almost universal across the region, both for boys
and girls. However, dropout rates are still significant in some countries, in particular in
Morocco, where it reaches the dropout rate is as high as 30%. In the last decade, gross
enrolment in secondary education has also increased fastrapidly, reaching more than 80% in
all the countries with the exception of except Morocco and Syria. Similarly, in some
countries (especially Egypt, Jordan and Tunisia), the numbers of young people entering the
post-secondary education system has increased explosively in some countries, in particular
Egypt, Jordan and Tunisia. In Jordan, enrolment in public post-secondary institutions
increased by with 55% between 1999 and 2003. In Lebanon, where enrolment in higher
education has traditionally been high, there was a gross enrolment of almostreaching almost
50% in 2004. (UNESCO, 2006).

One of the eight Millennium Development Goals is to close In recent years, the gender gap in
education enrolmentenrolment. In the MEDA regions in recent years, (which is one of the
eight Millennium Development Goals) this has too a large extent been eradicated achieved
atat all education levels. Some differences still exist at primary level, where with the girls to
/boys enrolment ratio in enrolment ranges fromat 0.92 in Morocco, 0.94 in Algeria, 0.96 in
Syria, Egypt, Lebanon and Tunisia to, and 0.98 in Jordan (UNESCO, 2006). At higher
education levels, differences are small minimal, and in some cases the ratios are reversed. or
even opposite.

Table 2.1. Gross enrolment ratio(%) for different educational levels in the MEDA region

                            Algeria    Egypt     Jordan   Lebanon   Morocco   Syria   Tunisia
   Primary      1970        76.1       67.6      72.0     121.4     51.5      77.5    100.4
                1980        94.5       73.1      81.6     111.4     83.0      99.6    102.1
                1990        100.5      91.5      100.6    113.2     65.2      102.2   113.7
                2004        111.7      100.7     98.2     106.8     105.6     122.9   109.9

   Secondary    1970        11.2       28.4      32.8     41.5      12.6      38.1    22.7
                1980        33.0       50.5      59.1     59.1      26.0      46.4    27.0
                1990        60.9       70.8      63.3               35.5      48.8    44.4
                2004        80.7       87.1      87.4     88.7      47.6      63.2    81.3

   Tertiary     1970        1.8        6.9       2.1      21.0      1.4       8.3     2.6
                1980        5.9        16.1      13.4     30.1      5.9       16.9    4.8
                1990        11.8       16.7      24.0               10.9      18.2    8.7
                2004         19.6      32.6       39.3    47.6      10.6              28.6
Source: Unesco ( (2006).) (,

Despite the large expansion of the expanded coverage of the education system in the last
recent decades, there has been no corresponding increase in public expenditures on education,
which, as a share of GDP, has have not seen a similar increase. Public expenditures on
education remained as a share of GDP have been fairly stable in most countries ranging from.         Field Code Changed

Although this rate is only 3% in Lebanon, the rates of to above over 6% in for Jordan,
Morocco , and Tunisia (Figure 2.3). T arehis is above the world average of 4% of GDP, and
and the 5.7% recorded for high income countries (UNESCO, 2006). However, as a result of
the large significant population growth in most MEDA countries, has meant that per capita
(i.e. per student) education spending per capita (or per student) has decreased significantly in
most countries. This would indicates that either the efficiency of the educational system
efficiency has increased or that education quality of the education may havehas deteriorated.
Little There is little direct evidence, however, exist that the that education quality of
education in the MEDA region has been decreasingdecreased (World Bank, 2006);. P pupil-
teacher ratios have been remained fairly stable or have decreasing decreased since 1985 in
most of these countries. Most Note that most countries in the MEDA region participated in
the 2003 Trends in International Mathematics and Science Study (TIMSS), and . Thalthough
the results are were fairly low in absolute terms, but they are in line with what canould be
expected for middle-income countries.

Figure 2.3. Public expenditures on education (in % of GDP) in the MEDA region (% of




   6                                                                                  1970
   4                                                                                  2003




        Algeria     Egypt      Jordan    Lebanon     Morocco      Syria     Tunisia

Source: Unesco (2006). ( (2006),

The education system in MEDA countries has is largely been public (, with the exception of
Lebanon where more than half 50% of the pupils enrol in private schools. There are ) and
some indications exist that increases in private expenditurespendings on education may have
compensated for stagnating public expenditures. The total educational bill in Lebanon
amounts to roughly 9% of the GDP, with and two thirds of this spending is contributed
covered by the population at largegeneral public. Such a percentage would makeTaking into
account private contributions to education, the level of spending on education makes the
country Lebanon one of the top world’s leading countries in terms of spending onGDP share
of education. In Morocco in recent years, the private educational system has recently been
expanded in large urban areas. Its; consequently, its proportion share in educational
expenditure has iincreased from 8.7% in 1990/-1991 to 15.5% in 2002/-2003 (Bougroum,

Public Although public education is free in most MEDA countries, the widespread existence
of private tutoring implies a substantial but the costscost for private households in terms of
may still be substantial due to the widespread existence of private tutoring. private lessons      Field Code Changed

that ensure that their children pass exams at public schools. In Egypt, where this the tutoring
system is now global and turned intorepresents a private parallel system of private education.
Households have to rely on private lessons to assure their children to pass their exams at
public schools. It, it is estimated that private tutoring classes account for represents around
20% of household expenditures in Egypt. In Jordan, 50% of public university revenues are
accounted for by fees paid by private finance private individualsplays a significant role in the
provision of higher education (public universities receive 50% of their revenue from fees). A;
according to household surveys, households spend on an average of JD 442 Jordanian dinar is         Comment [p3]: I spelled out currencies, and
                                                                                                    considered conversions, but found contradictory data
spent per year on private and public education (Mryyan, 2005). This, a figure which would           in some cases, so decided to leave them unconverted.
equal represents about 45% of total educational spending in the country.

2.2. Returns to eEducation investment returns

As discussed mentioned abovepreviously, the economy-wide payoff of large investments in
education and training seems to have been limitedminimal. A differentnother, but no less
important issue is that of returns to educational returns for for individuals. The distinction
between private (individual) and social returns to on education is important. L, and low social
returns to on education are perfectly compatible with high private returns (which can
stimulate individual demand for education). There are a number of possible explanations for
this phenomenone low private returns in the MEDA region. G: governments could might
provide pay high wages and benefits to graduates working in the public sector workers
without these workers necessarily contributing to higher productivity (Pritchett, 1999) or; or
easily -measurable credentials acquired though rote memorization learning and formal
schooling could may be valued higher rated more highly than more productive (but less
quantifiable) softer skills, such as creativity and team-work (Murphy and Salehi-Isfahani,
2003). On the other hand, pPrivate returns to on education do not reflect all the benefits of
education that affect the o society as a whole. Such benefits are known as, i.e. as externalities
since theythat generate benefits to other members of the society.

Internationally, higher educational attainment levels are is associated with positive labour
market outcomes for individuals, including higher wages and better job opportunities. The
typical individual (private) returns to for an additional year of schooling, in terms of higher
wages, typically have been estimated at to be a wage improvement of 8-% to 15% (Card,
1999; Psacharopoulos and Patrinos, 2002; Pritchett, 1999).

In MEDA countries, returns to on education have been estimated at betweens 5 and % to
15%, depending on the country and level of schooling (World Bank, 2004). While females
tend to earn lower wages than males, the differences tend to diminish with as educational
attainment improves. As a result, private returns to on education tend to be higher for
females than for males. In most developing regions, moreover, private returns to on education
tend to be higher for primary education than for secondary and university education (Krueger
and Lindahl, 2001). InBy contrast, in MEDA countries, however, the opposite happens:
returns to on education appear to increase with the level of schooling (Psacharopoulos and
Patrinos, 2002; World Bank, 2004). One explanation for this is that public employment plays
a more important role in the MEDA countries than in any other developing regions. R, and
returns to on education have a tendency to be higher in the public sectors than in the private
sectors. Higher returns to on education for individuals with high schoolsecondary and or
university education graduates may reflect government pay scales rather than improved
productivity (Pritchett, 1999; Glewwe, 2002).

                                                                                                    Field Code Changed

Said (2002) analysed changes in returns to on education in Egypt between for the period 1988
and to 11998. During In this ten-year period, returns to on education declined for holders of
preparatory and secondary certificates, whereas they increased among those with lower levels
of educational levels (read and write basic literacy skills and/or a primary education) and
among those with higher education qualifications levels of education (from higher third-level
institutes and universitiesy). In 1998, returns to on education were still higher in the public
sector than in the private sector, particularly for women. H; however, returns to on education
among females with secondary school certificates had deteriorated sharply in the government
sector over the analysed period.

Several studies have tried attempted to measure the returns to on education in Tunisia (for
example (Zouari-Bouattour 2001; World Bank, 2003). Generally, returns toon education have
increased in line with educational attainment and across skill levels. Some important
differences exist by sector, however. F; for example, farmers and skilled agricultural workers
earn less than urban workers with similar or fewer skills. equally and even less skilled urban
workers. There is anIn Tunisia, there is also a 18% public sector wage premium of around
18% (between 24% and 30% for women) compared to the private sectorr, this premium is
greater for women (from 24 to 30%).

In Lebanon, results from the a labour force survey conducted by the University of St
JosephUniversité Saint-Joseph in 2002 showdemonstrateds that income satisfaction for young
Lebanese (aged 18-35 years) increases increased with educational level attainment (Maleeb,
2005). However, also evident in the sample population was a general level of low income
satisfaction rates with lower incomes; are observed throughout the sample. 17.7%, 25.8% and       Comment [p4]: These % seem to be rather low
                                                                                                  to indicate ‘satisfaction’, at rates of 1 in 3 for
23.5% of respondents with graduates from primary education indicate that they have a              university grads, 1 in 4 and less for others exiting the
satisfactory income, 25.8% for , general secondary education, 23.5% for and vocational            education system.
secondary education, respectively, indicated that they were satisfied with their incomes. These
figures can be compared to a satisfaction rate of, and still only 35.4% for university

Huitfeldt and Kabbani (2005), who estimateds returns to on education in Syria in 2001 and
2002, found that . They find thatalthough rates of return in Syria arewere low by international
standards and , they increasing increased with the level of educational attainmentlevel. T; the
highest rates of returns are were for women with for additional years of schooling post-
secondary educationfor females beyond secondary education. In addition, they These authors
also find found evidence that higher education is was attractive because it increases increased
the chances of finding a job, decreases reduced queuing the times time waited forfor sought-
after jobsa job in the public sector, and increases increased the opportunities for for working

In MEDA countries, Although fairly low in an international context, estimated private returns
to on education are substantial in the MEDA context. l, albeit fairly low in an international
comparison. However, as analysissince analyses on returns to education are based on
“reported” wages and not on “real” wages, the reported benefits of additional schooling may
still underestimate the real benefits, in particularly in the public sector. This may be due to
less quantifiable or unreported benefits from public sector jobs and unreported earnings from
second jobs in the private sector (or in the informal sector).s.

2.3. The transition from school to work

                                                                                                  Field Code Changed

TheTraditionally in the MEDA region, the public sector in the MEDA region has traditionally
played a major role both in absorbing young people exiting the graduates from secondary and
higher education system and in balancing the supply and demand of in the labour market.
However, the labour market is out of equilibrium, as there are increasingly fewer less
possibilities of the public sector to absorbing growing cohorts growing numbers of educated
individualsworkers have put this labour market model out of equilibrium. For many school-
leavers, the The transition from education to work has therefore become a longis consequently
a lengthy and uncertain process, and u. Unemployment for among graduates young people has
reached high disturbing levels across throughout the region.

Given the expressed desire among the unemployedDemand for jobs in the public sector, is
such that young people unemployed graduates are, to a large extent,are queuing for to take up
posts in the public sector jobs, where . Qqueuing times, however, tend to reflect education
level, with more qualified candidates having to wait less time tend to decrease by level of
education (Huitfeldt and Kabbani, 2005). In this public sector model, hHiring decisions are
often based on the ranking in the labour marketposition in the queue and the place in the
queue, which tends to depends on the level rather than the quality of education, not the
quality of education. T, although this public employment employment model is placed at
risk as when the private sector starts begins to play a greater role in employment. At the other
end of the spectrum, low- skilled school-leavers or dropouts from the education system have
little few work choices at the labour market. T, and typically take up traditional
apprenticeships or work jobs in the informal sector. are often the only available options.

In Morocco, the process of transition from school to work for graduates has evolved changed
greatly since the 1980s (Bougroum, 2005). In those days, , when graduates produced almost
entirely by the state system most often found a position in the public sector. Jobs in the public
sectoran adequate supply of jobs were provided in sufficient numberswas available to meet
demand. In addition, private intermediaries mediation and (extended) family network contacts
have traditionally facilitated access provided pathways into jobs in the private sector.
THowever, the continued continuing increase in the numbers of growth in the number of
graduates young people entering the labour market andcombined with the curtailing
ofcutbacks on job opportunities in the public sector haves created led to an imbalance in
supply and demand that an unbalanced situation. This imbalance has resulted in very high
levels of graduate youth unemployment.

TToday, two main factors influence the conditions underircumstances in which young people
enter the labour market in Morocco in Morocco. These are: the quality of the training they
have received and the quality of thean individual’sir network of contacts. Graduates of State
state higher education institutions of higher education often try to find obtain work jobs iin
the private sector while waiting for a public sector job, but access to private sector jobs is
frequently impeded limited by the inappropriateness of the training they have received (too
theoretical) and/or by the poor quality of theirlimited nature of a network of contacts. On the
other hand, gGraduates of vocational training programmes, on the other hand, have no choice
but to find work in the private sector. Many of them these begin their careers by taking jobs in
the informal private sector, where they face competition from young people who have may
never have been to school, but who have completed apprenticeships in the informal private

                                                                                                    Field Code Changed

In Egypt, Amer (2002) studied and compared changes in the process of transition from
education to public employment, private employment, unemployment or inactivitywork in
Egypt between in the 1980ss and 1990ss (comparing transitions into four different labour
market states: public employment, private employment, unemployment and inactivity). The
public sector consistently has played an an important and steady role in the labour market
insertion forpath of educated youth young people in both the 1980s and 1990s. Among the A
comparison of individuals, who were had been students in 1981 and 1990, revealed that by
1988 and 1998, 29% and 28%, respectively, were employed by in the public sector (by the
including both government and public enterprises and government jobs) in 1988 and 1998
respectively. In the same period, transitions into the number of students employed by the
private sector increased from 31% to 51% (thus transitions into u, whereas unemployment and
inactivity decreased over the period). HoweverThat said, transitions into private employment
changed radically in terms of the kind of jobs, ; in particular transitions into, the number of
regular but unprotected (informal) jobs increased radically. Thus, the although the public
sector employment model is to some extent still in place in Egypt, but imore young people
choose (or are forced to accept) jobs in the informal sector, as an option to being nstead of
being openlyopenly unemployed andwhile they waiting for (scarce) public sector jobs and or
formal private sector jobs, many (more) school-leavers chose (or are forced to accept) jobs in
the informal sector.

2.4. Concluding remarks

In the last recent decades, the MEDA region has experienced large significant population
growth (and and subsequenthence, labour force growth) growth and. It has also implemented
economic reforms that have reduced the limiting the role of the public sector in providing
employment. have been main features in the MEDA region. AtE the same time, enrolment in
education and training has increased radically, and educational attainmental levels have
improved have increased radically. Individual (private) returns on education are substantial.
Generally, theThe economy-wide payoff of these investments improvements in education
seems, however, to have been limited in the MEDA region, although there is . However, little
evidence exists that the quality of the education system has deteriorated during this period of
large expansion. In addition, individual (private) returns to education are substantial. Instead,
The MEDA economies seem to have not been able to been incapable of matching these large
investments improvements in education with comparable reforms in the labour market to that
would make effective use take full advantage of the entering entry of cohorts of educated
workers to the labour market. A well-functioning labour market that functions efficiently and
effective employment creation mechanisms that are genuinely effective are both crucial to the
success of any policy aimed at fostering economic growth through increased investment in

                                                                                                    Field Code Changed

                    Chapter 3. Labour mobility and segmentation6
Human Although human capital plays a crucial role in the process of economic growth.
However, , itsthe impact of human capital on productivity growth depends on both the quality
of the human capital as well as theand the way this capital is allocated and used allocation and
utilisation of the available human capital. Labour mobility is essential to the efficient
allocation of human capital; in other words,For an economies to be able to usey can use their
its human resources more efficiently and productively, workers should be mobile to facilitate
that process. Thus when its workers are mobile labour mobility is an important requirement
for the efficient allocation of human capital.

Labour mobility to a large extent depends on the a flexibility of thele labour market; the USA,
for example, has a more mobile and flexible labour market structure than European countries.
D, and developed countries in general tend to have more flexible labour markets than
developing economies that allow labour mobility. T. Lhe US in particular has a mobile
flexible labour market more so than European countries for example. Labour mobility is
particularly important for economies undergoing economic reforms or transition, given that
because the speed and extent of labour reallocation between different sectors and labour
markets is an important factor in the influence the eventual success of such reforms or

Many economies, thoughhowever, suffer from segmented labour markets where that make it
difficult for workers cannot to move from one sector to another. Segmentation occurs as a
result of labour market distortions such as minimum wage levels and government hiring
practices. In many cases, workers are immobileare limited by because of entry barriers, such
as that prevent them from moving because they do not hold the required the wrong
educational degreequalification or , or they do not belong to a particular the wrong race or
gender. However, in many In other cases, the high cost associated with labour mobility
discourages workers from movingmoving between sectors. In effect This kind of labour
market segmentation resulting in labour imprejudices labour mobility and, consequently,
prevents the efficient allocation of human capital. Given the impact ofe importance of labour
mobility onin regard to how the utilisation of human capital is used, this chapter examines
labour mobility was examined in five countries of the Meda MEDAregion countries, namely
Egypt, Jordan, Lebanon, Morocco and Tunisia.

3.1. Which sectors are growing?

As a result of economic reforms and globalisation, The success of an economy during a
period of transition will be determined as discussed above,by the extent to which labour can
move shift from non-tradable to tradable sectors, from non-competitive sectors to more
competitive onessectors, and from inefficient sectors to efficient onesectors will determine the
success of an economy during transition. Thus, for the cPublic authoritiesountries therefore
need to be fully aware of under study, it is crucial to examine which sectors are growing and
which are not as an indicator ofin order to be able to labour reallocatione labour effectively.

Distribution of eEmployment by economic activity sector
 This chapter is was drafted by Jackline Wahba, (Economics Division, School of Social Sciences, University of
Southampton, Southampton, SO17 1BJ, United Kingdom). Email:, Tel: +23 80 593996. ,
Fax: +23 80 593858.                                                                                             Field Code Changed

In terms of the distribution of employment by economic activity, allAll the studied countries
under study have witnessed a falls in the share of agriculture in total employment in recent
years (Table 4.1). The agriculture sector in Egypt has continued its secular declined steadily
since from the 1960s as; between 1990 and 2002, for example, its agriculture’s share has of
employment fell decreased from 40.6% in 1990 to 27.5%. in 20027. Similar trends are seen
evident in Tunisia, where over the last four decades, the share of agriculture in total
employment has fallen from more thanover 50% around forty years ago to around 21% in
2003. In Morocco, although the distribution of employment by economic activity shows that
the share of agriculture in total employment has also fallen, it remains but it is still a major
sector in the economy, employing accounting for around 45 % of total employment in 2003.

Manufacturing Although manufacturing has always traditionally been seen to beas
instrumental for to economic development. However, , not all Mediterranean MEDA
countries have lately experienced an expansion ofs in their manufacturing sectors. In fact,
Egypt, for example, has witnessed a fall in the contribution of manufacturing in to total
employment, whereas , while in in Jordan, Morocco and Tunisia manufacturing employment
the share of has remained stablemanufacturing sector employment has been almost stable.
Underlying Nonetheless, underlying these broad trends have beenare significant
compositional changes shifts within the manufacturing sector though. The For example,
Jordanian manufacturing activitiessector, for example, can be broadly sub-divided into: the
large large-scale, wholly or partially state state-owned, industrial establishments that
produced chemicals, fertilisers and other mineral-based products; and a more small -to to-
medium, family-owned scale light manufacturing entities, in which private family ownership
tend to predominatebusinesses , that produced a wide range of consumer goods. In general, in
Jordan, ; the the larger industrial sector has tended to expand continuously overgrown steadily
over the period under discussion, while the more traditional indigenous sub-sector businesses
have has at times, been subject toexperienced severe declineemployment— decline. This
applied particularly in the recession of the mid- 1990s, when many uncompetitive traditional
enterprises were forced permanently out of businessto wind up in Jordan (Kanaan and
Kardoosh, 2002). In Tunisia, within manufacturing, the textile and apparel clothing sector has
traditionally been the most important manufacturing employer but ; however, its share of
employmenthas decreased from 10.4% in 1999 to 9.4% in 2003, and is likely to decrease
fasterfurther decrease as a result of the dismantling of the multi-fibre agreements and the
growing Asian competition from Asia.

The fortunes of the construction industry tend to reflect cyclical conditions in an economy as
a whole, and, in the MEDA countriesThe, c onstruction’s employment share of the
construction sector in total employment in the Meda countries has barely remained largely
unchanged. The fortunes of the construction industry tend to reflect cyclical conditions in the
economy as a whole. For example, in In Jordan, for example, there was a marginal small
employment decline in employment in the construction sector over the second half of the
1980s, followed by a modest recovery in the early 1990s, primary primarily due to the influx
of more than 300,000 Jordanian expatriates after after the Gulf Wwar. In Egypt, the a
construction boom was witnessed in the late 1970s and 1980s was as afuelled by result of the
inflow of remittances.

 However, it has toIt should be be noted that these figures may be underestimated since female participation in
agricultural activities and, in particular, in subsistence activities, is not captured throughreflected in the regular
LFSSlabour force surveys.
                                                                                                                         Field Code Changed

 On the other hand, the The services sectors (including trade, restaurants, hotels, transport,
 communications, finance and insurance) have has been the a main contributors to
 employment in all the Meda MEDA countries. In Tunisia and Morocco, the share of total
 services sector grew and contributed almost 45% to total employment in 2003. I; in Egypt, the                       Comment [p5]: This figure of 45% for Morocco
                                                                                                                     seems to contradict Table 3.1., which states (for all
 share of employment in servicesits share has risenrose from 48.7% in 1999 to 51.9% in 2002.                         the referred to sectors, 12.5 + 3.5 + 19) 35%
 This structure of employment by according to economic activity is biased towards non-
 tradable sectors and therefore, and, since these sectors are constrained by limited domestic
 demand, cannot generate sustainable sources of income of growthcannot be generated as
 these sectors are constrained by the limited demand by the domestic economy. However,
 trade, hotels and restaurants has witnessed the highest growth rate during the last decade, but
 has only increased by around one percent between 1999 and 2002 as seen in Table 3.1. This is
 basically driven by tourism which is a tradable service. Although tourism has increased in the
 last decade, it has been set back by various terrorist attacks and thus has been hindered from
 achieving its potential in employment creation. In Jordan as well, employment trends in the
 restaurants and hotels sector were responsible for the highest increase in services

 Table 3.1.: Distribution (%) of Employment employment by Economic economic
 Asectorctivity: (1999 & 2002/03) (%)

Economic activity                   Egypt                Jordan              Morocco                Tunisia
                                1999    2002          1999   2003          1999   2003            1999    2003
Agriculture                      28.70      27.52      ---       ---        47.8       45.2       21.82     21.3
Mining/manufacturing             13.46      11.85     17.65     17.74       13.8       13.1       20.23     19.7
Construction                     7.88       7.36       3.32      3.74        6          6.6       12.18     12.28
Utilities                        1.236      1.35       2.26      2.11        ---        ---       1.31      1.09
Trade/hotels/restaurants         13.85      14.78     22.26     25.11       10.8       12.5        ---       ---
Transport/communications         6.33       6.34       6.23      4.49        3          3.5        ---       ---

Finance/insurance                2.74       1.23       2.93      2.57        ---        ---        ---       ---

Services                         25.80      29.55     45.35     44.24       18.4        19        28.5      45.03
Total (in thousands)              16750.2     17856.2     584.4   692.1      9360.3     9945.9      250.4    295.1
 Sources: Egypt : CAPMAS, Labour Force Sample Surveys 1999 to 2002.
          Jordan : Department of Statistics. Employment Surveyssurveys., Department of Statistics.
          Morocco : Direction de la Statistique. Enquête ‘Activité, emploi et chômage’ , 1999, & 2003.,
 Direction de la Statistique.
          Tunisia : Institut National de la Statistique. Employment surveys 1997, 1999, 2000; 0 & 2001. INS.

 The highest growth rates in the last decade have been witnessed in the trade, hotel and
 restaurant sectors, but as can be observed from Table 3.1, growth was only around 1%
 between 1999 and 2002. This sector is basically driven by tourism, which is a tradable
 service. Although tourism has generally increased in the last decade, it has been badly
 affected by terrorist attacks and has, consequently, been hindered from achieving its full
 potential as a source of employment. In the services sector in Jordan, a growing restaurant and
 hotels sectors is responsible for the highest comparative increase in employment.

 Secondly, we examineExamining the average annual growth rate ofin total employment and
 employment by sector (Table 3.2). Overall,, we find that total employment growth was the
 highest in Jordan (5.8%) and the lowest in Morocco at (1.6%). The average annual growth
                                                                                                                     Field Code Changed

rate of employment in , with Egypt was 2.2%and while in Tunisia was 3%registering
intermediate growth rates (2.2% and 3%, respectively). Although these rates of employment
growth were somewhat differentvaried, similar patterns of employment growth patterns were
seen in the MEDA countrieswere very similar. The , with, for example, very small average
annual growthincreases in agricultural employment in agriculture has been very small at (less
than one percent1%) in Egypt, Morocco and Tunisia. Agriculture has been hardly growing
over the last few years.

However, mFew countries have experienced significant increases in manufacturing
employment. has not been growing in all countries. In fact in Egypt, In fact, manufacturing
employment in Egypt it has been decliningdeclined at an average annual rate of just over 2%
over between 1999 and- 2002,, while in Morocco it hardly grewstagnated. Yet in In Jordan
and Tunisia, on the other hand, the average annual growth of in manufacturing employment
was 6% and in Tunisia was around 3.5%, respectively, indicating thus suggesting a healthier
manufacturing sectors in both countries. On the other hand, As for construction employment,
Jordan and Morocco have experienced an average annual increases in employment in
construction, while whereas Egypt and Tunisia have seen a experienced declines.

In all the countriesThe services sector has been growing in all the MEDA countries, have
been growing, but at a much faster rate in Egypt and Jordan, where the average annual growth
of in services employment between 1999 and 2002 in services was almost around 7-% to 8%
between 1999-2002. On the other hand, inIn Tunisia and Morocco, however, the average
growth rates were of the services sector in both countries was around 2-3%more modest (at
2% to 3%) which is less than that witnessed in Egypt and Jordan. Employment in theThe
education sector has generally witnessed lower than average employment growth rates:
between 1999 and 2003, not been the fastest growing services sector. In Jordan employment
in the education is sector in Jordan grew by 2.7%, while for the same period in Tunisia,
education, health and public administration employment grew by 1.9% between 1999 and

There is no time series on the distribution of employment by economic activity sector or on
the growth of employment growth by economic activity sector in Lebanon. However based
on, extrapolating from the various surveys, there is an indicationit would appear that,
between 1997- and 2002, employment in the trade and services sectors has been growinggrew
at the expense of industry, agriculture and other activities.

Table 3.2.: Average Annual annual employment growth (%) of Employment by Economic
economic Activity:sector ( 1999 to 2002/03) (%)
                           Egypt        Jordan    Morocco         Tunisia
                        1999-2002      1999-2002 1999-2003       1999-2003
 Agriculture                0.80           …        0.12            0.91
 Manufacturing             -2.02           6        0.22            3.47
 Construction              -0.10          10.1      4.22           -0.42
 Services                   6.96          7.7       2.43            2.73
 Total Employment           2.16          5.8       1.56            3.00
Sources: Egypt: CAPMAS Labour Force Sample Surveys 1999 to 2002.
        Jordan: Department of Statistics. Employment surveys.
        Morocco: Direction de la Statistique. ‘Activité, emploi et chômage’ 1999 & 2003.
        Tunisia: Institut National de la Statistique. Employment surveys 1997, 1999, 2000 & 2001.

                                                                                                         Field Code Changed

Sources: Egypt : CAPMAS, Labour Force Sample Surveys 1999 to 2002.
        Jordan : Employment Surveys, Department of Statistics.
        Morocco: Enquête ‘Activité, emploi et chômage’, 1999, 2003, Direction de la Statistique.
        Tunisia: Employment surveys 1997, 1999, 2000; 2001 INS.

OverallIn conclusion, the MEDA countries have experienced a slow- down in agricultural
employmente, and . The growth of the manufacturing sector employment has varied greatly in
growth terms. has been mixed. Employment in the services sector, which employs most
workers in absolute terms and represents the largest share of total employment,However, the
services sectors have has been expanding in all the MEDA countries and employing more
workers in absolute terms and as a share in total employment in all the countries.

Ownership Public/private ownership of economic activity
Another important dimension in addition to the economic activity isof employment is
economic activity ownership the economic sector by ownership. All given that all these
MEDA countries have had a substantial substantial public sector presence, but have and
havealso undergone reforms to in recent decades in order to rationalise their public sectors
and privatise their public enterprises.

Table 3.3 shows the changes in the distribution of public/private ownership of economic
sectors activity between 1999 and 2002/03. Although the public sector’s share of total
employment in Tunisia and Morocco have experienced a fall in the has fallenshare of the
public sector in total employment, Egypt has experiencedthere has been a a slight increase in
Egypt. Although Since 1990, the Egyptian economy has been implementing a programme of
structural adjustment aimed at reducing the role of the state in ,the beginning of the 1990s
aiming at reducing the role of the state, but the public sector (including the government sector
and public enterprises) is still a major employer. Indeed, the share of the public sector in share
of total employment has increased from 31.8% in 1990 to 33.5% in 2002. Yet the r, although
there was evidence of a ecent trendslow-down between 1999- and 2002. suggest a slow
down in the growth of the public sector. The substantial increase in the share of the
government public sector employment sector is driven mainly by the growth in public
services such as health and education services, in which ledwhich the government to sector
continued to hiring hire at high levels during the 1990s. The increase in government
government employment has to some extent offset the large job downsizing and contraction
oflosses in public enterprises, whose share in of total employment fellhas fallen (, especially
since 1995) as a consequence of with the implementation of the privatization privatisation

Tunisia and Morocco have experienced declines in the public sector’s share of
employmentOn the other hand, both Tunisia and Morocco have experienced a decline in the
share of public sector employment. Indeed, Tunisia has managed to squeeze radically reduce
employment in the public sector from around 19% in 1999 to just under 13% by in 2003. ; by
2003, public sector employment in Morocco on the other hand has managed to reduce its
public sector to was less than 10% of total employmentby 2003.

Those figures in Table 3.3 also point out thatshows that thethe share of the private sector’s
share ofin total employment is more prominentgreater in both Tunisia and Morocco compared
to inthan in Egypt. In fact, the share of the private sector employment in the private sector in
Egypt fell from 68.1% in 1990 to 66.5% in 2002. When looking more precisely at this
evolutionExamining this trend in more detail, it appears that, coinciding with the slowdown in
government employment growth, the share of the private sector share of employment reached
                                                                                                        Field Code Changed

a low of decreased from 1990 to 1997 reaching 63.9% in 1997, but beginning from 1997 its
share rose tothen rose to reach 66.5% in in 2002. coinciding with the slowdown in the growth
of government employment. However, it has to be noted that theThe overall decline in the
share of private employment reveals disparities across according to gender, however. While
the share of the private sector employment of men increased (for male employment from
66.8% in 1990 to 69.3% in 2002), for women it decreased considerably in terms of female
employment (from 71.8% to only 54.2% over for the same period). Thus the The government
sector in Egypt, consequently, continues to be a major still represents the main esource of
employer for femalesment for women in Egypt.

Table 3.3.: Distribution of Employment Employment (% of total) byaccording to
public/private Sector ownership of economic activity of Ownership: (1999 and 2002/03)
(% of total)
 Sector of Ownership                          Egypt                Morocco                  Tunisia
                                          1999    2002           1999    2003            1997     2003
 Government                               26.62   28.21           8.80        8.30        ---        ---
 Public enterprises (PE)                  6.52     5.32           1.50        1.20        ---        ---
 Public sector ( (Government
 government+ PE)                          33.14       33.5       10.30       9.50       19.29       12.86
 Private                                  66.86      66.47       88.20       89.10      80.71       87.14
 Others                                     ---        ---        1.50       1.40        ---         ---
 Total                                     100        100         100         100        100        100
Sources: Egypt: CAPMAS Labour Force Sample Surveys 1999 to 2002.
        Morocco: Direction de la Statistique. ‘Activité, emploi et chômage’ 1999 & 2003.
        Tunisia: Institut National de la Statistique. Employment surveys 1997, 1999, 2000 & 2001.
Source: Egypt: CAPMAS, Labour Force Sample Surveys 1999 to 2002.
        Morocco: Enquête ‘Activité, emploi et chômage’, 1999, 2003, Direction de la Statistique.
        Tunisia: Employment surveys 1997, 1999, 2000; 2001 INS.

Table 3.4 shows the average annual growth rate of employment growth byaccording to
economic activity economic ownershipsector. In Egypt, showed the highest level of the
public sector continued growingemployment growth. I; indeedn fact, government
employment grew more rapidly than overall employment overall. However,, even though
employment in the public enterprises shrank as a result of privatisation in Egypt. Morocco
though has witnessedsaw an overall a decline in the growth of public sector employment.
Civil While employment in the civil Service service and in local government jobs have barely
increased remained essentially stagnant between 1999 and while 2003, the employment in
public enterprises (nationalised and semi-nationalised industries) has providedfell
considerably fewer jobs between 1999 and 2003. On the other hand, theThe private sector in
Morocco has generated the greatest number of jobs over this period, albeit at a very low rate.
Also, The public sector in Tunisia has experienced a also contraction of ed;the public sector,
but the private sector, in contrast, has shown more success in having aed healthy growingth
private sector.

Table 3.4.: Average annual rate oemployment f growth (%) of employment according
to public/private ownership of economic activityby sector of ownership: (1999 to
2002/03) (%)
 Sector of Ownership sector                         Egypt            Morocco            Tunisia
                                                  1999-2002         1999-2003          1999-2003
                                                                                                                 Field Code Changed

 Government                                          4.14               0.05                …
 Public enterprises (PE)                            -4.52              -3.75                …
 Public sector (Government + PE)                     2.55              -0.50              -1.28
 Private sector                                      1.96               1.83               6.78
 Others                                               …                -0.21                …
 Total                                               2.16               1.56               5.23
Sources: Egypt: CAPMAS Labour Force Sample Surveys 1999 to 2002.
        Morocco: Direction de la Statistique. ‘Activité, emploi et chômage’ 1999 & 2003.
        Tunisia: Institut National de la Statistique. Employment surveys 1997, 1999, 2000 & 2001.
Sources: Egypt: CAPMAS, Labour Force Sample Surveys 1999 to 2002.
        Morocco: Enquête ‘Activité, emploi et chômage’, 1999, 2003, Direction de la Statistique.
        Tunisia: Employment surveys 1997, 1999, 2000; 2001 INS.

To sum upIn conclusion, most of the MEDA countries have experienced a decline indeclining
employment levels in public enterprisess employment. However,, because of the pressure to
provide work to new entrants to the labour market, but have not all countries have managed to
downsize the government sector because of the pressure to create jobs for the new entrants to
the labour market. T. Thehe private sector, moreover, has failed to has not been able to create
enough new jobs for to meet demand from the increasing growing labour force in all countries
as well.

3.2. The informal sector

During the last two or more In recent decades, the informal sector has played a major role in
the MEDA labour markets, accounting . It has been responsible for a substantial increase in
job creationnumber of new jobs. As a result, the share of informal employment in most
countries in the region has increased sharply.

Definition & and measurement
The informal economy consists of a wide range of informal enterprises and informal jobs.
Despite its heterogeneity, it can be is distinguished in general terms by two main component
segmentsfeatures, namely: type of economic unit and employment status. The economic unit
in the informal sector refers to is an all unregistered or unincorporated enterprises below a
certain size (usually five or fewer employees or less), ; such enterprises are typically
including: informal micro-enterprises (owned by informal employers who hire with one or
more employees workers employed on a continuing continual basis); andor own-account
operations owned by individualssole traders (who may employoccasionally employ
contributing family workers members and employees on an occasional basisor other workers).
In addition,Note that the informal sector does not include agricultural activities.

Employment status in the informal sector is employment that is invisible, unregulated, and
unprotected by existing legal or regulatory frameworks, i.e. On the other hand, the informal
employment status refer it typically refers to employees oto employees of informal enterprises
(as well as also to employees working informally some non-standard forms of wage
employment in formal enterprises, or in households , or with no fixed employer (this includes
domestic workers, casual or day labourers, temporary or part-time workers, industrial
outworkers (including , home workers), and unregistered or undeclared workers). Under the
expanded concept, In broad terms, informal employment is understood to include all both
remunerative remunerated work – (both self-employment and wage employment -) that is not
                                                                                                         Field Code Changed

recognized, regulated, or protected by existing legal or regulatory frameworks and non-
remunerative remunerated work undertaken in an income-producing profit-making enterprise.

In spite of the heterogeneity ofAlthough the informal sector economic units and employment
status in the informal sector may be very varied, , however, what all informal activities have
in common is their vulnerability. This vulnerability is due to the fact that they have to rely as
best they can on self-supporting and “informal” institutional arrangements, which and that
they operate separately from, and independently of, the institutions of the modern economy.
In addition, for informal workers, moreover, is precarious and working conditions are
typically poor. lack of stability or security as well as poor working conditions make them

The limitations of ed availability of statistical data on the informal sector and informal
employment are is a major constraint in terms of studying the sector size and dynamics of this
important sector. Based on the data available for a few countries in the region, a recent
estimate of on the size proportion of informal employment in the non-agricultural
employment informal sector in north African countries is around 48% for North African
countries, ; Egypt and Tunisia have the highest rates of informal employment, at with almost
505% in Tunisia and 5550% in Egypt, respectively (Figure 4.1).

Figure 3.1.: Size of the informal sector (% of non-agricultural eNon-agricultural
informal sector employment (% of total )




                Syria       Egypt      Tunisia Morocco Algeria

Source: ILO, (2002)., Women and men in the informal economy: a statistical picture. , Geneva, International
Labour Organization

Self-employment represents nearly around one -third of total non-agricultural employment
worldwide. SelfThe self-employment rate in MEDA countries, expressed as a percentages of
total non-agricultural employment, in the MEDA countries are is not especially high (Figure                   Comment [p6]: Fig. 3.2. / The ‘not especially
                                                                                                              high’ would seem to contradict the data given in the
3.2), although it has increased in the 1990s relative to the 1980s. , compared to other regions:              next marked sentence. This Fig indicates that the
Data for other regions indicate rates of 53% in for sub-Saharan Africa, 44% in for Latin                      MEDA countries have % of 50% plus. If this isn’t
                                                                                                              ‘especially high’ compared to the other contrasting
America, 32% in for Asia, and 31% in for North Africa. Figure 2 presents the figures for a                    rates given, what is?
selected group of MEDA countries. In addition, and Mmore importantly, self-employment
comprises a greater share of informal employment than wage employment in most developing
countries and, and this is also the case in the MEDA countries as well. In fact, self-
employment account s for at least 50% of informal employment as in Egypt and Tunisia and
up to 81% in Morocco (Figure 3.2). There tends to be a higher proportion of the self-
                                                                                                              Field Code Changed

employed individuals compared to wage-employed individuals in the informal employed who
are self-employed tend sectorto be higher than those working for wage in Algeria, Tunisia,
Morocco and Syria, but not in Egypt or Tunisia, where they are equal proportions are more or
less equal.: 50% of informal employment is accounted for by self-employment and 50% by                        Comment [p7]: Note correction re. Tunisia.
wage employment (Figure 3.2).

Figure 3.2. Share of sSelf-employment and vs. wage employment in the non-agricultural                         Comment [p8]: Note that the legend (incorrect
                                                                                                              and unnecessary)at the top of this Figure has been
informal non-agricultural employmentsector: (1994-2000)                                                       blocked out using an empty text box .

              Figure 2:Share of Self-Employment and Wage Employment in
                   Informal Non-agriculatural Employment: 1994-2000






                Algeria        Morocco          Tunisia          Egypt           Syria

                                 Self-employment      Wage Employment
Source: ILO, (2002). , Women and men in the informal economy: a statistical picture., Geneva, International
Labour Organization

As a whole, the informal sector is functions in an anti-cyclical manner. E, with employment
in the informal sector tends to tending to grow and expand as the economic cycle is oriented
downwardwhen there is an economic downturn, and it shrinks or at least its growth slows
downtending to shrink or stagnated when the when the economic cycle turns upward. Since
these the MEDA countries have been undergoing a period of economic reform,s it is not
surprising that employment in the informal sector has been on the rise. In fact, in most
developing countries, employment in the informal economy tends to expand during periods of
economic adjustment or transition. In the case of the MedaMEDA countries, as a result of
reforms, the reform process has led the public sector to limit has been trying to limit the
number of new employment opportunities it can generateemployment and to downsize. In
addition, privatization privatisation of public enterprises has led to lay-offs, and the and the
private formal sector has shown itself to be incapable of absorbing absorption of the growing
increases in the labour force by the private formal sector has been relatively limited. All of
theses factors have led to the an increase of in informal employment. Also, inMoreover, in
response to inflation and cutbacks in public services, households often find that they have to
needed to supplement formal sector incomes with informal earnings. In addition,
theFurthermore, the MEDA economies of the region have been affected by globalisation,
which has meanthave been increasingly facing increasing global competition from abroad, as
a result of globalization, that . This has led to an erosion in eroded employmentlabour
relations by encouraging , with formal firms to hireing workers at low wages with few
                                                                                                              Field Code Changed

benefits, or to sub-contracting (or out-sourceing) the production of goods and services.
Moreover, and by reducing thethe competitiveness of many informal firms, or self-employed
producers, is also affected, vis-à-vis imported goods in domestic markets and vis-à-vis larger
more formal firms in export markets.

Egypt provides evidence of this anti-cyclical informal sector growth of the informal sector
where. Its the informal sector has increased grown in the pastrecent years, and by now,
decades represents a significant ing an important and increasing share of the Egyptian
economy. El Mahdi (2002) gives an estimate of the informal economy using Using the broad
definition of coined in 1993 by the International Labour Organisation (ILO), (1993)
combining informal employment and informal sector and using the special labour surveys of
1988 and 1998. She El Mahdi (2002) made an estimate of the informal economy and informal
employment using special labour surveys for 1988 and 1998. T estimates that the number of
informal wage workers,8 which grew from 2.3 million in 1988, (prior to economic reforms, )
to 3.3 million in 1998 (reaching 3.7 million when addingif unpaid family workers are
included) which , represents represented 82% of total private non-agricultural wage workers.
As for theThe number of informal economic units,9, it which grew from 2.4 million to 2.8
million over the same ten-year period, representeding 84% of total all economic units. Thus,
tehe overall number of workers (adding the including unpaid family workers) reached 6.5
million in 1998 compared to 4.7 million in 1988. Also, Moktar and Wahba (2002) give
anmade an estimate of the evolution of informal employment growth in Egypt from for 1990
to 1998, based on the employment history of employment module of the Egypt Labor Market
Survey 1998ELMS 98.10 . Using several different definitions of informal employment (lack of
contract, lack of social security coverage, or lack of both), they find found that the proportion
of individuals in informal jobs increased by from about 5-% to 6% from between 1990 to and
1998. When controlling for individual characteristics such as gender, age, educational level
and region of residence, McCormick and Wahba (2004) find reported the same trend.11.

Irrespective of the definition of informal employment, tThe probability of being informally
employed has increased by around 5 percentage points from between 1990 to and 1998 in
Egypt, whatever the definition of informal job being used. For example, the probability of
being employed with no contract increased from 39% in 1990 to 44% in 1998. However,
theThis probability of being informally employed increased more was greater, however, for
specific socio-economic groups, namely women and young people such as females and the
youth (less than under 40 year oldss, and in particular, the 20-29 years old-old age bracket).
Also, this result is confirmed by the huge increase in . Tthe proportion of informally
employed new entrants beingto the labour market informally employed increased from 20%
in 1969 to 69% in 1998. Women are the most at risk as the, and the predicted probability for a
female new entrant of taking a job without a contract increased by 12 percentage points from
1990 to 1998. ThusConsequently, young females female job-seekers facing barriers to entry
in the formal private sector suffered the most fromworst consequences of the economic
reforms and its consequences (McCormick and Wahba, 2004). There is no doubt that

  Informal employment refers to the number of wage workers (outside the agriculturale sector) without with no
written social security contract, of social security working either in formal or informal economic units (El
Mahdi, 2002).
  An informal economic unit refers to the one withhas no licence and/or is or commercial/industrial unregistered,
and that does not keep regular accounts. The size of the economic unit is not taken into consideration; however
more 95 percent% of informal economic units employ less than 5 workers (El Mahdi, 2002).
   Moktar and Wahba (2002) refer to non- agricultural workers aged 18-64 years in 1990 and 1998.
   Three definitions of informal employment were used among the for non-agricultural workers aged 15-64 in
1990 and 1998 (McCormick and Wahba, 2004).                                                                          Field Code Changed

theUndoubtedly, the growing informalisation of the Egyptian labour market—which took
place in the last decade in responseresponds to the economic reforms and structural
adjustment programmes launched in at the beginning of the 1990s and that it affected —
particularly affects the most vulnerable groups - in the population, i.e. females women and
youthyoung people.

Tunisia There arehas also shown signs that the size ofof a growing the informal sector ialso
increasedn recent decades in Tunisia during the past decade or two, given the as a result of
reforms and restrictions imposed on public sector growth and of that the country had to go
through and as a result of a government policies favouring the development of small and
micro- enterprises. A sStagnation of in the proportion of the wage- earning employees,
concomitantly with the growth of the family non-unpaid labour, (especially in the
agriculturale sector), suggest would indicate that the formal sector, which is based on wage
labour, has not been growing fast enough and is not gfailing to generate jobs in sufficient
numbers. enerating enough jobs, pushing workers in any case to move to the informal sector.

The role of the informal sector
The informal sector has played an important role in job creation role in during the period of
reform in the MEDA countries.s. For example, in In Egypt by the end of the 1990s, for
example, 69 % of new entrants to the labour markets only managed to only secure informal
jobs. Workers operating within the informal sector engage in a There is a wide variety of
transactions coveringactivities in the informal sector, covering manufacturing, trade, repairs,
construction, transportation and petty services. The informal sector . Goods tend to be
produces more non-tradable goods. These range from and the range of jobs is wide, from
lower- end activities such as street vendors vending to innovative metal--working and
designworkshops sub-contracted from the with formal sector subcontracts and product
design. In Jordan, more than 70% of workers in services and sales (typically enterprises with
less than five employees) are employed on an informal basis(working for enterprises with less
than five employees). In Egypt, informal workers are concentrated in the manufacturing,
construction, trade and transport sectors. Informal female women workers are limited
restricted to a few small range of economic activities, namely,: trade (37 percent%),
manufacturing (31%) and transport (25%) (El Mahdi, 2002). In Morocco, the most common
business activities linked to the informal sector are ‘trade and repairs, which account for ’.
This sector generates 48.2% of all informal business activities. In Tunisia, most of the
iinformal employment is concentrated in the following sectors: manufacturing, (mainly in
food-activities, wood products, and metals products), construction, commerce, automobile
repair, and transportation, and that; e employment, moreover, is highly correlated with
production and value added. In Lebanon too, , according to the 1997 Census of Buildings and
Establishments conducted by the Administration Centrale de la StatistiqueCentral
Administration of Statistics (CAS), 76% of construction companies and 94% of service
businesses are small enterprises. comprise between 76% of enterprises in construction to up to
94% of enterprises in services.

The informal sector is quite heterogeneous. On one hand, the informal sectorit involves
productive small-scale activities with the potential for growth and technical upgrading, and at
the other extreme, “dead-end survival” activities, which absorb those workers without any
particular skills. Based on international experiences, the micro and small and micro-
enterprises can be a keyplay a key role in creating jobs and reducing gaps between labour
supply and -demand gaps. In developed and developing countries alike, small enterprises           Field Code Changed

represent a high share of enterprises and can be the mostan important source of employment
generation. In Egypt, for example, in the mid-1990’s, the vast and mostly informal sector of
micro- enterprises sector employed more than 2.5 million workers in 1.5 million
establishments with of less than 5 employees, and another 500 thousand ,000 workers in
establishments employing 5-9 five to nine workers (1996 Census of Buildings and
Establishments). In Morocco, the "National Survey on Non-structured Structured Enterprises"
indicates that informal enterprises alone represent 37%, 19% and 26% of employment in the
commercial sector, , services19% in services and 26% in and industrial sectors, respectively.
industry. In Jordan, according to the Direction de la Statistique, informal small and medium-
sized enterprises, (SMEs) according to Jordan's Department of Statistics, accounted for 33%
of total employment (Abdel Fadil, 2000).

The data available on small and micro and small- enterprises indicate a highly segmented
structure of inthe private sector establishments in countries of the Arab region countries,:
with a vast majoritylarge number of informal “small” and “ micro” -enterprises sub-sector, at
one end of the spectrum, and a small group of formal large and modern enterprises sub-sector,
at the other end of the spectrum. This, in turn, points to the fact that there is a “missing
middle”, middle component in the structure of the private business sector structure in most of
the Arab region. In Morocco, based on the a national survey of the non-agricultural informal
sector, undertaken inbetween 1999/2000, during the period of this survey (April 1999 to and
April 2000,), estimated the number of informal production units was estimated at 1,233,240
units. The , of which the majority were small-scale operations. , 87.2% of which are were run
by sole traders working alone or using unpaid labour. Only (i.e. only 12.8% of these informal
units make made use of paid labour). Informal units were estimated to employed
aroundaccount for 39% of total non-farm employment and 20.3% of all jobs. Informal
employment in Morocco is mainly self-employment (69%). Similarly, Inprivate enterprises in
Tunisia, private enterprises are also predominantly small: 99% are micro- enterprises with
less than six employees. The A 1997 Survey survey on micro- firms (less than 6 employees)
by the Institut National de la StatistiqueNational Statistics Institute show revealed that
approximately 18% of total non-agricultural employment wais in the informal sector. The
World Bank estimates that, in Tunisia, the informal sector contributes accounts for 38% of
GDP in Tunisia. Lebanon's economy as well isis also dominated by small- scale enterprises.
The 1997 Census of Buildings and Establishments conducted by the Administration Centrale
de la Statistiquecensus of buildings and establishments conducted by the central
administration of Statistics (CAS) put the number of existing enterprises at 198 thousand,000,
with where small enterprises employing less than five employees make up the bulk of
operational enterprises:accounting for 88% of the total number of enterprises in Lebanon.
Overall, the informal sector generates around 19% of employment in the Lebanese economy.

Since the late 1970s, tThe informal sector in the Arab countries of the Arab region has proved
to be sufficiently dynamic and resilient, by maintaining its . It has led the way in lead in
“terms of job employment creation”, and by increasinghas grown considerably its relative
share in certain lines of activities such as: transport, furniture manufacture, leather-making
and, shoe manufacturingfootwear manufacture, metal products, and repair shops. In most
Arab countries, both the number of establishments and of employees has have risen grown
significantly faster than the rate of growth of the labour force (Abdel Fadil, 2000). Although,
those informal enterprises constitute an inexpensive and efficient creator of employment in
economies where capital and technology are scarce, those enterpriseeys are operating at far
from operating at their full potential because of market failures that prevent them from
accessing obtaining access to credit, skilled labour, better technologies, and the larger
                                                                                                  Field Code Changed

domestic and export markets. In Tunisia in 1997, for example, in 1997, investment in the
informal sector was modest ( at around US 150 US$ per worker) compared to the Tunisian
per capita gross investment, (approximately equal to US$2,000 per worker) US$. This little
investment was mostly self-financed (75%) by the informal firms, which confirms that they
have very limited access to banks and to other formal financial institutions. Unfortunately,
there are no data available on the dynamics of informal micro and small and micro-
enterprises,; such as i.efor example,. on whether entrepreneurs in small and micro-
enterprisesmicro and small enterprises respond to new opportunities and make speedy
adjustments to change, and or on whether their enterprises become formal or grow in size
over with time.

The characteristics of the iInformal sector worker characteristics
Although, informal employment isjobs are generally a large more important source of
employment for women than for men in developing countries, this is not the case in the
MEDA countries (for which data are available: (Algeria, Tunisia, Morocco, Egypt and Syria)
this is not the case; i.e., where t the proportions of here is a disproportionate number of men in
informal employment exceed those of women. In addition, although female self-employment
as a share of female total non-agricultural employment has increased in most developing
countries, this trend has not been seen in ere is no evidence that this is the case in the MEDA
region. , where, in In fact, the share of female self-employment has been fallen in the MEDA
countriesing. One reason behind that this trend has been is that there are the fall in the share
of increasingly fewer women female entrepreneurs. I; inn other words, in the MEDA region,
the entry of women typically into enter the labour market in the MEDA region as wage
earners. mainly operates through wage employment. Although this can be anis a potentially
encouraging featurefactor, it also indicates that there are probably potentially serious
obstacles to placed in the way ofthe entry of women who want to be as entrepreneurs. In
addition, wRomen have very littleestricted access to private formal sector work employment
and with the downsizing of the public sector has meant that women have had to increasingly
end up inaccept unprotected jobs in the informal sector. For This is the case in example, in the
case of Tunisia, for example, where informal employment is growing; nonetheless,,
anddespite this growth, the share of women in informal employment has been dropping,
especially for the self self-employed (Charmes, 2003). In Egypt informal workers are
predominantly males; in 1998, for example, only . Aaround 13% of total all non a-griculture
agricultural wage workers without ah no contract in 1998 were females women (McCormick
and Wahba, 2004). Informal economic units are also male male-dominantdominated. The
drastic large drop that occurred inin the number of formal economic units run by
femaleswomen from 1988 to 1998 and the sharp increase in informal economic units run by
females from 1988 to 1998 women between 1988 and 1998 reflect, once more, the high
barriers to entry for femalesfor women in in the formal private sector (El Mahdi, 2002). In
Morocco, as well also, women are remain in the minority in informal employment. O, with              Comment [p9]: These sentences appear to be
                                                                                                     contradictory, or at the very least, the data is
only 12.7% of informal jobs are occupiedheld by women. Similar trends are seen evident in            presented in a confused way, as it seems to be
Jordan, where females tend to work in the formal sector rather than in the informal sector one.      confusing the general situation with that of women. I
                                                                                                     have tried to correct the data but this needs a 2 nd
Secondly, the majority of theAnother feature of the informal sector workers is that workers
tend to tend to bbe uneducated. This correlation between low educational level and the
probability of being informally employed has been demonstrated by McCormick and Wahba
(2004). In Egypt, for example, even though educational attainment has generally improved for
both formal and informal workers, the educationalal gap is persistentbetween them remains
wide. I; informal wage workers are concentrated among those with no and less thantend to
have less than intermediate-level education. There is a negative correlation between
                                                                                                     Field Code Changed

educational attainment and the probability of being informally employed (McCormick and
Wahba, 2004). In Morocco, workers in the informal sector are also poorly educated. M; more
than 46% percent of such workers have never been to school and 70.3% of them have no
qualifications. In Tunisia, the an Institut National de la Statistique survey brings provides
further evidence about of the education and skill levels of the labourworkers employed in the
informal sector (as also onand about its investment in the informal sector and access to the
financial market. It e), shows reporting that the proportion of those workers with high
schoolsecondary and higher education is was significantly lower than in the informal market.
Even so, , but is not at all negligible: 12% of the employed reached high schoolhad secondary
education, and 1 percent% higher education—although p. Presumably, people with higher
education are mostly employers in the informal sector.

Overall, the evidence from the five countries under study studied suggests that the informal
sector is substantial in the MEDA region, . It is dominated by males, and employs mainly
uneducated workers.

3.3. Sectoral mobility: the case of Egypt

There is very little information on labour mobility in MEDA countries due to the lack of data,
so we will discuss the case of Egypt, as . The the only country with providing data on sectoral
mobility is Egypt; therefore the Egyptian case is discussed below.

Overall Between the 1980s and the 1990s, overall labour mobility in Egypt has declined in the
1990s compared to the 1980s from 27.7% to 22.6%.12. In the 1990s, most mobility occurred
the most between in relation to employment status (30%) followed by occupational mobility
(18%), change in economic activity (13%), informal/formality status (9%), and finally, in
economic sector (7%). Although itIt is striking that sectoral mobility was lower beforeduring
the era of adjustment, sectoral mobility was lower before, although this is likely to be because
the labour market and workers were adjusting to the reforms through a different mechanism
and notrather than through existing workersby changing sector of employment. Existing
Many workers , in particular older workers in the 50-59 age brackets, were pushed out of the
labour market altogether- , particularly older workers in the 50-59 year-old age bracket
(through early retirement). On the other hand, nNew entrants to the labour market were
pushedre chanelled, more than ever before, into the private sector and to into informal
employment. (Wahba, 2002).

Mobility between public and private jobssectors
In the 1990s, similar to the as in the 1980s, and despite attempts to downsize the public sector,
the mobility of civil servants were not mobileas low, with : the government sector had tthe
government sector accounting for the highest persistency rate (86%). Among females, fewer
civil servants were mobile in the 90s. However, and as seen above, the Although the transition
rate of public enterprises’ workers increased as a result of the downsizing of in state- owned
enterprises and the a privatization privatisation programme implemented in this period in
Egypt. O,n the whole, there is no evidence ofthat greater mobility from public jobs to private
jobs occurred during the period of major economic changes in Egypt. On the contrary, the
transition rates from public jobs (comprising government and public enterprises employment)
to private jobs were was lower in the 1990s (8.1%) compared tothan in the 1980s previous
decade (4.8%). This phenomenon was experienced by both males and femalesen and women
  Mobility refers to any changes that could occur in employment status, economic sector, occupation, economic
activity, or in geographical job location (see Wahba 2002).                                                     Field Code Changed

and by both young and older workers. The probability of moving from the public employment
to the private sector dropped more fell significantly for females thoughwomen. This was ; this
was due to the fact that women were more eager to keepkeen to hold onto their public jobs as
those jobs became scare and because, which, in turn, was a consequence of the fact that
women tend to face barriers to entry in the formal private sector.

However, An analysis of exit rates from public employment to non- employment reveal
throws up interesting results. They Exit rates increased significantly amongfor malesmen
while itbut declined slightly among for femaleswomen. But above all,T the probability of
leaving public employment for unemployment or inactivity almost doubled between the
1980s and 1990s amongst those aged 35-60 years, from the 1980s to the 1990s reflectingas a
consequence of the early retirement scheme implemented in the public sector (McCormick
and Wahba, 2004).

Mobility between formal and informal sectors
Evidence for Egypt suggests that there is no significant movement from public employment to
informal employment. Indeed, those who leave the public sector typically become inactive.
On the contrary, there areThere is, on the other hand, more significant movement from
informal employment to formal employment; and this is particularly true for the youthyoung
people, suggesting that informal employment is represents a waiting waiting stage phase for
until they obtain a public job. Insignificant mMobility rates are foundfrom from the formal
private to the informal jobs private sector during the 1990s was negligible. Even though
persistency rates awere the lowest among the holders of a formal private job, the vast majority
of those who leaveft their jobs become became inactive or find a jobobtained work in the
public sector (McCormick and Wahba, 2004). Overall, the findings indicate point to the
attractiveness of public sector jobs employment in Egypt and the limited role played by the
formal private sector.

3.4. International migration

Although sectoral mobility is limited within MEDA countries, workers are regionally very
mobile, and so .l The MEDA countries have relied on overseas regional mobility. Labour
migration is a structural feature of the MEDA economies. Table 3.5 shows the net migration
in selected MEDA countries. The five MEDA countries: Egypt, Jordan, Morocco, Tunisia and
Lebanon are all labour exporting countries. However, Jordan and Lebanon are also labour
importing economies, (mainly replacement workers).

Table 3.5: . Net Migration migration in MEDA countries (in thousands)                                Comment [p10]: This data is expressed as
                                                                                                     thousands and with decimal points. I haven’t
 Country              1970            1980          1990             2000                            converted to millions as I’m not too confident with
 Algeria            -200.06           6.22         -70.00          -184.88                           maths. If necessary I can do so, provided I am given
 Egypt              -150.17         -750.00       -550.00          -500.00
 Jordan              287.83          -79.79        75.22             35.00
 Lebanon             -60.00         -285.00       -320.00           -30.00
 Morocco            -217.74         -208.98       -175.00          -300.00
 Syria               -15.00         -125.00        -45.00           -30.00
 Tunisia            -144.52          -16.72        -23.00           -20.00
 Yemen              -275.00          -75.00        -50.00           -50.00
Source: The World Bank, World Development Indicators & Global Development FinanceGDF & WDI Central
(April 2005).

                                                                                                     Field Code Changed

During the 1970s and 1980s, when the oil- exporting countries mainly (e.g. the Gulf States,
and Libya) found their development plans constrained by labour shortages,, and they
embarked on importingstarted to import large numbers of workers from neighbouring
countries. The main labour exporting countries within the MEDA region have beenwere the
non-oil oil-producing countries, mainly Egypt and Yemen, but also Jordan and Syria. In
addition, some countries like Jordan and Lebanon exported workers to the Gulf but also
imported workers from neighbouring countries like such as Egypt. HoweverThe North north
African countries have mainly traditionally exported their workers to Western western

Egypt has been a major labour exporting country. The d; demand for Egyptian labour
increased developed after the first oil boom in the 1970s, leading to and extensive flows of
Egyptian workers moved to the Gulf countries, in particularly to Saudi Arabia, Kuwait, Iraq,
and Libya. The CAPMAS estimatesIt has been estimated (Central Agency for Public
Mobilisation and Statistics) that one million of the Egyptians were working abroad in 1980. ,
and that by 1986 tThis number more thanhad doubled in 1986 to reaching 2.25 millions. In
the early 1990s the number of Egyptian workers abroad still exceededwas officially estimated
at 2.2 million, although s. However, the unofficial estimate of the number of overseas
Egyptian migrants is closer to 4 million. At the peak up to the migration peak, around 10% of
the entire Egyptian labour force was working overseas. External migration has played an
important role in the Egyptian economy for the last three decades by reducing; it has reduced
the pressure of labour supply on the domestic labour market and it by has providedproviding
foreign currency. However, at present theBy now, however, demand for Egyptian workers
has slowed down as a consequence of due to the Arab Gulf countries policy of ies favouring
national labour and orthe replacement of Arab workers by Asians workers in the Gulf
countries. Consequently migration is not anymore longer substantial enough to represent an
importantan option for absorber ofing surplus domestic labour, and, given the demographic
pressures on the labour market, the labour force is is expected to keep continue
increasinggrowing in the nearfor the foreseeable future.

On the other hand, Jordan both exports and imports labour. With the oil boom of the 1970s
in the Gulf States, substantial numbers everal hundred thousand of educated and skilled
Jordanians labour force temporarily emigrated for employment. Several hundred thousand
Jordanians left their country to work in neighbouring Arab nations. Up to one third of the
workforce was is employed outside Jordan, largely in skilled occupations. Jordan has had to
rely though on imported workers as a replacementto replace its emigrants, and it . It is
estimated that as much as a quarter of the kingdom’s workforce consists of foreign workers.
However, fForeign workers typically occupy mainly low- wage occupations which nationals
would not accept—which points to thus highlighting another an additional dimension toof
segmentation in the domestic labour market in Jordan.

Like Jordan, Lebanon exports and imports labour. However, the. The civil war was to some
degree responsible for responsible for the increase in the number of Lebanese
emigraoutflowsnts. Since 1975, it, although it is interesting to note that the rate of emigration
did not fall off significantly after the war but remained steady until 2001. It is estimated that
600 thousand,000 Lebanese have left the countryemigrated since 1975. It is interesting to note
that the rate of emigration outside of the country did not drop off significantly after the war
and has managed to remain steady from 1975 – 2001. All in all,, 45% of the Lebanese
migrantwhoms who left the country following the war did so left after the end of the war. The
main destination of Lebanese emigrants has been mainly was to the Gulf States in the 1970s,
                                                                                                    Field Code Changed

and but has since been towards Europe and North America thereafter. In addition, Lebanon,
like Jordan, has also relied on imported cheap labour from neighbouring Arab countries.
There is also evidence to suggest that the re is a segmented labour market is segmented along
by nationality: foreign workers are engaged inperform the low- wage jobs which nationals
would not acceptwill not do because of social norms that stigmatise those these jobs.

The mMigration patterns of Nin north African countries though are slightly different, as most
since the majority of workers are destined to Wemigrants go to western Europe. Among north
Africans in Europe (particularly France), Moroccans comprise the largest migrant nationality.
The nre is a large community ofumber of Moroccans living and working abroad mainly in
Europe is , estimated at nearly 3 million, i.e. nearly 10% of the total population. Emigration
from Morocco began commenced in the early sixties 1960s and has undergone several phases.
At the beginning of the sixtiesIn the 1960s, emigration was mainly of unskilled labour
workers meeting the needs of demand from rapidly expanding European economies- (France,
the Netherlands, Germany, and Belgium). Initially, the flow wasFlows were initially
organised by means of bilateral agreements signed bybetween Morocco and the host country
(mainly, France). However, by the mid-seventies economic recession in Europe in the 1970s
led to a fall in the demand for foreign labour and, and consequently, new restrictions on
immigration were introduced whereby (for example, only only family reunionfications were
permitted) migration was permitted. By the beginning of the 1990s, Italy and Spain as well
became popular destinations for North north Africans. Moroccans comprise the largest
migrant nationality among North Africans in Europe and in France in particular.

The total number of Tunisian expatriates in the world is around 600,000, which represents
close to 15% of the national labour force. Close to 70% are based in France, and Tunisia, too,
has been sending has also provided labour to for Europe. The total number of Tunisian
expatriates all over the world is around 600 thousand; that is close to 15% of the national
labour force: most of them in Europe (France, Italy, and Germany.) with more than 70% in
France. The biggest largest waves of migration took place mostly in the seventies1970s, and
to a lesser degree, in the 1980s and 1990s. less in the eighties and nineties. Currently
however, theBy now the net outflow has fallen as opportunities to for legal migrate
legallyion—except for highly skilled workers— have been severely restrictcurtailed, except
for the most highly skilled.. Consequently, the net flow has been rather limited over the last
decade. On the basis of the pPreliminary results data from of the 2004 population census in
Tunisia, indicate that in the five-year period from between 1999 and to 2004, only 76
thousand,000 people migrated abroadleft the country, and 28 thousand,000 people returned,
yielding a. At a net outflow of less than ten thousand10,000 people a year, this represents only
a small number compared to the actual small proportion of the unemployed and the labour
force and to the level of unemployment..

3.5. Concluding remarks

This chapter has examined lIn this review of labour mobility in for five MEDA countries—
namely, : Egypt, Jordan, Lebanon, Morocco and Tunisia. Ta—thehe evidence suggests that
there is low domestic labour mobility. This is in the five MEDA countries studied a
consequence of resulting from variousthree main types of labour market policy policies
ddistortions. First, theFirstly, the public sector still plays a major role in job creation and in
providing attractive jobs, and this that makes mobility out of that sector very costly- e.g. in
(e.g. Egypt). Secondly, the formal private sector is too small to create enough jobs for thea
ever growing labour force- for example, in (e.g. Egypt and Morocco). Thirdly,Finally,
                                                                                                     Field Code Changed

labour market regulations related toon hiring and firing requirements are creating a have
created a rigid labour market, t (e.g. for example in Morocco).

Two recommendations Thus, for developing flexible labour markets that allocate
workerslabour efficiently and utilise its use human resources efficiently are proposeda
number of policies are suggested.

First,. Firstly, rationalising rationalisation of the public sector remains a priority, as a where
an efficient government role in the economy focuses on the provision of public services rather
than production of goods and services is essential. Secondly, a suitable business environment
needs to be created in the private sector that will enable and encourage it to enabling and
encouraging the private sector to play a more active role in job creation by providing the right
business environment.

However, given the paucity of data on labour mobility in the region, it seems crucial to
investment is necessary in more on suitable data sources, such as panel datas and labour
mobility surveys, which that would enable one to understand better the a better understanding
of the dynamics of the labour markets in these countries. There are various knowledge gaps in
our understanding which future research should focus onaddress. F, firstly, in regard to the
informal sector, and secondly, in regard to workers. what What is the role played by the
informal sector: and to what extent do workers graduate from the informal sector? Do
entrepreneurs in small and micro and small- enterprises respond to new opportunities and
adjust to economic changes? Do informal micro -informal enterprises become formal or grow
in size over time? Secondly, wWhat happens to workers as a result of public sector
downsizing and privatisation? Do workers become unemployed for a period of time? Do laid-
off workers join the private sector? Finally, aAre educated workers more mobile? Does
human capital facilitate the reallocation of workers?

                                                                                                     Field Code Changed

        Chapter 4. Labour market institutions and employment policy
Massive youth unemployment in the MEDA region started to develop into a serious problem
from the early Since the beginning of 1990s. Consequently, and with the challenging problem
of massive youth unemployment, creating job opportunitiesjob creation has became one of the
major preoccupations of the various governments in the Mediterranean region. As a result of
structural adjustment programsprogrammes implemented by the governments since the early
1990s, there was has been a trend towards privatisation, administrative reform, and limiting
restricted recruitment for to the public sector to decreaseas ways of reducing expenditures.
Restructuring The restructuring of the public sector has meant that there has been less public
recruitment, despite vacancies for many positions vacancies and a scarcity of qualified
technicians in the programming and planning areas of programming and planning. In this
context, employment has come to moved tooccupy a central position in the political agenda as
a priority and became is a recurrent concern theme in official speeches and declarations in the
regionstatements by authorities in the MEDA region. There have been some , and led to some
piece-meal changes to that have endeavoured to address the urgent problems of the day, but
the. Strong pressing need for labour market reform is has not yet led to not translated yet to a
comprehensive policy designed developed at the national and/or regional levels. The
challenge is is toto build develop comprehensive and , multidisciplinary strategies which that
are interlinked and coordinated between different policy areas (e.g. labour, economy,different
fields of policy (e.g. labour market, economy, financial markets, and social policymeasures
fields, etc.).

EAn early reforming phase in arly reformers like Tunisia led to the creation of created some
policy documents (e.g. national strategy papers) and the design of designed some active
labour market measures. Tunisian In general terms, Tunisian employment policy is defined
within the framework of economic and social development plans, setting which establish
employment objectives and priorities in terms of employment for every five- yearsyear
periods. Last Its last two development plans (the 9threferring to 1995-2000 and the 10th for
20001995-2005) included measures for creating more jobs through investment in productive           Comment [p11]: This 2005 contradicts the 2006
sectors,; adopting adapting education and training policy policies to the needs of the
economy, and improving the qualifications of human resources at all levels through training
programmes,; and promoting private initiatives and self-employment by through an active
SME small-and-medium enterprise policy. A national employment and qualifications
observatory of employment and qualifications was also set up to collect and analyze analyse
data related to employment and vocational training data. Another strategy adopted for the
period 2002-2006 added new provided for further measures to develop dimensions on
developing the private sector, ; vitalizingenhance the role played by the of regions, ;
consolidating consolidate employment programmes, and encouraging encourage employment
abroad. The sSustained economic growth (especially in market the services and
manufacturing sectors industries) and the implementation of employment programmes
implemented to boost employment in various ways (in particular, labour force training
programmes) have contributed to improved conditions on in the labour market, but
employment still remains a fundamental challenge in Tunisia, with rising where the
unemployment rate continues to grow in what is already and a precarious job markets
(Lahouel et al, 2005).

The importance given accorded to employment in the Moroccan political agenda has
evolvdeveloped during over last recent decades according toin response to the nature of the
                                                                                                   Field Code Changed

problems incharacterising the its labour market, and particularly by a. Emergence of alarming
rates of unemployed unemployment among graduates young peopleled to a sudden awareness
of authorities and received more attention. Graduate This kind of unemployment tends to
increases in a context in which workers are very largely undereducated and under-qualified,
and is . This may be partly due in part to low number of an insufficient number of vacancies
in the private sector to meet growing jobseekers, and partly because and to the fact that not all
graduates young people are necessarily “employable” in the private sector. The presence of an
In Morocco, an abundant supply of poorly educated labour (unqualified school leavers and
school drop-outs) and the predominance of unskilled jobs on in the labour market have
created the conditions for daily casual job exchange where there isemployment, with high
worker rotation and with the interplay of supply and demand determined by wages determine
the interplay of supply and demand. During At the end of the 1990s the , alarming indicators
rates of poverty and the an atmosphere of political changes resulted in the designing design of
a broader social policy to to deal with uncover both graduate and non-graduate problems of
employment. The strategy implemented forto improve prospects for graduate employment
(unemployed skilled workers) included new organisational arrangements (new labour
legislationsetting up and a public agencylabour exchange of intermediation, adopting new
labour act) and active job creation measures ( for the private sector aimed at lowering
lowering labour employment costs, encouraging flexibility, and promoting self-employment)
to stimulate skilled job creation in private sector (Bougroum & and Ibourk, 2003). For non-
unskilled workers, the government involved other partners (development agencies, NGOsnon-
government organisations (NGOs), and UNDPthe United Nations Development Programme)
in a broader strategy of aimed at combatting fighting against poverty. The action is primarily
directed towards rural, suburban and urban poverty homes. Measures included the
development of setting up public work schemes, co--financing funding for local development
projects, encouraging and the provision of micro-credits for income-generating activities
through micro credits. Whether It remains to be seen whether these measures and new
legislative textson (a national charter of on education and training, and a new labour actlaw)
will create better opportunities for employment and policy coordination remains to be seen.

In Egypt, aThere have been a number of employment creation packages were declared by the
Egyptian government launched in 1997, 1999, and 2000 and, more recently in, December
2004. N, providing for national Employment employment Programs programmes,included
investment in mega mega-projects, modernising modernisation of employment services, a
strategy for upgrading of the informal sector, and emergency employment schemes. In the
last package of 2004 package, tourism, agriculture, petrochemicals and the information and
communication technologies were targeted “for investment as labour-intensive sectors” with
high high added value and labour intensity. Developing a There were also plans to develop a
labour export programme targeting Arab and other countries, and foreign countries and
training programmes aimed at equipping the labour force with qualification through training
programs for young peoples in marketing, languages and computers were also planned. H.
However, these ambitious objectives resemble rather a “more resembled a wish -list” and so
do have not been not correspond to the policies implemented as yet by any governments.
Some A number of programsstructures at different levels (adoption of the a new labour law,
creation of a national training fund, and of the a Supreme Council forcouncil for human
resource development) were put in place to help achieve the employment objectives; ,
however, butsince no incentive was were offered s given to the private sector to invest in
labour-intensive activities, the s. They resulted in was modest investment levels and
investment patterns biased against labour-intensive growth (Fawzy, 2002). RMore recently
the laws on , investment and financial market were legislation has been amended to improve
                                                                                                    Field Code Changed

the investment climate, and a new tax law was adapted introduced aimed at to
unifystandardising and reducinge corporate corporation tax, with and offering a 10ten-year
tax exemption in for newly industrialised zones. However, none of these incentives or tax
exemptions is are linked to job creation or levels of employment levels (El Ehwany, 2004).

Unemployment In Jordan, unemployment and poverty are among considered to be top
priorities of by the governments in Jordan, whereas the c. Current employment policies are,
however, ad hoc, fragmented, mostly temporary in nature, and not deeply rooted in the
bureaucratic apparatus (Mryyan, 2005). It is worth to mention about rRestrictive policies
towards in regard to foreign workers by the government as have been implemented by the
government as a partial remedy to local unemployment. The Labour Ministry spends
cFonsiderable time to regulate foreign employment is regulated bureaucratically through work
permits, and it wants to limit, if not reduce, and the current aim is to limit or reduce the
number of foreign workers in the country to and replace them with its ownunemployed
Jordanian low-skilled labour who are currently unemployedworkers. There are also signs
indications of an implicit labour export strategy in governments’ documents, where with
emigration is considered as one of theseen as one solutions to an overabundant labour supply.
But; however, this solution is affected by this is not an easy task given incincreasingly
restrictive host country policies of receiving countries. The Jordanian government has
recently appointed labour attaché in s in the Gulf countries and Libya, with the aim of
developing job to open more opportunities for both low- and high-skilled Jordanians abroad.
Promotion —a measure which of jobs abroad is one measure often is also being recurred to
mentioned by other countries of thein the MEDA region too.

In Lebanon, Since the end of war, the policies have generally focused on economic for
recovery of the economy and reconstruction were the main concern of the
governmentsfollowing the civil war in Lebanon. The official approach to employment has
was offollowed a traditional typically liberal line, namely, that: economic private sector
development through private sector would bring solutions tove all economic and social
problems, including employment. Significant aTherechievements have have certainly been
been madeachievements in reconstruction, but ; the large amount of despite significant
expenditures in this area, however, there has been failed a failure to positively stimulate the
labour market, since the workers as workforce recruited to work on extensive constructions
sites were are mostly unskilled and/or non-Lebanese workers workers. Growth in the
production sector has been negatively affected by high The increase in average interest rates
due to high costs of (a result of the reconstruction process), increasing rising indirect taxes,
and the high cost of public services negatively affected growth in the production sector,
accompanied by a . This slow growth has been paralleled by a surge of in unemployment and
immigration rates, but. Nonetheless, the authorities remain unconvinced of the necessity need
forof employment promotion creation measures, and do not seealso fail to view migrant
workers a bigas a problem or as posing competition to the Lebanese, on the basis that as their
skill levels are considered “complementary” to to complement existing skills and pose no
competition to the Lebanese. Employment All in all, the employment issue in Lebanon seems
to be losthave been pushed to one side in the face of among the significant political problems
experienced byof the country.

Under this policy framework, theThis chapter focuses on five main elements of the labour
market systems in the MEDA region in the region: labour market institutions in charge of
policy formulation and implementation, social partnerships, labour legislation, active labour
market policies, and vocational training systems.
                                                                                                   Field Code Changed

4.1. Institutions involved in pPolicy formulation institutions

Labour The quality of labour market institutions and the human and financial resources
allocated for theto employment services are generally good indication indicators of labour
market their efficiency. In the MEDA region, lLabour market management involves different                         Comment [p12]: An example of a confusing
                                                                                                                  source sentence. It’s not clear what the point is, see
public institutions; it is consequentlyis fragmented in the Meda region at both policy and                        my interpretation.
operational levels, involving many different public institutions. They These institutions can be
classified under according to three levels: high- llevel advisory boards for policy orientation,
regulatory ministries at the national level, and autonomous execution agencies mostly
working mostly at the local levels. Advisory boards are, generally presided over by high
senior institutional and ministerial functionariescivil servants, are who are in turn charged
toresponsible for implementing             government employment policiesy;13.             Tthis
mechanismapproach, however, is not capable of producing means that independent
knowledge is not sought in order to introduce inform changes in the governmental
employment policypolicies. Mainly, ministries of Llabour ministries, are the institutions that
regulate labour markets, mostly supported by the affiliated public bodies, are the main
institutions regulating the labour markets of public employment services.

In spite of their recognised central role in labour market regulation, ministries of labour
ministries often do not have clearly defined tasks functions related in relation to employment
policy and/or lack the means to implement policypolicies. In Lebanon, for example, no clear
stipulation in the mandate of the Mfor the labour ministry contains no clear stipulation of
Labour can be found in the law to develop a policy for employment or job creation policies.
The Ministry, even though it “is concerned with all is responsible for labour affairs and
undertakes the preparation, coordination and implementation of in the fields of labour and
social legislationmeasures”, but no task for drawing up an employment policy is found within
the functions attributed to the Ministry. In Jordan too, also requires enormous major changes
are needed in its the current structure of the Ministry of Labour labour ministry if itthis
intends is to assume itsplay a part role in the economic development of the country. Such The
Jordanian labour ministry, for example, has no clearly defined responsibilities as in regard to
the production of labour market-related information, career guidance and counselling, training
of workforce, employment restructuring due to privatization privatisationprocess, or
coordinating and managing retirement programsprogramme coordination and management. ,
are in fact out of the hands and control of the Ministry in Jordan.

In Egypt, the mMinistry of Manpower and Emigration emigration ministry is theoretically
given responsibilityresponsible for designing policies for aimed at an efficient utilisation of
human resource uses, the supervision of graduates’ employment, the design ofdevelopment of
a national training policy for training, and the collection ofcollecting data and information on
the labour market. However, it seems that its major role it had played a major role onlyis, in
fact, to act as as a a public employer employment agency,through the through an
administration bureau “General Administration of Graduates” when it used to ich distribute
allocates graduatescandidates who were eligible for the guaranteed employment into the
different government offices and state-owned enterprises.14 . In Tunisia, organisational

   The Tunisian Conseil Supérieur pour le Développement des Ressources HumainesHigh Council for Human
Resources Development (CSDRH) in Tunisia is one example to of an advisory boards which give issues
opinions on many aspects of the employment and, education &and training policypolicies.
   The Employment employment guarantee scheme was introduced in 1961/62 and for university graduates were
eligible. In 1964, the employment guarantee it was extended to secondary vocational school and technical school   Field Code Changed

changes have led to an improvement in the employment situation. the situation has improved
after the organizational changes. Since the A legislative decree passed in no 2002/2062, gave
the corresponding ministry ( “Ministre de l'Emploi et de l'Insertion Professionnelle des
Jeunes)Ministry of Employment and Professional Insertion of Young People” has had as athe
general mission to of elaborate elaborating governmental employment policy in the
employment sector and to evaluate evaluating policy results. Within this framework, the
ministry is responsible for longer-term project such as facilitating the insertion entry of job
seekers into the national and international labour markets, encouraging promoting self-
employment, and improving enhancing employability. The results are to be seen in the longer

Public Although public employment services affiliated to labour ministries exist almost in
almost all the MEDA countries, as affiliated to the labour ministries, but they tend to operate
along the lines of old-fashioned labour exchange services are dominants; they are, moreover,
bureaucratic and fail to respond to the realities of the . Increasingly administrative in nature,
job placement services quite removed from the realities of labour market. As tSince there are
no unemployment benefit schemes governed by labour offices that require unemployed job
seekers to register themselves, and where since access to jobs is primarily governed by a
network of social contacts primarily governs access to jobs, the only way to attract job seekers
is by offering efficient employment services responding that respond to the real needs of
clients. Public Efficient public employment services would may help reduce the risk of
exclusion for of socially deprived workers who has ith few contacts, and so would acting as a
counterweight to the dominance influence of social networks in the private sector and enable
enterprises to broaden their recruitment base (Bougroum &and Ibourk, 2003). However, such
agencies will fail if no close contact is unless effective links are established with the private
sector to respond to their needs, their services may not be demanded and unless its labour
needs are adequately met.

Although In Jordan there ishas an extensive decentralised network consisting of 22 labour
officesexchanges,. Despite their physical and geographical magnitude, they these fail to offer
any of theadequately respond to the demand for much needed employment services. The
Ooffices are sparsely located, inadequately equipped and , procedures are operate using
outdated procedures, . Frequently, their work procedures routines are notare not supported by
integrated even in the most rudimentary ICT supportinformation and communications
technologies, and staff are poorly qualified. have low qualified staff. Almost 90% of
jobseekers have never used the labour exchanges or and counselling services.15. In Egypt has
360 state-run employment offices under the responsibility of the ministry there are 360
employment offices that register and match job seekers and with job vacancies from
employers to match them tthroughout the country. However, these offices are not efficient
enough (—iinn terms of infrastructure, staff competences, and information system) s—to be
able to to actively respond to the needs of the job seekers and employers, who are therefore
reluctant to use their services. A. Clthough counselling services, moreover, can be very
effective, they are almost non-existent.

   According to the Jordan country report, 63% of Jordanian job seekers make direct visits to the enterprises
running from door to door, 13% read and watchlook for job advertisements in the media, 12% seek assistance
ofuse personal and family contacts, and more thanaround 6% await the announcement of for the government
jobsvacancies. through queuing.                                                                                 Field Code Changed

In Lebanon, although the national employment bureau (whose offices and records had been
destroyed in the civil war) was reopened in 1995, it is slow in becoming truly
functionalFollowing the destruction of its offices and records in the civil war, National
Employment Office in Lebanon has been revived in 1995, but the process has been slow.
Until recently, the Officeit had only one central employment office, based in Beirut.
According to data of For the period 1998- to 2005, it had received approximately 1,370 job
requests per year and the number of yearly job offers was around 450. Around 210 employees
per yearThe number of those who actually entered the labour market through the
intermediation was around 210 employees per year. This, which means that those who were
recruited recruitment through the employment office did not exceedwas no more than 15% of
those who appliedapplicants. This is insignificant taking into consideration that new entrants
to the labour market are estimated at no less thanGiven that there are an estimated 35,000 per
yearnew entrants to the job market annually and around and the unemployed at no less than
150,000 unemployed people in Lebanon, this is a mere drop in the ocean. The . The limited
role of played by the employment office is justified explained by aby the paucity of human
and financial resources. While the bAlthough the basic staff requirement for the whole
institution was initially foreseen as projected as 107 personnel minimum107 staff, it currently
functions with a mere 38 people.

In Morocco,Institutional the institutional framework of for the public employment services
has been recently been improved in Morocco and Tunisia. New entities were have been
created in Morocco to take charge of newspecific tasksfunctions, for example, . Most notable
one is ana new affiliated body—ANAPEC (Agence Nationale de Promotion de l’Emploi et
des Compétences)—is responsible for programmes aimed at intermediating between job
seekers and employers, in charge of intermediation and management of programs which aim
at assisting with integration, and/or job creation: “National Agency for the Promotion of
Employment and Skills (ANAPEC)”. Like As in Morocco, Tunisia has reorganised and
greatly improved its reorganization of employment services, to the point where it is
considered has improved the quality in Tunisia that is considered by some as a model for the
region. ANETI (Agence Nationale Pour l’Emploi et le Travail Indépendant),16 which has as
its The mission of the “National Agency for Employment and Independent Work (ANETI)”
consists of putting into actionthe implementation of government employment policyies of the
government and the promotion of ion of employment. ANETI , has a network of 67 offices,
of employment and independent work (BTTI). The offices of employment and independent
work which, in turn, have local delegations sub-offices—all constituting a local n
employment pool of employment. They These offices and sub-offices are responsible provide
training, and offer services to enterprises, job seekers and young investors, with the aim of for
the animation of theproviding an impulse to the labour market in the different sectors of the
economy, including services for enterprises, job seekers, young investors and applicants for

With some exceptions, the Ministries ministries and public employment offices play a
marginal role in the llabour markets of thein the MEDA region. Because they all suffer from,
largely because they are short shortage of staff, low quality human resources, and lack of
adequate infrastructures and information systems, and receive limited financial resources to
for investing in or improve improving services, and have to cope with interferences and
pressures from the economic and political powersabove, and have poorly trained staff (and in

  The ANETI (l’agence nationale pour l’emploi et le travail indépendant) is , a public establishment body with
an industrial and commercial character, was created by the lLaw No. 11-93 of 17 February 1993. The name of its
employment offices was replaced with “Offices of Employment and Independent Work: BTTI”.                         Field Code Changed

some cases the staff problem is further aggravated by overstaffing).. Some others, on the other
hand, are characterized by quantitatively high and qualitatively low staff17. Available The
pool of human resources available is frequently unable to supply do not always have the
adequate suitably skilled candidates, and this kind of imbalance between profiles for the job
posts. This kind of inconsistency with the quantitativey and qualitative quality is to some
degree aspects is partly accentuated by the fact that recruitment s are carried out under is often
a political pressurematter.18 This issue is also is part of the larger problem related to thea
problem for the civil services of the many MEDA countries. Furthermore, thein the nature of
the mandates of ministries and labour offices there is inadequate emphasis has less emphasis
on the development of employment policiesy, al though some recent organisational changes
have improved the situation somewhat; for example, : Different types of ja number of joint
committees and commissions were have been established in which where all stakeholders – ,
including social partners, are represented are represented. However, their relations are
ratherinteraction is largely limited with to the official presenceattendance of bodiesat in
meetings, and these consultation consultative and coordination committees are not always
operational. Thus, eythese have not as yet do not havarrived to the point where they
participate in the e a real dialogue in the formulation of policy or sharing assume
responsibilities in for addressing the employment problems of employment. Each
Furthermore, each of the committees tends to work in isolation. works in its own field rather

Beyond Outside of the Ministries ministries and affiliated bodies, the functioning of the
labour market is directly influenced by the actions undertaken by other ministerial
departments and public bodies in charge of macroeconomic policies (budgetary, fiscal and
monetary policies), sectoral policies (development plans, plans for industrialindustry,
agriculturalagriculture, commercialtrade, tourism etc.), and social policies (education, land
planning, social assistance and solidarity programmes). Ministries However, ministries have
little control or coordination on input to these policies. In pMirroring arallel to the important
role played by theof public sector in the economy, public recruitment institutions for example
have been are typically more influential than other employment offices. Traditionally, pPublic
recruitment is has traditionally been based on diplomasqualifications, and; the implementation
of open competition rules procedure for obtaining public employment, furthermore, to get a
public job is not always transparent (, as there is frequent recourse to common use of social
contact networks and clientalismclientelism. ). Although wages in the public sector have
decreased in both nominal and real terms, public jobs are still attractive for many young
people (particularly females), given the due to better working conditions and generous social
security benefits, in particular for females.

In The Jordan, a Civil Service Bureau in Jordan is a central public recruitment department
directly attached to the prime minister and is responsible for recruiting personnel in for all
public bodies and officeofficess. Public The public recruitment system is highly regulated in
the country and the stated goal is to improve public sector capability efficiency and
performance based on while applying the principles of justice, equality, and transparency. In
   A Moroccan official who was interviewed confirmed that if he had been free he would be able to have had
hisrun his department operated with only just 25%- to 30% of the presentits current staff. He further confirmed
that he spent a lot of his time work dealing with organisational matters which arisearising from a quantitatively
excessive overstaffingstaff.
   Some of these pPublic recruitments recruitment, which was seen as a way to combat were made as part of
fight against graduate unemployment, has traditionally been made on the basis of a degree (diploma) level.
Consequently, most of the newly recruited graduates employees do not have the necessary skills and
competences (nor professional projects) required to work in one of these institutions.                              Field Code Changed

Despite of the downward trend of in public employment, its role is still this recruitment body
still plays a crucial central role in the labour market. Over the past ten eleven years, the
Bureauit has experienced witnessed an increase of over more than a 50100% increase in their
job applications. The number of (from applicants totalled 77,625 applicants in 1992 while it
rose to 168,133 applicants in 2003). This tendency is , most likely due as a consequence of to      Comment [p13]: Note that I changed 50% to
                                                                                                    ‘over 100%’, as an increase from 78000 to 168000 is
the stability, security, and shorter working hours associated with governmental positionsposts.     (more than) double the former. 50% would be 78000
In Egypt the, guaranteed civil service employment for the graduates of secondary and higher         plus 39000 = 117000.
education al institutionsgraduates has been a policy since 1963. The c, with a entralized
centralised manpower allocation system of the General Administration of Graduatesthat
placed places graduates in public enterprises and civil service positions. Since Public sector
overstaffing has led to limited recruitment since the the mid of the eighties -1980s, and when
the public sector suffered from overstaffing, the recruitment was limited. Aas the queue
waiting time for governmental jobs beganins to increase (in some cases the waiting time is
10 years), the role of public employment substantially (reaching sometimes more than 10
years), its role becameis becoming less important.

4.2. Social partnerships

Active involvement and cost-sharing, via Ttripartism, is an important tool for effective
implementation and financing of labour market policies through active involvement and cost-
sharing. The existence of well-functioningeffective social dialogue and of strong employers’
and workers’ organisations helps improve labour market conditions and its functioning.
Almost all countries of in the MEDAthe region have legal mechanisms for protecting trade
unionisation unions and the collective bargaining rights of social partners. EHowever,
although employers and trade union confederations are seen represented in a number of
national committees and commissions, but their relations with the governments are rather tend
to be limited with the official presencto official attendance ate in meetings. This is mainly due
to the weak structure the weakness of both the of private sector and trade unions, and to the
paternalistic nature of the relations between the state and social partners. Unionisation Union
membership rates tend to be low due to the limited industrial base, small private sector and
the pre dominance of agricultural and/oor petty-trade economysectors. Most of the trade
unions are concentratedoperate mainly in public sector enterprises, where labour regulations
have traditionally been enforced. C. This is hardly surprising, as onsidering that almost all
manufacturing industry industries was were originally created and controlled by the stateand
controlled by the state for long time and it was the only sector where labour regulations were
enforced accordingly, this is not surprising. In most of the cases, employers are more
advantageous in terms of resources, particularly whenre there are biglarge-scale private            Comment [p14]: I don’t understand this
                                                                                                    reference to employers and their resources in the
enterprises exist (Lebanon, Tunisia) while in some. In other cases trade unions may have            context of trade unionism.
organic links with political parties of governments or governments to and so can influence
policy policies (Morocco). Even in cases wherewhen there is an opportunity to play a stronger
more important role in labour markets, the institutional capacitiesy of social partners in the
region isare often too weak to influence policiesy. Therefore, the impact of social partners on
labour market policies, therefore, seems to be minimal.

In Egypt, tTrade unions in Egypt are concentrated in the the civil service and in government
and public enterprises, and their presence is with a minimal presence ofin the private sector
and in the new industrial cities. There is noAlthough there are no official data or statistics
available on the number of trade union membership, but Amer (2005) gave estimates this to
be 20% of the formal workforce (i.e. some representing 4.5 million workers). The figures are
not representative as most workers employed in the public sector automatically become
                                                                                                    Field Code Changed

member of trade union members. De Gobbi and Nesporova (2005)Out of them, the suggest a
private sector membership rate of 25% is given as the share of private sector workers by De
Gobbi & Nesporova (2005). Its Trade unions in the private sector are structured structure ias a
centralised hierarchy on at the top of which is the General Trade Union Federation (GTUF).
The GTUF , comprises comprising 23 sectoral trade unions. Each sector of the economy is
allowed to beis typically represented by only onea single union, and the 23 unions are divided
into 1,751 committees. They These unions are represented in the National Wages Council of
Wages and in the Supreme Council for Human Resources Development Council. There are
close links between union leadership and government, but the relations are tend to be
paternalistic. Egyptian trade unions were very reactive active during the government’s
privatisation programmes and played an important role during thein redundancy negotiations
(packages of early retirement packages, lump- sum compensations, retraining, etc.) for
redundant workers. However, they canunions may not participate directly in negotiations with
management in establishments with of less than 50 workers, which is ; this represents a severe
a considerable limitation in the view of the small size of most businesses. The biggest
employer organisations are the Federation of Egyptian Industries, the Egyptian
Businessmen’s Association and the Egyptian Exporters Association. as most enterprises are
small. Egyptian employers are more very effective in forming a powerful political lobby
lobbieson governments. The biggest employers’ organisations are the Federation of Egyptian
Industries (FEI), the Egyptian Businessmen’s Association and the Egyptian Exporters’

Social partnerships in Jordan are highly scattered along different linesin terms of organisation:
, with employers’ associations fragmented between sectors and regions, labour unions
organized organised on a sectoral basis, and bringing with unions whose membership
combines public and private employees together. They Unions have tripartite representation
in the board membership in of the Social Security, the Vtocational Training Corporation and
on the national social security and labour law committee boardss of labour law. However,
their impact on the Jordanian labour market is called reported to be negligible by (Mryyan,
(2005). Although the leaders of these organizations organisations are sometimes consulted by
the labour ministry, Ministry of Labour, they lack the organizationalorganisational, legal and
informational infrastructures to be effective in decision--making. Contrary to the
ineffectiveness of unions, professional organizations associations (lawyers, engineers,
physicians, dentists, journalists, auditors, etc.) play more active roles—over and above which
goes beyond protectingthe protection of the interests of their members to —in terms of
exercising some influence on political life; this is due to the greater sophistication and higher
education levels among theirof members (Al Khouri, 2005). This ‘politiciszation’ may cause
annoyance to governments, bringinghas often brought these organizations organisations into
direct conflict with the government.

According to Issa (2005), in Lebanon in 1996, only 7% of eligible workers are were members
of the General Labour Confederation (GLCCGTL (Confédération Générale des Travailleurs
du Liban) in Lebanon in 1996. A similar study undertaken in 2000 sets this e percentage
membership rate at 5.7%. As of the yearIn 2000, members were distributed as follows: 4.6%
from the agricultural and fishing sectors, 22.8% from the industry and construction sectors,
and 72.6% in from the services sector, which. This largely reflects to a large extent real
distribution of employment distribution among these three economic sectors. There Although
there are currently over 500 unions attached to 42 confederations in Lebanon, most exist in
name onlyof which are a mere façade. The largest number ofMost the unions is registered by
unions are sectorssectoral, second highest by followed in order of importance, by professional
                                                                                                    Field Code Changed

unions, and finally, by unions at enterprise levewithin enterprisesl. These unions are
distributed among 42 confederations. This multiplicity often corresponds tolargely reflects
political, ideological and sectarian divisions in Lebanon. Low number of members and
numerous numbers of unions A large number of small unions weakens the possibility of the
movement as aacting as a pressure group for any influence onin regard to labour market
issues. The internal structure of the unions, moreover, is not conducive for to a democratic
process leading to a responsive organisation that ensures responsiveness to the demands of its

Lebanese employers are organized organised geographically and by sectors and within a
certain geographical framework. The most important of these confederations are unified and
combineinclude Beirut and its suburbs, where most ofover 70% of Lebanon’s economic
activity is concentrated (over 70%). Leading confederations are include the traders
associationthose for traders, , the industrialists association, bankers association, hotel owners
association, association of restaurant and nightclub owners, and the association of private
school owners. Contrary toUnlike trade unions, trade unions, there is no multiplicity in
representation within one a sector and the rate of membership is high. Higher Better financial
resources and skilled human resources have made them (specifically the Chamber of
Commerce, Industry and Agriculture in Beirut) more capableenabled these confederations—
and especially the Chamber of Commerce, Industry and Agriculture in Beirut— to participate
in political decision-making. Collective work agreements are not very a common approach to
prevalent and they have limited effect as a means to organizesing industrial relations. This is
both due to both the weakness of trade unions, and the refusal of employers to accept this
formula, which they see which is considered as a threat to their absolute position of absolute
power. Nevertheless, both unions and business confederations agree on the fact that there is a
the lack of social dialogue with the government. The and that the legal framework is for
dialogue is either dysfunctional or titular undemocratic—the as the political authority is
always the final principleinvariably the ultimate decision-maker. In the rare instances where
there could be effective discussion on some issuesis possible, the a spirit of cooperation is
lacking due to political and religious divisions.

Tunisia is characterized characterised by a reduced number of social partners. One A single
trade union (Union General des Travailleurs Tunisiens, or UGTT) represents workers,; and
two associations represent employers in the private sector: —one one for the industrial and
services sectors (Union Tunisienne de l'Industrie, du Commerce et de l'Artisanat, or UTICA)
and one for the agricultural and fishing sectors (Union Tunisienne de l'Agriculture et de la
Pêche, or UTAP). The Tunisian General Trade Union (UGTT ) is the major confederation of
main workers’ confederation, with a membership composed of uniting all manual and
intellectualblue- and white-collar workers as well as the retired workers. The rate of
adherence to Membership of the UGTT exceeds 30% of the active population, (60% of
membership consists of workers of which is from the public sector). It is made ucomposedp
of 7,000 trade unions spread over the country, 23 regional unions, and 20 federations. The It
UGTT, which represents all Tunisian workers,; gives issues opinions on political, social and
economic issues, development plans, labour legislation and reform of the health- insurance
system; ; it also negotiates on their behalfbehalf of workers, , aand participates in all
government counselling advisorystructures of governmentbodies: (Conseil Supérieur du
Pacte NationalHigh Council of National Pact, Conseil Economique et Social,Economic and
Social Council, and Conseil Supérieur du Plan et de la Promotion NationaleHigh Council of
Planning). However, the role played by the UGTT’s role in calling in wage revisions reviews
is no longer discernible significant, and its role init has participated little in the the
                                                                                                    Field Code Changed

privatizsation process and trade liberalization liberalisation processes that have which
increased precariousness in the labour market has been virtually absent. Its role is reduced,
largely, to has been reduced to the organization organisation of some meetings and
participation in some a few committees and councils at the national level, without aand it has
no real say i real influence on labour-related decisions.

Tunisian Union of Industry, Commerce and Handicraft (he UTICA, which) is organizsed
along according to sectors and regions. It , consists of 16 professional federations and 24
regional unions representing, covering different sectors of industry, commerce, trades and
handicraft craftsthroughout all regions. It mostly defends the interests of big large employers
vis-à-vis the state, and is little real benefits for to the interests of craftsmentrades people, craft
workers and small and medium enterprises (SMEsSMEs) are barely visible. Tunisian Union
of Agriculture and Fishing (he UTAP) is the second is an employers’ s’association consisting
of 995 associations representing workers in agriculture and fishing. which organizes farmers
and fishermen within 995 trade unions. Although it takes part in national committees (tightly
or loosely representing, to a greater or lesser degree,connected with the agricultural sector)
and represents ais a signing partner in the national pact of the national pact,, its impact on
agricultural ground is not evidentis minimal. and it is incapable of supporting the farmers.

The A new labour law in Morocco has institutionalised social dialogue as part of company
life andby foresees providing for the compulsory presence of union delegates in companies of
with 10 ten or more employees and more. Given a large informal Due sector andto the
absence of reliable data and large informal sector, the precise rate of unionisation is little
information is known about the rate of unionizationnot known. According to Bougroum, only
4 four trade unions whose base is mainly public sector enterprises are officially associated
with a collective negotiation (Union Marocaine du Travail, or UMT; Moroccan Union of
Labour; Union Générale des Travailleurs au Maroc, or UGTM;General Union of Workers,
Confédération Démocratique du Travail, or CDT; Democratic Confederation of Labour,
anand Union des Syndicats Démocratiques, or USDDemocratic Federation of Labour) are
officially associated with collective negotiation.19 and their base is mainly in public sector
enterprises. If the public sector is excluded, very few trade unions can claim a national
statutestatus. It is characterized by the existence of a highThere are number of unions ( 21
unions in total), the majority of which are either sector-basedal or limited to geographical
areasly restricted. Their oOrganic links with the politicalal scene parties, moreover, means
that unions are politically alignedled to the fragmentation along the lines of political parties.
Employers in Morocco are organised in terms of 27 sectoral federations and 8 eight regional
unions, brought together under the CGEMGeneral Confederation of Moroccan Companies
(Confédération Générale des Entreprises du MarocCGEM). Its 2,000 members are the
biggest and most structured companies, whereas yet the total number of manufacturing units
in Morocco exceeds 60,.000 in Morocco. The concept of social dialogue has become recurrent
in the official speeches, but a symbolic dialogue takes place only at the central level between
government, employers and big the larger trade unions. Involvement of social partners in the
design and implementation of employment policy primarily concerns primarily with
employers who are part of the ANAPEC’s participate in ANAPEC (Agence Nationale de
Promotion de l'Emploi et des Compétences)Board. At the local level, partners are mostly in
conflict with each other due to lack of the absence of a negotiation culture in the majority of

   Recently the government has established informal consultations with a 5th fifth trade union. It is , the Union
Nationale des Travailleurs National Union of Moroccan Workers (UNTM), very closeattached to the new
Islamist party, PJD ( Parti de la Justice et du Developpement “Justice and Development). ”.
                                                                                                                    Field Code Changed

companies, but t. The role of the labour inspectors in conflict resolution, however, is
important. Its mediation helps; they solve more than 70% of collective conflicts and satisfy
resolve over 50% of complaints related to individual conflicts.

The above findings above indicate the question of depict representativeness of trade union
memberships both in terms of quantity and quality of their members (few members and who
tend to be from the better-off groups of workers). Majority of the Most trade union members
are considered to be privileged workers in national contexts, as they of the trade unions
belong to the public workforce and formal private sectors, which are considered ‘privileged’
in national contexts. The risk of representing only the interests of the most more advantaged
advantageous part of workers is high, as it excluding excludes very large numbers of workers
and their fails to take account of their harsher employment realitiesconditions. The higher
unionisation rates of in the public sector may also have a negative impact on public sector
reform and public employment (Agenor et al., 2003). The same conclusions generally equally
aapplyies to the representation of all employers. Employers’ associations tend to represent the
interests of bigger companies, and so exclude excluding most of the of SMEssmall and micro-
enterprises which are commonthat are numerous in the region. This institutional weakness on
the part of social partnerships makes an effective social dialogue difficult. Furthermore, the
relationship between social partners and governments is considered paternalistic in most
casestypically paternalistic. Some, and studies regarding of the nature of social dialogue on
firm level reveal similar that the attitudes towards to workers has also a paternalistic
framework within companies (De Gobbi & and Nesporova, 2005). According to the findings
in for Egypt, for example, workers are allegedly treated like family members, (which makes
it dismissal difficult to fire them. ) and only 5% of the firms in the survey had unionised
workersAt the same time, ; it is clear that workers’ independent worker organisations are are
perceived as to be unnecessary and undesirable, and . Only 5% of the firms had unionised
workers in the survey. The remaining ones claimed that managers claim to be able to settle
disputes personally. Given Consequently, given the this paternalistic work environment and
low level ofand the low unionisation rates, serious barriers exist to social dialogue exist at the
company level.

4.3. Labour legislation

A broad definition of labour legislation includes all legal arrangements regulating work life
and the rights and responsibilities of employees and employers, but this. In this section,
however, the focus is focuses particularly on labour law, minimum wage regulation and the
social security system (especially. unemployment insurance). Legal arrangements for
governing working life in the Mediterranean MEDA countries generally reflect similar
worldwide trends – , albeit in their early development stages. All The countries of in the
region have specific labour laws which were have recently been amended to respond to the
emerging needs economic development needs. of economic developments. In most cases,
labour laws legislation excludes significant numbers of workers (e.g. agricultural, domestic
and, family workers) and those enterprises employing less than 5 five workers from the scope
of the law. PartMoreover, part-time employment or other types of atypical work contracts
arrangements are much less frequent in the MEDA region. Furthermore, lLaw enforcement is
also a serious problem in the this region that is reflected inwith its large informal sector. In
fact, since the majority of workers fall outside the scope of the legal system in these countries,
the limited application of laws legislation undermines the scope and validity of any
assessment of the labour laws since majority of workers is outside the legal system in these
                                                                                                     Field Code Changed

Recent labour legislation changes of labour laws in Egypt in (2003), in Tunisia in (1994 and
1996), and in Jordan in (1996) have aimed at making theto make the application of laws
legislation more flexible in favour offor employers, particularly those on in regard to hiring
and firing rules. As a result, for example, economic company restructuring of companies is
included as one of the legitimate reasons for firing workers in most MEDA countries.
However, even after permission Even so, firing is typicallyoo costly for employers because
of long lengthy bureaucratic procedures, high payments and biased labour court decisions. In
particular, ‘severance payments are ’ is widely used as an insurance against unemployment as
, given that such unemploymentno social insurance systems does not exist. Therefore, the
majority of experts from the region agree that hiring and firing rules are still overly rigid a
and , given the existence of a large informal sector, over-protective and of only a small group
of full-time workers are protected at considerably high levels due to large informal sector.
Law and lax enforcement, moreover, is of the law laxs. As a result,, and because flexibility in
the labour market is achieved through non-observance of labour laws and the curtailment of
worker rights, labour legislation which is supposed to protect workers against employers
generateshas the negative effect of putting them in an a precariousunstable position, because
flexibility in the labour market is achieved through non-observance of labour law provisions
and the curtailment of workers’ rights.

In Egypt the new Labour L, after ten years of tough negotiation, a new labour law was
adopted in 2003, after ten years of tough discussions20. It which introduced more flexibility
in in hiring and firing rules. Thus,: the renewal of a definite contract does notno longer imply
implies an indefinite contract as was specified in the old law,; lay-offs are facilitated,;
dismissal for with due cause is made easierr and termination of a , contract termination under
economic restructuring is permitted with restrictions; , and termination of a contract by the an
employer without valid justification entitles only to a worker to compensation.s21 . A national
training fund (drawing its resources fromfinanced by government funds, 1% of the annual net
profits of enterprises,, government funds and other donations) was created to finance the
creation, enhancement, and modernisation of training centres and programmes in order tothat
match the needs of the labour market. The Finally, the right to peaceful strike strikes by
workers is recognisedrecognised.22.

However,Since the new labour law applies only for to new employment contracts rather than
to existing ones, however, so its effect on the labour market is likely to be small. Besides
fixed-term contract, theThe law, moreover, does not mention any other atypical form of
labour contracts other than fixed ones, such as, for example, those governing ; part-time work
and temporary agency work are not mentioned. It may, however, positively affect foreign
companies that were might have been reluctant to invest in Egypt in the past. It should also be
significant toof interest to privateised firms that have a with a significant share of their
workforce under the protection ofed by legal contracts. After Despite the new law, however,

   The new law applies to public enterprises as well, but not excluding civil servants, domestic workers and or
family workers.
   Employers can terminate a contract or modify indefinite duration contracts for economic reasons, subject to
the approval of a Stoppage stoppage Committeecommittee, proper notification of to the workers involved, and
the payment of a severance paymentment equal to one month’s pay per year of service for the first 5 five years of
service and one month and a half months for every additional year above 5 years of service. Termination of a
contract without valid justification entitles merits for compensation, the amount of which is to be determined by
the Ja judicial Committeecommittee, with (a the minimum of is two months pay per year of service).
   The right for to strike was had been denied under the emergency rules legislationthat were adopted
afterfollowing the assassination of the President’s Sadat assassination in 1981.                                    Field Code Changed

the a big disparity remains between the private and the public sectors in terms of legislation
enforcement of the legislation (in regard to contracts, wage wage-setting rules, social security,
etc.) still continues in Egypt. Private employers either employ workers without contract or
force their oblige new employees to sign an undated letter of resignation before starting their
job. This—all of which merely shows that norms on unlawful dismissal regulations are still
perceived by employers aas a real threat. According to De Gobbi & and Nesporova (2005),
one half of all workers had have no labour contract and even less fewer was workers are
covered by social security. Even the most formal onesFor workers with contracts, companies
frequently underreport the wages offered to their workers in order to lower the burden of
theircorresponding social contributionsecurity burdens.

The aAmendments to the Tunisian labour code inof 1994 and 1996 in the Tunisian labour
code introduced specific provisions for both definite and indefinite contracts of indeterminate
and determinate duration, as also and the notion of part-time jobswork for the first time. It
requires anyAny employer who intends to dismiss a worker is required to indicate the reasons
of for dismissal in a letter containing giving advance notice. The Ddismissals that happens
without a real or serious justifying causeication or and dismissals that fail to without respect
of the legal proceduress is are considered abusive. It The law also delimits the situations
which that can be considered as seriously in mistakeerror, to be taken as in terms of real or
serious causes justifying dismissal. TAlthough recognizedrecognised, dismissal for economic           Comment [p15]: This sentence was next to
                                                                                                      impossible to interpret.
or technological reasons, remains rigidis complex, with amid a panoply of wage protective
protection measures for salaries , and many conditions and administrative procedures to be
respected to be respected, which makes of. Consequently,               any act of dismissal
administratively too complicated andis both bureaucratic and financially costly. Therefore
even after the amendments, the labour code thus has remained remains overprotective to ofthe
insiders those within the labour systemand below the expectations of enterprises in Tunisia
(WB World Bank, 2003).

For According to Chemingui (2005), the new labour code does not facilitate the the
adaptation and restructuring of the Tunisian enterprises so that they as tocan face the
challenges imposed by trade liberalizationliberalisation. The rigidity of the law has led to two
important phenomena responses in Tunisia: firstly, the enterprises are increasingly hesitatant e
more and more to proceed to to dismiss workers in the interest of avoiding als in order to
avoid administrative complications, which negatively affect their activity. ; and secondly,
Second, the enterprises prefer to conclude enter into agreements of dismissal agreements
directly with the workers, without recourse toinvolving the commissions commissions with
control over for the control of dismissals. Many Consequently, many private enterprises do
not avoid even conclude drawing up contracts with most of their employees in order to avoid
incurring dismissal costs, and also to evade paying social security contributions and dismissal
costs. On the other hand, the eEmployees, on the other hand, often accept to worka job
without a contract for three reasons: refusal to pay firstly, to avoid paying social security
contributions, which represent for them a considerable part of an already low salary which is
already low. Second, ; secondly, they because they are not satisfied withdo not see that the
health benefits andhealth or retirement system eitherwill genuinely benefit them; and finally,
because . Finally, the absence of a contract allows themy are ensured greater freedom of
mobility towards as far as obtaining better working conditions is concerned.

Although the labour law legislation in Jordan is considered to be comprehensive and well-
enforced in the formal sector in Jordan, it suffers from major is highly inflexibilitiesinflexible.
More specifically, problems continue to persist in such areasspects such of as hiring and firing
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procedures, distribution of working hours within days and weeks, sexual harassment, and
official holidays. According to Mryyan (2005), the inflexible firing procedures principally
limit curtails the power of the employers to lay off irresponsible and hasty workers easily.
Labour courts tend, in fact, to are biased towardsfavour workers against over employers. In,
and in most cases they oblige employers to compensate the fireddismissed workers

The restrictionsLabour law in Lebanon placed on dismissal in Lebanon haves also been a
matter of complaintcriticised by employers as being too costly for its dismissal restrictions, ;
they particularly dispute the article 50 on the definition of unfair dismissal which made the
process too costly. A study on of the investment climate in Lebanon states reportsthat the
country comes init to be third within the region in terms of strictness of employment
protection measures (Issa, 2005). It is very common for enterprises to avoid declaring all their
Lebanese and foreign employees, or as also the their real wages and other earnings of their
workers. Unauthorised overtime and dismissal, as well as and other violations related to the
work environment and safety, gender disparities in wages, and employment of minors in
inappropriate jobs are also common.

After several years of discussions between employers and trade unions, Morocco was
endowed withpassed its first labour act (Law 65-99) in 2003. It This law recognises
temporary work under the concept of flexibility,; but its the corresponding mechanisms have
not as yet been laid downestablished by the authorities. Faced When faced with difficult
economic circumstances, a company can temporarily reduce the number of its employees
workforce to 50% for a period of up to two months and, with the consent of staff
representatives, for a period of up to four months. Companies running into difficulties may
also ask for permission to fire lay off workers for economic reasons, but the (applications are
examined by the labour inspectorate and discussed within by the a provincial committee
chaired by the provincial Governorgovernor). Companies may hire a worker on the basis of a
non-renewable contract of a given -duration (6 months maximum). If, but if they decide to
keep the worker at the end of a given-durationdefinite contract, the contract will be shifted to
is automatically classified as an indefinite contract; thusan unspecified duration whic h can be
represent a serious hindrance to flexibility. Finally, those enterprises with less than 5 five
employees were have been excluded from left out of the scope of the new act (in an
endeavour to to avoid driving them underground, i.e. into the prevent them shifting to
informalityinformal sector), but it. It will take many years to assess the real impact of the new
law and its implementation level in Morocco.

Labour market legislation regulation is not limitedrestricted with to labour acts. Regulations
on minimum wages, taxes on labour, and social security contributions have also have a
significant impact on employment. All five countries covered in by the this study have official
mechanisms to setfor setting minimum wages in the private sector. T, though the amounts of
minimum wages arehis wage level is considered excessively low by the majority of experts.
However,, yet there are workers who accept a lower wages than minimum wage in all of
themthe MEDA countries. In Egypt there was has been substantial wage compression during
in the last decade, and the minimum wage is considered very low (around 100 LE Egyptian
pounds per month) even for minimum subsistence living standards. Yet most employers still
do notfail to abide by the the law concerning the annual wage increments stipulated by the
labour lawlegislation. In Lebanon the monthly minimum wage was last set at 300,.000 LL
Lebanese pounds (the equivalent of US$ 200 USD) last time in 1996, but it fails to reflect the

                                                                                                    Field Code Changed

reality of basic living expensescosts.23. But mMany foreign and Lebanese workers in the
informal sector will accept a job with paying a lower wage than the minimum wage. It, which
leads employers, especially in sectors with an oversupply of unskilled workers, to employ
more unregistered foreign nationals. who are mostly unregistered and accept lower wages.

In Moroccano, employers believe that the legal level of the minimum legal wage is too high
and would be the origin of the adds to the lack of competitiveness of national companies.
However, this argument may be hold moremere rhetoric, as many see the low labour
productivity is viewed by many as theto be the real primary problem. Following According to
Bougroum (2005), the competitiveness of companies maycan be improved through increasing
improved labour productivity, —so acting onfor example, by improving variables such as
working conditions or by training of employees. In Tunisia, on the other hand, it was has been
reported that the guaranteed minimum wage has a particular bearing on influences
employment in sectors exposed to international competition, (mainly manufacturing
industries such as textiles and, clothing and electro-mechanics). In these sectors, an increase
of in the minimum wage at to a level higher than productivity negatively affects the
international competitiveness of Tunisian products. Furthermore, job creation of jobs is also
affected by other factors outside the labour market: , such as high production costs (interest
rates, energy, transport, and communications), and high corporate/ taxes, labour taxes and
social security contributions.

As a common feature, Common to all thethe countries in theof the region is the lack of a
social safety security nets for a considerable part component of the population: s. Social
security systems are insurance-based and the coverage is low (on average 50% of the
population is under a schemecovered).24. Fragmentation of the system (among civil servants,                       Comment [p16]: See footnote: ditto.
private sector workers, the self-employed, the military etc.) is an important issue, as because
it constraints restricts the mobility of labour force within and across sectors, increases
administrative costs, and generates an unequal treatment of different categories of workers.
Most of the beneficiaries in the systems do not get are not protected against ion for all
traditional risks (i.e. against lack of unemployment benefits, ill-lack of or limited health
insurance or old age), low level of old-age pensions). Lebanon is an example where of a
country with a social security schemes that lags far behind the standards of modern systems.
Variations in membership rules and regulations for membership, levies and membership
types, and levels of coverage of different systems leave much of the labour force, and
therefore much of the population, without social protection. Several Certain social risks are
only partially or not, or only partially, at all covered. In; in the case of health insurance, for
example, only 47% of workers are covered. The iInsurance schemes for workers in the
government sector workers are notably numerous and vary in benefits and level of coverage,
while; in contrast, only 14% of the self-employees employed workers receive health, family
and retirement benefits from a scheme.

Although unemployment insurance was recently introduced by law in Egypt (like as in
Algeria), its benefits are virtually non-existent. Only The only workers who would qualify for

   For example, Issa (2005) reports that the current minimum wage, according to latest estimates, amounts to
between a third and fourth of what is considered the equivalent of the the absolute poverty line threshold (the
estimate isd as between US$ 600 and and US$800 USD per month for a family of five).
   The World Bank (2005) gives indicates that 30% as the rate ofof the labour force is covered by all the
schemes. Yet, Even so, despite these modest coverage levels, expenditures as a share of GDP are is already in
the 1% to -3% range, despite these modest coverage levels and only 5-% to 10% of the elderly who receive a
pension.                                                                                                          Field Code Changed

benefits were are workers those laid off as a result of court-approved final closure of firms.
Similarly, social insurance in Egypt is virtually universal in paper by, with various insurance
laws covering civil service employees, public enterprise workers, and private sector wage
workers. Civil servants, unlike most private sector workers, benefit from high levels of social
security (retirement, disability, death, work injury, and health insurance), while most private
sector workers lack this. This is explained by the fact that the system is financed through
substantial levies on both workers and employeesemployers, which is (41% of the basic salary       Comment [p17]: Employees? Synonymous with
                                                                                                   ‘workers’, hence I assume ‘employers’ is meant.
salaries and 15% of the variable salarywage components). This has led many employers to
evade paying the social security contributions, which is possible in the context of a weak
inspection system. It is estimated that 30% of employers in the private sector do not pay any
contributions and that 40% of workers and employers underreport the wages.

None Not one of the five countries have has a fully functioning unemployment insurance
system in place. Without having a minimum guaranteed income in case of unemployment, the
poorest and (mostly unskilled) workers simply cannot afford to be unemployed. As they never
have choices toSince they cannot invest in skills development or wait for better jobs, a vicious
cycle is created for the reproduction of that reproduces the poverty of one throughout
generation in the next generations. In fact, those the only individuals who can offer afford to
be unemployed are those the ones supported by their families from higher socio-economic
strata. The recent paper of El Hamidi and Wahba (2005) suggests suggest that youth
unemployment among young people awaiting public sector jobs is mostly voluntary in Egypt,
and also that queuing for public sector jobs although the private sector has beenis very slow
in absorbing new workers. In all cases gGovernment benefit schemes with practically
unlimited job security are verytend to be the best attractive for to employees and workers
with unlimited job security. Theseis has must have a significant impact on the (im) labour
mobility and effective of labour and (in)effective skill development programmes of
workforce. Generous social security benefits makes public jobs even more attractive, and the
very low level of mobility from the public to private sectors is merely further confirmation
that this attitude exists confirms the situation. Meanwhile, those outside the system (iInformal
workers) outside the formal system, on the other hand, are relegated may be stuck in the
same type of to precarious jobsemployment, since they cannot afford to be unemployed or as
they can not afford being unemployed or being onto embark on training courses. for some
period. Without an expansion of the formal sector of the economy and/or a basic guaranteeing
guarantee of basic income security (means-tested social assistance) to for vulnerable groups,
the impact of labour legislation is likely to remain limited.

An overall assessment indicates that the labour market in the region has ais quite flexible
labour market,. However, this is but not because of flexible labour market regulations. Rather
it but stems, rather, from the lax enforcement of the labour regulations and especially from
the fact that there is a large informal sector. There is a sharp contrast divide between
“insiders” of the in the registered economy and “outsiders” of employed in the informal
economy (segmentation). In practical terms, only public sector enterprises and big large
manufacturing companies are the only part of the economy which appliesy the regulations –,
and at that, though selectively. As a result, only those workers with official formal
employment contracts have access to social security benefits, obtain protection for health and
safety protection, and benefit from fair , subject to hiring-firing rules. while those in
iInformal sector receive workers are completely unno protection at alled. The, and this lack of
protection system for informal workers is not far from compensated for by the provision of
solid technical assistance through training and employment services as well asand through
various labour market measures. Therefore, ever expanding growing informal sector is,
                                                                                                   Field Code Changed

therefore, one of the main drivers causes of the social exclusion of young people and women
(Martin, 2006). For countries like those in the MEDA region countries which suffer fromwith
a high unemployment rates and an abundance of seasonal and precarious work (especially for
those working in the agricultural, construction and tourism activitiessectors), the a highly
regulated labour market does not seem to be the best option ands it it may hinder the creation
of enterprises requiring an extensive flexible work force.

Several reasons are put forward to explain why labour regulations are not implemented
properly in the region. Some argue that it is beyond the willingness of employers are
reluctant because since several provisions of labour regulations are difficult to implement at
the present development level of private sector. Clearly inspired from Ieconomically
advanced countries, they t is assumedassume that, as in economically advanced countries,
companies are strongly structured and that the two sides of production (employer and
employee) can work together under a well-organised cooperation logic. This, however, does
not reflect the labour market realities of the MEDA region. Important part of economiesAn
important feature of the MEDA economies is the existence of a large number of is made up
of small and micro and small-sized-enterprises companies of a family nature. They, which
are managed according to a domestic logic based on network relations (hiring family
members) with and which have a natural tendency to operate in the informal sector. Faced
with an abundant (but if unskilled) labour supply, many companies operate in low value-
added activities and use low wages for unskilled or poorly skilled workers as the only
parameter of competitiveness by employing low/unskilled workers. Labour regulation is
essentially seen as a threat which underminesto their competitiveness. Therefore, benefits of
non-compliance with labour legislation are high for companies, and the weakness of the
public inspection mechanisms (mostly within operated by the mMinistries of lLabour) makes
it easier to evade detection. Labour Labour inspectorates in charge of controlling and
implementation of labour regulations, is not equipped simply do not have withsufficient
enough human and material resources to achieve suitably thisfulfil their functions adequately.

Reducing the sharp dichotomy between different segments of labour market segments
requires a comprehensive set of measures that addressing addresses the rigidities of regulated
markets as well as the formalisation of the informal sector. Given that it is usually the private
sector which offers poor salaries, bad poor working conditions and inadequate social benefits
(and and which, furthermore, avoids labour regulation, ) low overall labour demand and very         Comment [p18]: Another sentence I fail to
                                                                                                    understand. Maybe it’s simply ‘low demand for jobs
poor quality of jobs look asplay as significant a role as important as legislation. For this        in the private sector’?
reason, conditional support to the private sector may be crucial in to the creation of more
“decent”better jobs. Weaker enforcement of lLabour legislation offers can be approached in
one of two ways: it can be two options to the countries: more liberal regulation, or it can be
more restrictive. Enforcement of the latter type of legislation is likely to be legislation
accompanied by massive evasion and/or may . Stricter regulations may ssimply lead to
widespread non-observance of labour legislationan expansion of as well as increasing the
informal sector. This ultimately defeats its purpose, which is instead of better protection of of
workers against precarious contracts, so it could act against the objectives of the regulations.
Inspired by the view of discussions on developments in terms of “flexicurity” (i.e. flexible        Comment [p19]: Check this interpretation of a
                                                                                                    difficult section.
security), the labour markets need to seek an equilibrium balance whichthat moderates
minimises severe segmentation among workers based on the job types of job and sector, and
which improves their access to institutions and programmes that raising theire worker
employability and that providing provide re-employment assistance. Together When
combined with a comprehensive employment promotion strategy, basic income support to
                                                                                                    Field Code Changed

disadvantageous the unemployed can help moderate tensions arising from the sharp
diversities in opportunities and treatment in different economic sectors, reduce the opposition
of workers against ato job changes, ameliorate improve labour allocation in the economy, and
thus ultimately, improve the functioning of the labour market with in such a way as to
produce a positive impact on the economic economy and employment developments.

4.4. Active labour market policies

Promoting The promotion of active as opposed to passive labour market policies is a
recentrelatively new fashion seentrend in developed and developing countries alike. When
well-designed and targeted, aThey ctive policies are effective in improving employability and
in promoting employment, although a good level of when they are well designed and
targeted, which requires good supervision by is required of the parties concerned, i.e.
governments and social partners. How these measures are integrated with other policy
instruments are is also very important. The active pproachapproach is mostly based on public
intervention the activation measures of aimed at the unemployed and youth young people,
most through public interventions (particularly public employment services); , with awhile a
minimum level of income security is provided by through social security
mechanismsprogrammes. In parallel to withthe world trends, active labour market measures
are increasingly being implemented to promote employment in the Mediterranean MEDA
countries, of which a notable example is . Countries like Tunisia are particularly noticeable.
The most common types measures are implemented are vocational training courses and
micro-credit self-employment schemes of self-employment for the unemployed and
youthyoung people. The scope of these interventions is generally quite limited and some
measures are rarely implemented ( guidance and counselling services).

An important feature of employment activation measures is the predominance of donor-
funded interventions, partly a consequence of mainly due to limited government budgets and
the weak institutional capacity of national players. The existing donor-supported programmes
supported by donors (by the EU, World Bank, etc) focus on different types of employment
and training schemes, but also include some reform initiatives of public employment services
reform initiatives (Tunisia, and Morocco) or the establishment of pilot employment centres
(Jordan, and Egypt) for aimed at building institutional capacity buildingies. Impact analysis
of these measures is necessary, particularly regarding in regard to their impact on employment
promotion and on the population groups who benefited most from the programmes (e.g. high-
skilled versus or low/unskilled workers). The risk of deviation from the original intention may
be high, due to immediate the interests of the local actors directly involved in the training
period (trainee, training provider and recipient host enterprise). The Nor is the net effect on
employment is not clear, because of such phenomena inherent to implementation, such asas
deadweight loss, and substitution effect andand displacement effects, which are inherent to

Tunisia is a country givingcurrently awarding highest priority to employment activation by
means of its and a more systematic efforts to develop an active labour market policy.
According to the World Bank (2003), Tunisia spent about 1.5% of GDP on active measures in
2002, with the aim of aiming to offering a whole range of programmes covering different
job-seeker skill levels of job seekers; however only 5.3% of the labour force could benefited
from the programmes despite this high level of public spendingexpenditure. TMoreover, thus
thee overall percentage of GDP funds devoted earmarked forto labour market policies policy
fundingas a percentage of GDP remains limited even in this best case.
                                                                                                  Field Code Changed

Owing to the considerable number of theseThe programsprogrammes underway in Tunisia,
they can be classified into four groups as follows: insertion ; namely programsprogrammes of
insertion, university graduate employment programsprogrammes for increasing employment
of university graduates, FIAP (Fonds d'Insertion et d'Adaptation Professionelle)
programsprogrammes of the Fund of the Insertion and Professional Adaptation (FIAP), and
programs for the promotion of micro-enterprises and self-employment programmes.25. The
aims of the insertion programmes are based on (1st group) are to facilitateing the first initial
entry to the labour market byof young people to labour market through work-based training
and by to encourageing enterprises to hire them. Target groups are university graduates (Stage
d’Initiation à la Vie Professionnelle 1SIVP1), post-secondary graduates (Stage d’Initiation à
la Vie Professionnelle 2SIVP2) and vocational high school graduates (Contrat Emploi-
FormationCEF). The university 2nd group of graduate employment programmes focus on new
university graduates through encouraging enterprises to recruit them, and young graduates to
set up their own businesses, ; it also provides further training for young graduates to graduates
to facilitate their labour market integration. The Fund of the Insertion and Professional
Adaptation (FIAP programme) employs different tools in the 3rd group26. Finally as the 4th
group, and micro-enterprise/self-employment programmes are operated by a number of many
pupublic institutions and non-governmental organizationNGOs.27 provide programmes for the
promotion of micro-enterprises and self-employment.

These programmes target different levels of skills and education as well as different
professional sectors in Tunisia. When the number of beneficiaries and level of support given
in each programme are were examined analysed according to by skill/education levels, the
middle-high skill groups seems seemed to have an advantagebenefit most, but it is difficult to
make pass a final judgment on how accessible these programsprogrammes are to the least less
qualified segmentspopulation elements. Although programsprogrammes that targeted to
unskilled workers exist, for both political and social reasons, they are often less privileged
than the programsprogrammes targeteding for university graduates for both political and
social reasons. This unemployed group iUniversity graduates are s more active and more
visible, and make them known bytheir enrolling enrolment in different exams of public
administration exams has , which led the government to give them priority. Unskilled job
seekers are rathertend to be more ignorant of possibilities due to the lack of key competences
or prior qualification requirements. The Tunisian case is often cited as the best example ina
model for the MEDA region, due to the high numbers involved and the and intensity of these
measures implemented, but. Nevertheless, required is an impact assessment needs to be done
in terms of effectiveness, coverage and target groups.

   All the information given abouton the Tunisian programmes were received fromwas supplied by Mohamed
Chemingui and ANETI , (Agence Nationale Pour l’Emploi et le Travail Indépendant). National Agency for
Employment and Independent Work, by Mohamed Chemingui.
   Instruments as follows: A.: insertion into Filling a vacancy; B.: aAssistance to with business creation of
enterprises; C.: pProfessional perfectiondevelopment; D.: development of subcontracting Subcontracting through
partnership; E: . aid Aid to geographical mobility; F.: re-Requalification or re-conversiontraining; and G. P:
promotion of theng the private supply of initial training.
   BTS: Tunisian Bank of Solidarity; FNE: National Fund of Employment; FONAPRA: National Fund for the
Promotion of Handicrafts and Small Trades; FSN: National Fund of Solidarity; UTSS: Tunisian Union of Social
Solidarity; PRD: Regional Programme of Development; PDUI: Integrated Programme of Urban Development;
PDRI: Integrated Programme of Rural Development., Development associations: through granting of micro-
loanscredits.                                                                                                    Field Code Changed

Faced with alarming unemployed graduate rates, Morocco started tocommenced
implementing first active employment measures at the beginning of the 1990s after facing
alarming rates of unemployed graduates. Measures targeted toing unemployed graduates are
grouped under three typesof three kinds: better labour market information and public
employment services (reorganisation of ANAPECthe Agence Nationale de Promotion de
l'Emploi et des Compétences),; increasing improved qualifications for to ensure better
employability (complementary training courses or in-company training),; and the creation of
better jobs (young investors’ loans and self-employment programsprogrammes). Measures
targeting non-qualified workers emanate from the social policy of struggling fightingagainst
poverty rather than that of from employment policy. They are more and more Increasing
numbers of programmes are carried out through partnerships with national NGOs NGOs and
international co-operation fundsfunds, and; the micro-loans credit system is also popular.
Eligibility criteria like such as age, diplomaqualifications, length of length of time
unemploymentunemployed, and the existence of a business project is are applied to
graduatesyoung people, ; for the poverty reduction measures, while selection criteria are
primarily based focused onon the social background (e.g. precariousness, vulnerability) in
poverty reduction measures. Impact Unfortunately, no impact assessment is hardly done
afterperformed for these programmes, with and priority is often given awarded to achieving
quantitative objectives (e.g. maximising recruitment “making numbers”). Compared to
Tunisia, programme coverage and tthe number of beneficiaries and coverage of programmes
are even more limited, and as in Tunisia, but similarly graduatesyoung people seem to benefit
more from the programmes compared tothan the the unskilled.

Lebanon does not have any policy of for implementing comprehensive programmes to
integrate different categories of workers into the labour market. Due to a poor institutional
framework, training seems to beis limited to one type of accelerated vocational training for
youthyoung people. These courses, which provide short training in a variety range of manual
or simple machining techniques for vocations trades and crafts, either manual or those which
use simple machines, and requiringe no more than basic skills and or knowledge in the
technique of the vocation or craft. The programme mainly targets primary education poor
achievers from the primary education sector and school leavers (aged up up to 15 years old).
Another common type of intervention is self-employment training and micro-financing
activities. Supported by the EU and launched in 2002, the Economic and Social Fund for
Development (ESFD) was launched in 2002 foris aimed at poverty alleviation through local
community development and job creation. NGOs NGOs are particularly active in micro-
financing where there were ; in 1999 there were a total of 19 sponsored micro-financing
programsprogrammes sponsored in 1999. The amount of, funded by loans disbursed wasof
approximately US$11 million USD, distributed to 11,000 thousand beneficiaries (Issa, 2005).
Excluding religious welfare associations, NGOs spend more (around 28.5 million USD in
1999) than the government (around US$28.5 million in 1999) on vocational training projects
and rehabilitation programsprogrammes for the disabled, deviantsdelinquents, addicts, and
convictsprisoners. The largest portionMost of these activities was are funded by donors.

AIn Jordan, a panalopy panoply of measures are have been implemented under active labour
market policy policies. in Jordan. A Development and Employment Fund (DEF) was
established in 1989 to provide technical and financial support for to small and medium
enterpriseSMEs and to promote entrepreneurship and self-employment. Like most other self-
employment programsprogrammes in the region, it experienced has been featured by fiscal
sustainability problems, incompetent utilization utilisation of loans and low payback rates.
Jordan Overis over-saturated with low poorly educated and unskilled foreign workers, yet
                                                                                                Field Code Changed

exports the its own qualified professionals to the Gulf, . It has Jordan suffers from a huge
domestic unemployment rate, and one . One explanation for this is attributed to is the
attitudinal factors of youthe of young people who are too proud to accept refuse to accept
unskilled low-status jobs made available out of embarrassment. In an effort to resolve this
problem, the Jordanian government, in cooperation with the Vocational Training Corporation,
the military and the private sector established an ambitious training project in 2002. The
project , offering offered a varietya range of training specializationsspecialisations, (each
composed of two components: one of a disciplinary nature component offered by the military,
and the second of and a vocational naturecomponent). The aim of the programme was to
teach positive attitudes and strengthen work ethics. However, driven by supply rather than
demand, this programme was found useless to be ineffective and foldedstopped after three

Egypt is an example wherehas many donor-funded active measures are in place, without there
being a a clear national strategy and coordination policy. Under As a means of providing
counselling and job search assistance, a CIDA-funded project (ELMSR) funded by the
Canadian International Development Agency is has been implemented to develop a modern
and efficient national employment service. It consists of . This consists of establishing
employment centres; , improving strengthening the capacity of professional staff skills, and
enhancing the Occupational Information System (OISE), including an which includes an
automated electronic labour exchange). As regards for labour market training, the World
Bank-funded Skills Development Project (SDP) funded by World Bank aims to stimulate
private sector demand for skills training, by providing short- term (less than 6 months)
training (less than 6 months) related toon the production processes on a cost-sharing basis
with SMEs in tourism, construction and manufacturing sectors; this programme is
implemented on a cost-sharing basis with SMEs. The Social Fund for Development
(supported by the World Bank and the German KfW) also implements different a range of
public works programmes, with funding from WB and German KfW, aimed at eradicating to
eradicate poverty and improvinge the quality of life for illiterate and/or unskilled individuals.
A national programme for integrated rural development (or SHOROUK) was launched in
1994 to both promote rural integrated rural development based on grassroots participation and
to provide job opportunities to for the rural unemployed. The main obstacles faced are lack a
shortage of trained administrative staff,; a lack of government funding to sufficient to ensure
the achievement of targets,; and the influence of powerful local figures in changing changing
projects to meet the demands of to suit their own interestspowerful local figures.

The Egyptian Small Enterprise Development Organisation (SEDO) also provides financial
and technical assistance as well asand training to start-up and existing enterprises. Inspired by
an assessment study that confirmed the need for such a programme, it represents the most
important source of funding for small enterprises. It SEDO operates through numerous
intermediaries (NGOs and financial institutions) and has established a number of one-stop-
shops have been established. An assessment study confirmed the need for such program as it
represents the most important source of funding for small enterprises. Most beneficiaries
borrow directly from SEDO rather than through banks and hadve had no problems in repaying
the loans. The Micro-Finance Programme (MFP) is another one programme that targeted “as
the active poor”. M; it benefited more than 180 thousands,000 individuals benefited from it in
between 1992- and 2005. However, theThe main challenge as far as these programmes are
concerned is to achieve and preserve the financial independence and sustainability in these
programmes, ; their viability, meanwhile, depends on the willingness of donors to subsidize
subsidise loans with interest rates below the market rate.
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4.5. Vocational training systemseducation and training (VET)

Vocational training systemeducation and training (VET) is an indispensable part ofelement in
employment policy, as it provides a fast by providing a faster route to the labour market and
is an integral part of lifelong learning strategies. Labour markets increasingly favour people
with up-to-date skills and competences who require are willing to undergo constant on-going
development of their vocational and professional skills. Improved VET systems can increase
the supply of individuals with the intermediate and technical skills needed by cessary for
economy economic development and can provide individuals with opportunities for reskilling
and upskilling. Particularly uUp-skilling those people with low poor or no qualifications is,
for example, a key to reducing reduces social inequalities in society. Features of theThe
vocational trainingVET systems (VET) in the different countries in the Mediterranean MEDA
region pose some are faced with similar challenges (ESCWA, 2003), which have which are
also been identified by in all five background reports commissioned by the ETF. These are as

   Absence The absence of a grandn overall vision for the whole entire education system,
    anda lack of consensus on the exact role of VET in the system (, and unclear
    differentiation between the social and economic goals assigned to the VET system);
   Insufficient The insufficient human and financial resources allocated to the VET system
    and the resulting quality problems;
   Outdated occupational profiles, curricula, teaching methods, textbooks and equipment; ,
    an imbalance between theory and practice; , and a lack of practical work experience of
    among teachers and instructors;
   Fragmentation The fragmentation and insufficient coordination existing among VET
    providers to in addressing address accessibility, transferability and accreditation issues;
   High Great internal and external rigidity due to centralised bureaucraciesy and the
    inability of trainers to design courses relevant to the needs of the modern labour market;
   Internal The internal drive focus of the whole entire education system towards on higher
    education, combined with a the low status and low relevance of VET, which results in
    leading to an overproduction of higher education graduates;
   Lack The lack of involvement of the private sector in the governance, funding and
    delivery of VET;
   No The lack of established horizontal and vertical pathways between the different sub-
    sectors of the qualification systems system, the lack of incentives, and the absence of a
    spirit of competition;
   Lack The lack of consideration of gender-sensitive iconsiderationsssues and the
    dominance of traditional gender roles in the VET system.

Despite large donors’ the support of important donors to for VET systems in the MEDA
region, most of them systems concentrate on sub-sector reforms, creating “islands of
excellence” but failing to provide a coherent support to sectoral policy reforms. The Egyptian
vocational trainingVET system is an a good example of fragmentation and insufficient
coordination. : there are as many as 21 ministries, and not to mention a number of agencies as
well asand some public enterprises, have with VET centres. The major main VET providers
are the Ministries of Industry and Technological Development, Military Production,
Manpower and Emigration, Housing and Public Enterprises. They . These offer a wide range
of training courses which lasting from a few weeks to four years, but ; in all cases training is
mainly vocational and semi-skilled. The efficiency and quality of the training efficiency and      Field Code Changed

quality are is low, due to the separation of theory from and practice and. There are few the
number of properly trained trainers is few, due togiven the the low pay and low social esteem.
The vast majority ofMost equipment in training centres is in bad conditionantiquateds and of
insufficient largely unsuited relevance to program design and to trainees’ needs (Amer, 2005).
The Since the providers themselves are not allowed to retain any fees from courses, the
courses do not meet that could be earned by meeting the specific demands from of private
enterprises. Therefore There is thus no incentive is available to respond to labour market
signals concerning the skills required in the economy. Teachers are under-qualified, poorly
remunerated and unmotivated. Teaching is based on memorisation rote learning and repetition
of teachers’ statements rather than on analysis andtical thinking. The entire system is geared
towards public administration employment and not to jobs where critical and/or creative
thinking is required. The result is a failure to adjust to the type and quality of skills that are
needed by employers.

In LebanonSimilarly, the current training system in Lebanon also lack financial capacities s
funding and incentives incentive mechanisms that allow them to provideenable the provision
of training in vocations careers that require expensive equipment and competent trainers. It
Training is mostly limited with to accelerated vocational training for general mainstream
education school leavers. The courses are mainly theoretical with few practical components,
and they lack focus on the basic tenets of learning or language aptitudes. Burdened with
quantitative and qualitative deficiencies, most training institutes do not have no links with
business ownerses. As for vocational training in the private sector, Issa (2005) confirms that
most of these training centres are supervised by welfare associations and institutions, and
around 80% of these centres only provide accelerated training for unskilled adults for
humanitarian purposesreasons, i.e. training is , not necessarily linked to specific labour market
needs. Only Around 6% of training centres were are aimed at dedicated for industrial
apprenticeship training, while industrial skill development centres accounted for another 3%.
They These mostly target women (sewing, knitting, embroidery, flower arranging,
cosmetology, hair dressing, and general housework).

There were have been efforts to change these trends in some countries of in the MEDA
region. Being at In Morocco, vocational education has witnessed considerable development in
the last two decades, after existing in the shadow of general education for a long time, and
considered for long as a poor second choice to for families and young people, vocational
education in Morocco has witnessed a considerable development for the last two decades.
This process started commenced with VET reform as an essential actor element into
accompanying the economic restructuring process of national economy for government. The
Its iVET approachmprovement is supposed to be one of the main tools for improving
allowing the improvement of the interaction between training and employment in order to
stopand reducing the unemployment of among young people.28. However, vocational
teaching in Morocco suffers from three points of weaknesses that which slow down its
development: the Low low proficiency in French29 shown by the trainees, trainersthe’ lack of
understanding of professional realityrealities by trainers, and the insufficient inadequate

   This strategy is defined in the Charte nationale d'éducation et de formationNational Charter of Education and
Training, adopted in 1999 and implemented in as of 2000 (Bougroum, 2005).
   This difficulty is due to a linguistic cut divide between the general educational system and the vocational
training system. Teaching in the latter case is done primarily in French whereas Arabic is the teaching language
in trainees come from the public-based general education where teaching is done in system. Arabic. The
Llinguistic hindrances are also apparentbarriers also exist in at some higher education subjects (e.g. the technical
and scientific areas).                                                                                                 Field Code Changed

involvement of employers. AsThe Moroccan private sector, moreover, is dominated by the
small-sized informal companies in informal sector, this which does not help to the creation
ofe the necessary professional environments for proper formal vocational teaching.

Since the beginning of the 1990s Tunisia has, since the beginning of the 1990s, analyzed
analysed and treated the issue of vocational training as a reform issue,. It has been introduced
within a the context of global overall reform of the Tunisian economy and privatization
privatisation of public enterprises. In this context, an upgrading programme of the Tunisian
economy has been set up in operation since 1996, in order to improveaimed at improving the
competitiveness of enterprises. Vocational training has figured as one of the main components
of this programme, which was placed under the tutelage of the corresponding Ministry
ministry of Education and Vocational Training in 2002. This function is supposed to replace e
aims is to replace and/or to improve in the best way what has already existed at the level of
educational establishments as much as theand associated social affairs centres linked to social
affairs. Implementation of tTraining programmes is ensured are typically implemented by
public and private operators.30. The receiving capacity of the whole public education system
has been improved via the creation or re-structuring of centres and, by improved better
exploitation of the existing capacityresources, and especially through the extension of training
with in cooperation with enterprises. This has helped to quadruple the flux inflow of new
registered trainees in this system in the span of eight years (in the period from 11995 to 2003).

Jordan is another country reforming its VET system. Its mMinistry of Education education
offers a variety of programmes in 200 secondary level schools,; the Vocational Training
Corporation provides apprenticeship model training in 50 vocational centres; , and the Al
Balqa Applied University offers practical education and training in practical fields via 28
public and 25 private community colleges. Although originally designed to lead the reform in
national vocational training programmes, the Al Balqa Applied University last model is
dominated by academic concerns and competes to offer more associate associate degrees
rather than industrial expertise. Each delivery system operates independently of each other,
and so theythere is a failure to do not successfully coordinate the their programmes between
theand qualifications offered in different vocational streams. It is for this reason that
Consequently, the VET system continues to be perceived as a 'second- resort' educational
option. All The three providers mentioned above share such same characteristicsdrawbacks,
such as as insufficient industry liaison with industry, rigid and overly bureaucratic
management systems, and lack of programme irrelevance and inflexibility.

Considering Given the challenges and developments described, above, two fundamental and
systemic-level issues need to be addressed in concurrent the context of with any proposed
reform initiative in the MEDA region. Firstly, VET there is a lacks lack of the kind of an
overarching vision in regard to VET at the highest level of government that would serve to
guide and coordinate reform initiatives. Secondly, there are many persistent systemic barriers
exist foragainst the creation of a VET system that is is industry- driven, competency-based,
flexible and responsive; such as. These include the pervasiveness of the academic model,
bureaucratic civil service processprocedures, weak industrial structures, and a

  For public sector, theThe Agence Tunisienne de la Formation Professionelle Tunisian Agency of Vocational
Training (AFTP) is the major vocational training provider in the public sector and practically the only one
operating in the industrial sector. The Agence de Vulgarisation et de Formation AgricoleAgency of Agricultural
Popularization and Training (OVFA), the Office National du Tourisme TunisienTunisian National Office of
Tourism (ONTT), and the ministries of Ministry of Ddefencse and Ministry of public health equally also provide
vocational training (Chemingui, 2005).                                                                           Field Code Changed

growingincreasing number of informal micro-enterprises in informal nature, highly
centralized centralised financial process procedures, and a lack of performance management
systems. Unless they these problems are dealt with at the systemic level, the chance to success
with less far-reaching changes will be limited. succeed with small changes may be limited.

Furthermore, vocational guidance services, which should need to be an important component
of any reform and, should be made available to all students and trainees before and after
graduation they exit the education systemon job opportunities. In general, choices on
education and training are made on the basis of prestigious jobse, family traditions and
proximity of schools. If training and education does not facilitate recruitment, then most
graduates young people will end up working in the fields which have nothing to do with their
educational background (De Gobbi & and Nesporova, 2005). According to a reportn by the
United States SAAIDgency for International Development report (USAID, 2003), among on
the the well-educated young in Morocco, as many as 40%two thirds of humanities graduates
may beare unemployed in Morocco, with and about one -third of university graduates turning
to vocational training institutes to acquire for practical skills-buildings after realising that
their university degrees do not equip them for the job market. Therefore, the existence of an
overall grand vision for of the whole education system as a whole and the role of the role of
VET in it the system is crucial.

4.6. Concluding remarks

Recent debate on theThe term “flexicurity” was initially used to describe the a successful
combinations of labour market flexibility and security that was particularly applicable to
certain European countries, such as realised by some national labour markets (i.e. Danish or
Dutch)Denmark or the Netherlands. in the European context. The term has then movedthen
broadened to away from the description of specific national contexts to become a tool to
being a descriptor that clclassifyied a certain kind of different labour markets in Europe (EC,
2006b). It is now treated as aNow both a “concept and an common approach”, it is viewed
shared by many experts as a a suitable response to the new employment and social challenges
faced by contemporary societies. Its origin is based is based on a negotiated deal, between the
government and social partners ,in the specific historical/social context of Western Europe to
lower employment protection and to increase in turn employability and worker security, of
workerswith the ultimate aim being to enable to enable easier labour market transitions and
encouragehigher workers’ mobility. Although developed in the specific historical/social
context of Western Europe, tNevertheless, the he concept is employable bycan easily be
extended to all countries as a policy objective, and, and differing degrees of balance between
flexibility and security can be achieved by the interaction of the four key elements of the
flexicurity concept in any local context: a) sufficiently flexible contractual arrangements; b)
effective active labour market policies; c) credible lifelong learning systems; and d) modern
social security systems. According to this approach, countries need tocan play withjuggle all
those these elements synchronically and so as to develop different combinations of policies
that can be implemented to serve the sameir policy goals.

In the Mediterranean MEDA context, the chapter shows it can be seen that there are
deficiencies in all these four elements, which are considered to be key tools toways to
achieve well-functioning labour markets. Flexible contractual arrangements are in fact very
common due to the large informal sector, but this is achieved through non-observance of the
rule of law and the curtailment of workers’ rights, and at the expense of high protection of for
a small group of people. Informal employment may improve the labour market situation in
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quantitative terms and provide poor households with incomes, but in most cases it does not
contribute to any substantial improvement in job productivity and future prospects. Majority
The majority of workers are and continue to be outside the scope of any public interventions.
This brings us round to another crucial element to our attention foraffecting the MEDA the
region: decent adequate income support to for the unemployed poor. Social security systems
tend to subsidise relatively better-off segments of the population. They fail do notto reach
benefit the most disadvantaged segments members of societies society in the face of
unemployment foror to ensure a better transition and or allocation of labour, instead they tend
to subsidise relatively better-off segments.

A policy shift towards meeting the needs of the neediest members of society may be
necessary by providingis required, in the form of better assistance in better re-employment
assistance provided by public employment services, broader access to active labour market
programmes, and to access tothe vocational training systems throughout the life-cycle for
these segmentsof targeted groups. Particularly bAetter targeted active labour market policies
and training aimed at assisting at the poorest can help lift their livesthem out of poverty and
contribute to formalise formalising the workforce. The roles of played by labour market
institutions and actors (efficient implementing agencies, strong social dialogue, and
independent research institutions for monitoring purposes) are important in the any new
policy design and implementation, but although this will first require this requires a
significant degree of capacity building of institutions and actors in the region. Furthermore,
the whole process needs to be supported by improved macroeconomic conditions.

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            Chapter 5. Ways forward for to labour market reforms
The This report focused on some certain issues related to the functioning of the labour market
functioning in the Mediterranean MEDA region. From a quick review of theOn the basis of a
brief review of key labour market indicators, the report has identified a number of challenges
problems, such as low labour force participation and employment rates (in particular for
females and youthyoung people), difficult labour market entry intorestricted access to good
jobs resulting in large informal employment sectors, and labour market segmentation with
few little mobility between labour market segmentsacross sectors. The overall conclusion of
the report is that labour markets in the Mediterranean MEDA region may not be functioning
well in the allocation ofallocating human resources to their best uses, which is—a crucial
requirement for to the success of any policy aimed at broadening increasing employment and
fostering economic growth. Besides The report concludes that, besides the challenges implied
for the facing the quality of education and training systems in terms of quality improvement,
the report concludes that comprehensive and multi-dimensional structural reforms are
necessary in the Mediterranean the MEDA labour markets.

Given the urgency of addressing the growing unemployment rate, aThe need for change has
been gradually come to be assumed accepted in the region, as unemployment has started to
become a top urgent problem, and theand political willingness to reform the labour marketss
has constantly consistently been expressed since the beginning of 1990s by the political
leaders. Particularly yYouth unemployment in particular has placed pressure on urged
governments to develop some emergency measures to address the issue. By 2000sthe
beginning of this decade, some countries of in the region had begun to develop more clarified
reform strategies in a more precise and explicit way:reform strategies, for example, to deal
with In the short term, reform strategy adopted by authorities aims to face the growing rate of
unemployed unemployment (particularly among young people) or, over the mid-to-long-term,
to (particularly graduates). In the middle and long term, the reform aims at setting up a
structuredrestructure the labour market so that where a productive private sector can would
play a central role as the maina creator of employment.

Reforms for a smallerto reduce the public sector and the emergence and development of a
formal private sector touch upon several aspects of the macroeconomic system, such as
broadening the private-based sector through the a policy of for deregulation deregulating
(privatisationprivatisation) and, upgrading enterprises, ; modernising public administration,;
and updating legal and regulatory frameworks in various fields (the taxation and ; legal
systems, the family and code, the labour system code, etc.). In line withthe the economic
restructuring process of the economy, reforms will need to be carried out simultaneously on
the several front lines. Coordination with other economic and social policies (e.g. controls
over capital flows, company and investment lawslegislation, energy and transportation
infrastructures, social security system, etc.) is will be crucial to necessary for a successful
labour market reform. For example, Sstructural adjustment programmes, for example, should
be designed to have an impact on unemployment, or and incentives for investment incentives
and tax exemptions will need to be linked with the level of to employment. All these aspects
of Ppublic action of this nature will will have significant long-term implications on for the
social and employment structures of the countries in question.

There are several reform initiatives already underway in the region aiming, aimed at
improving to improve the legal, administrative and institutional frameworks governing in the
labour market and strengthen enhancing partnerships among key stakeholders. Initiatives to
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revise reform labour market legislation and to modernise public employment services, for
example, have been introduced in several countries. On the supply side of the reform process,
the education and training sector has been heading differentlaunched a number of
programmes—mostly funded by international donors—in the in basic elementary, and
secondary education,; vocational education and training,; and tertiary and higher education
areas, aimed at meeting the ; mostly funded by several international donors. Through these
programmes and projects, MEDA countries indeed agree on the nneed to upgrade educational
the performance, relevance and quality of the systems, . These programmes focus on
implementing to better take into account the labour market demands through more
“employment-driven” education and training strategies and policies that reflect the needs of
the labour market; better , involvement of stakeholders and social dialogue, institute social
dialogue; , enhancement of governance; , develop institutional capacity for building for
definition of defining policies and for decision--making, and ; and increase and diversification
diversify of the sources of funding.

Under a comprehensive programme entitled MANFORME, launched in 1995, Among the
most notable reforms, Tunisia has developed an ambitious program project, in cooperation
with social partners, for upgrading the provision of training services and increasing enhancing
worker employability of workers under a comprehensive reform called Manforme since 1995.
In. V cooperation with social partners, vocational training aimed at developing qualified
human resources is considered key forto the integration of the integrating Tunisian economy
in the world economythrough better qualified human resources. The first decade of reform has
focused on the establishment ofestablishing infrastructures (, particularly, the creation and/or
re-structuring of training centres, the implementation of partnership principles, creation the
development of training programsprogrammes, and the adoption of quality principles). This
investment phase is being has largely been consolidated, today although some structural
investments are stillremain to be realizedimplemented. Among the mMajor international
donors contributed to the Manforme are the World Bank (a $project of employment/training
II with a loan of 60 -million loan $), the Agence Française de Développement French Agency
for Development (a €with a loan of 72 -million loan Euros), the European UnionU with a sum
of (a €45- million loan Euros), the Arab Fund forof Economic and Social Development (a
loan of loan of 111 million KWDKuwaiti dinar), and the Belgian Fund of Compensation (aid           Comment [p20]: I could not find any reference
                                                                                                   to this body in EN or in FR on the WWW.
of 150 million BFBelgian francs). The EU has allocated another a further €6 million for to job
creation and €30 million for to VET sectorelsectoral support for vocational education and
training in for the period 2005- to 2008 (EC, 2005). Under MANFORME, the international
donor community has supported many different a range of projects related to employment
policy, the restructuring of the employment services offered by the Agence Nationale de
l'Emploi et du Travail Indépendant ANETI, support to for self-employment measures, and
vocational training programmes for different target groups have been supported by
international donor community.

According to the evaluation of an an employment project evaluation carried out in Tunisia by
in Tunisia by the Swedish International Development Cooperation Agency (Oxenstierna,
2001), the development of an employment services based on ICT the information and
communications technologies and of on training modules for staff as well as for job-seekers
was has been easier to adapt and apply to the local conditions. As a result of the cooperation,
manyMany employment offices had have been modernised during the pastin recent years and
that work was are consequently more efficient, with from the view of more job offers made
available tochannelled through the officesem, and more job seekers being assisted to with
obtaining jobs or training. However, different the management model of for state agencies,
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based as it is on a different culture and level of economic development, has produced resulted
in a somewhat more centralised and hierarchical characterstructure, which, . The centralised
model of management although it has the advantage of easier implementation, does not easily
admit but a large degree of delegation of responsibilities and idea of team work is not easily
applicable. Local offices had have little independence vis-à-vis the central apparatus
(including in regard to the recruitment of local staff),, and a large partdisproportionate amount
of of time goes tois spent on administrative worktasks.

In Jordan, though less comprehensive and more modest, similar—although less
comprehensive and more modest— reform programmes and projects have been implemented
with the support of international donors:. For example, funded by the Canadian International
Development Agency is the Al-Manar project, which funded by CIDA focuses on labour
market information databases, electronic labour exchange and career counselling. In
cooperation with the Aqaba Economic Zone, Al-Manar has developed the Employment
Promotion Centre in Aqaba as a model to mediate between job seekers and employers in the
region. Education Reform for Knowledge Economy (ERfKE-1) is another ambitious project
aiming to transform the education system from the early childhood, basic and secondary
levels stages to graduates withso as to equip school leavers with the necessary skills for to
participate in the knowledge economy. This ambitious US$380- million project is supported
by nine international partners, : primarily the World Bank (which contributes US$ 120
million), but also the the Arab Fund for Economic and Social Development (AFESD), the
Canadian International Development Agency (CIDA), the British Department for
International Development (DFID), Kreditanstalt fUir Wiederaufbau (KFW), the European
Investment Bank (EIB), the Islamic Development Bank (IDB), the Japan International
Cooperation Agency (JICA), and the United States Agency for International Development
(USAID). Higher Other examples are higher education reform funded by the World Bank,
and social dialogue and prevention of child labour prevention projects supported by the ILO
are other examples.

Egypt has also manyalso has a number of donor-funded programsprogrammes underway,
related to labour market and training reforms. Major donors in the country are the European
UnionU and the World Bank. All the programsprogrammes intervene intervene directly in
central the labour market , given that issues as they deal with vocational training, labour
market information, SME support, etc. The EU funds a large VET project with a €33- million
grant, a private sector development programme of worth €45 million, and an industrial
modernisation programme with a total fund of €250 million. A nother new project, spinning
and weaving sectoral support programme, with worth €80 million, aims to restructure the
public sector and address the issue of 30,.000 redundant workers. The World Bank supports
skills development projects with a loan of USD US$ 5.5 million, and the Canadian
International Development AgencyCIDA supports a program on labour market information
and employment services reform programme (with a CAN$ 5- million grant). The Mubarak-
Kohl Initiative (MKI) is another donor-funded project that implementing implements a dual
vocational approach targeting targeting secondary VET students for VET apprenticeship
trainings. The Although the project is considered to be one of the most successful experiences
in the field, however its action is limited with to the creation of an icreating an “island of

In Morocco, there has been job creation schemes and on-the-job training projects have been
funded by the World Bank (total a US$ 51- million loan), and job creation and work-oriented
training projects funded by USAID the United States Agency for International Development
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(a US$ 9 -million grant), ). tTechnical and vocational training (a €38 38-million grant) and
job creation projects (a €3.3-million grant) have been funded by the EU. European Union,
French and Belgian funds have been provided for for vocational training projects (€15 15- and
30 30-million loans, respectively) and , as also a Japanese grant for to set up a vocational
training school. Main international cooperation programmes being planned for the future are
the MEDA II VET scheme in for textile, s, tourism and NITC sectorsthe information and
communication technologies (a €50 50-million grant), German technical assistance for
vocational training (a €5 5-million grant), French and Belgian funds for follow-upmonitoring
(totalling aid of €5 million togetherin total), and Canadian International Development Agency
Canadian CIDA assistance to for establish skills approach development (a CAN$ 10 -million

In Lebanon, tThe primary interest of donors in Lebanon (including the EU) has focused
onbeen the rebuilding of the infrastructure of educational infrastructures sector after the civil
war. European UnionThe EU started mainlysupports with the development of SMEs through
its MEDA I and MEDA II programmes. Under MEDA I, the Lebanese government received
grants amounting to €166 million between 1996- and 2001, but . Oonly two projects were
related to employment: the an iIndustrial Modernization modernisation Programme
programme (an €11 -million grant) and support to for the establishment of small and micro
micro-industries (a €12 12-million grant). Under MEDA II, of immediate relevance to
employmentprojects of ru are rural development projects (€10 million), the Tempus TEMPUS
higher education project (€3 million) and Integrated integrated SME support (€17 million)
have relevance for employment. Germany, Belgium, Spain and France are the most active EU
member states engaged in different aspects of vocational training system programmes, and
targeted to special groups through NGOs in Lebanon.

From the quickour review of reform initiatives being implemented in the MEDA countries, at
least two favourable factors can be identified forin regard to the labour market market-related
reforms in the region.: The first one is the urgency urgent need to address the unemployment
problem (particularly youthamong young people) and the strong pressure being felt by public
authorities to in relation to dealing deal with its the social and political implications of
unemployment. This has led leads to such initiatives such as the designing design of a
national employment strategy, the reorganising reorganization of public employment services,
the easing of labour regulations, the implementing implementation of active labour market
measures, and the increasing enhancement of the relevance and quality of education and
training systems. However, tThe emphasis given to each factor (including social security) in
the reform processes varies greatly from country to country, depending on the local
conditions. This Nonetheless, this positive political environment helps the interest groups and
lobbies that support a smaller public sector for the benefit ofand a larger private sector (a
number of liberal politicians and organised employers) in the region to push for a more
comprehensive reform agenda.

The second favourable factor is the availability of international donors for willing to provide
financial and technical assistance. The willingness of donors to support and fund reforms and
know-how brought by technical assistance help, which is an important help in terms of
initiatinge the change process and strengthening the hand of change-minded local actors.
Given the tight public budgets in the MEDA countries, donors provide crucial input in to
reformingreforming labour market institutions, employment services, and education and
vocational training systems. In most cases the reforms have been partly promoted and pushed
encouraged by the donors such as the World Bank, the EU, the ILO and , UNDP the United
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Nations Development Programme, andor national development aid agencies.31. From the
quick brief overview aboveprovided above it can be observed that , donors seem donors play
a vital role in bringing vital to bring thea reform agenda into the MEDA region. Depending on
the existence of conducive political environment and the level of cooperation, Donors have
channelled significant money amounts of funding and expertise into labour market and
training reforms in the region, in accordance with the degree of political cooperation existing
in the individual countrieshas been channelled to the countries by donors, each of them
focusing on different aspects of labour market and training institutions. The nature of this
support is not only large generous in terms of amounts funding but also ambitious in terms of
its objectivesaims, geared as it is towards systemic reform (Tunisia, Morocco, Jordan), and
complemented bying national strategies in some countries like (Tunisia).

Looking at the eEarly assessments, indicate the results are to be modest insofar so far inas
translating the pilot initiatives into irreversible major systemic change. Although most of the
individual projects can behave been evaluated as successful, the long-term and system-wide
impact of these programmes is as yet unknown. Most Many of these projects remainhave
created “islands of excellence, and have not as yet led to systemic change. ” and they have not
led to a systemic change yet. AThere are a number of reasons are attributed to these resultsfor
these outcomes. In most of the cases,In many cases, financial resources are not insufficient
for to fund a comprehensive restructuring in of the countrieseconomy, and donor-funded
projects do not haveare not financially sustainabilitysustainable. In reality, theThe
governments in question do not as yet have the hardly own necessary financial and
(skilled)skilled human resources necessary to implement a reform agenda, nor are they ready
to risk their popularity by introducing the difficult policy measures necessary for a
comprehensive reform,, the effects of which can only be seen in long-run. Donor-funded
programmes, moreover, are not always successful in creating full ownership of countries for
mainstreaming project results to the whole system. E Nor has the economic performance of
the MEDA countries in recent decades been very promising. did not help them either in the
last decade.

Weak A weak institutional capacity seriously limits the absorption rate, by public bodies in
the MEDA region, of the financial and technical assistance made available by donorsof
public bodies from available financial and technical assistance of donors. Public policy was
has been designed and carried out in an un non co-ordinated way for so long that some local
actors are not unable to achieve fulfill their new roles. the role assigned to them. The
eEffective involvement of several many actors (ministries, companies, and civil society...the
public) at the national and local levels is necessary forcrucial to success. The iInstitutions are
not as yet equipped with the human and material resources necessary to be able to to perform
the required tasks as in (the case, for example, of with most of the public employment
services and labour inspectorates in the region). Individualised initiatives of by donor-funded
programmes are sometimes implemented without dialogue, coordination and synergy among
with the institutions even in even a single area, one sector, let aloneand so an interdisciplinary
approach is extremely rare; : Egypt and Lebanon could be given asare just two examples for
of overlapping initiatives and piecemeal changes. Weak coordination between donor agencies
with different agendas has also negatively affected the reform process. Last but not least, most
of the countries lack an objective knowledge of the situation and/or a comprehensive national
reform strategy for informed policy-making and implementation. As a result, the donor

     Particularly USAID, CIDA, AFD, SIDA, FSP, BEI, GTZ, DFID, JICA, KFW KfW etc.                    Field Code Changed

projects tend to remain separate isolated from national policies and the daily practices
routines of local institutions.

Even more important is the relevance of policy options that are mostly imported from other
countries. The An experimental phase of systemic change phase (involving innovative
programmes and projects) is crucial, given that as the majority of most adopted measures
were have been inspired from theby experiments of in the developed world. By definition,
they are based on such assumptions such as a well-developed private sector, strong social
partnerships, efficient public institutions, and an all-inclusive social public safetywelfare net.
—all This is far from the reality in the Mediterranean MEDA region. The intended
consequences of policy measures in one context may not happen be produced in another
context. Therefore,, and so these measures need to fit be adapted to the local contextlocal
conditions, particularly where where the actors actlocal actors function on the basis of a
network in network logic. and not of a market one. The lIn other words, local actors often
belong to the same network of interpersonal relations and may turn out intoact as a coalition
of interest in order to transform a device with profits forprotect their own interests. private
interests. The importance given by public authorities to the achievement of quantitative
objectives (often overestimated) during project implementation may also lead the local actors
to adhere to the logic of “making up numbers” at the cost of quality, which; this ultimately
works against the credibility of any public intervention.

Any labour market change process or reform in the labour market process tends to induces
resistance and opposition among those who may feel threatened by the intended planned
changes. By definition, a reform touches upon the vested interests of the power structures and
inevitably lead, leading to “losses” or “gains” in one wayof one kind or another. The question
is how far a reform can go proceed without provoking a backlash that may endanger its entire
existencecontinuance. For some authors, more than insufficient financial resources, and
socio-cultural and institutional reasons are the main obstacles to the modernisation of the
systems. Contrary to rapidUnlike adjustments to technical and technological developments,
which tend to occur rapidly, changes in attitudes and mind-sets are tend to be extremely slow.
Managing and monitoring a change process in specific these socio-cultural and political
contexts is a complex task. O, and the change process can only unfold successfully ifnly
where there is there is internal consistency between political support, financial and human
resources, and social values can the change process develop successfully.

Some sSpecific cultural phenomena and certain work attitudes are complicating the
implementation of reforms in the MEDA region. According to De Gobbi & and Nesporova
(2005), for instance, in Egypt there is widespread favouritism in recruitment and a lack of
geographic and social mobility in Egypt. Due to the traditional importance attached to the
extended network of family and friends, vacant positions both in the formal (public and
private) and informal (public and private) sectors are filled by a relatives or friends of an
existing employee working for a particular employer. Although this may facilitate generate a
sense of loyalty towards the employer, it obviously creates mismatches between skills
demand and supply, and also seriously hinders and serious obstacles for a merit-based
competition in recruitments. Under these circumstances, if one does not havewithout the right
connections, finding a first job becomes particularly difficult. In addition, status does havehas
an impact on labour market entry, in particular among educated people who havewith high
job expectations. Personal and family status is strictly linked toclosely associated with one’s
type of workjob status; , to the point that it is sometimes preferable to be unemployed rather

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than have a low-prestige job. Urban Thus, urban work is deemed to be better than rural
employment. Likewise,, and white-collar jobs are preferable to blue-collar onesemployment.

Restructuring A restructuring of private production systems certainly helpscan certainly help
overcome some of these problems in the region. Creating an environment of fair competition
and rule rule-of of-law for companies (with an emphasis on higher productivity and cost -
efficiency) and reforming monetary and financial systems are important steps for towards a
functioning market economy. The public sector can not no longer afford to be the continue to
be the only source of decent employment, so address of decent jobs. Also the private sector
has tomust also assume its its responsibilitiesrespected role. Widespread A widespread
attitude ofamong private employers who is to tend to compete with on the basis of low-cost
labour rather than on the basis of with high -quality products, and; they thus can only who
offer informal jobs and/or poor working conditions that do not comply with below minimum
legal standards (i.e. minimum wages, health and social insurance, reasonable working hours
etc.) i. This attitude acts as a barrier in the transition to a market economy. Labour
Consequently, labour market reforms must be a component of a comprehensive programme of
structural reforms that support economic growth and, promote decent job creation, and
expandexpanding employment and skill development options for all social groups. Since most
of the existing productive structures have deteriorated and/or are no longer able to compete in
the midst of context of current regional and international developments in most countries of
the region, the issue of “decent” job creation is has developed into a serious problem.

Finally, the issue of rationalising public sector employment (i.e. by limiting/downsizing or
restructuring both public enterprises and administrationthe civil service) is a particularly
thorny one. even more difficult in the region. Except for Lebanon, whose public sector has
historically been minimal, the MEDA other countries of the region have a have traditionally
had a strong public sector, and this has greatly affected with huge implications for the
economy and labour market. The existence of relatively large public administrations working
operating according to under more advantageous civil service (or similar) statutes (or similar
statutes) may function as a source of distortion indistorts the labour market. The posts in the
public administrationPublic sector jobs are attractive not only for the job security, good
working conditions, generous pension rights and additional benefits they offer, but also for
their perceived job image (white-collar and urban employment, and less demanding, easy but
prestigious work, white-collar and urban jobs). Although decreasing decreasing in in nominal
and real terms, public sector wages and related benefits are stillcontinue to be a magnet,
particularly to less ambitious workers attractive, particularly for those with poor performance
and productivity. Apart from the eroding effect on work ethicsGiven the, the lack of
accountability and performance-based assessment in the public sectorystems, this may set
sets an artificially high benchmark for job expectations in the labour market and create an
eroding effect on work ethics. Despite the negative impact, the gThus, groups that benefit
directlyiting from the public sector (i.e. the government and the ruling party bureaucracy)or
government interference may be considered as one of the main a major obstacles for to reform
(i.e. government and ruling party bureaucracy).

The resistance to reforms by public sector workers and unemployed graduatespotential
employees makes renders the mission of a reform process mission practically impossible.
Graduate The fact that qualified young people remain unemployed represents a drain onment
means loss of economic investment in education, andnot to mention the encourages brain -
drain through that occurs if the young people emigrate. ion. However, theThe sceptical
attitude adopted bys of a great large number of unemployed graduates who who—rejecting
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any professional prospect in the private sector and —insist on their right of access to public
employment (as happens in Morocco, for instance, ) creates doubts on as to the reliability of
public actions. It is also an indication of a deep mistrust towards of political systems.
Difficulty The difficulties experienced inof implementing comprehensive structural reforms
may be related to the lack of a social consensus and a the profound crisis suffered being
experienced by the political systems in the MEDA region. As promoted pointed out by some
authors (Yousef, 2004; World Bank, 2004), a new social contract based on the reviseda
review of the rights and responsibilities between of individuals and of the state may be a
necessary precondition for any comprehensive reform.

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