MENA’S INSTITUTIONAL FRAME WORK : REINFORCING THE STATUS QUO
Economy Egypt, Arab Rep. Iraq Jordan West Bank and Gaza Tunisiaa
People starting new jobs
People losing jobs
0.6 2.0 5.2 15.0 10.5
4.0 1.2 8.8 27.0 6.3a
Sources: The Arab Republic of Egypt’s LMPS 2006, Iraq’s HSES 2006–07, Jordan’s LMPS 2010, the West Bank and Gaza’s LFS 2008, and Tunisia’s LFS 2010 (see Appendix); expert interviews by Hendy and Selwaness (2011), Mryyan (2011), and Boughzala (2011). Note: MENA = Middle East and North Africa. a. Formal layoff from open-ended contract only.
extreme exception of the West Bank and Gaza, job entry ranges from 2 to 10 percent of all jobs per year, while layoffs range from 1 percent to 9 percent of total employment per year. Comparable figures for OECD countries are generally in the 10 percent range, and available figures for Eastern Europe range from 2 percent to 16 percent, with most countries above 8 percent. Effect of strict legislation on youth and first-time job seekers Strict employment protection legislation primarily hurts access to jobs by vulnerable groups such as youth and women, thereby leading to more exclusion. Blanchard (1998) shows that an increase in dismissal costs leads to higher unemployment among marginal groups of workers because of their inferior access to jobs. Because the productivity of young workers is not easily revealed before hiring, their probability of being hired is lower in the presence of increased firing costs. OECD (1999) finds that stricter employment protection legislation reduces employment among prime-age women and youth, thus exacerbating exclusion effects, as difficult firing leads to longer unemployment spells and job duration, a trend that likely benefits prime-age males. Similarly, Kugler and SaintPaul (2000) show that greater firing costs increase discrimination against unemployed
workers, because they increase the costs associated with hiring a bad worker. In other words, large dismissal costs contribute to the segmentation of labor markets, in which well-protected workers in the formal sector (who tend to be predominantly prime-age males) contrast with much lessprotected workers in the informal sector and the unemployed. Evidence from the region, reviewed in the sections that follow, shows these effects among youth and women. Consistent with the above observations, youth have less stable labor contracts than prime-age workers in MENA. In Egypt, Tunisia, the United Arab Republic, and the West Bank and Gaza, youth have signifi cantly fewer open-ended contracts and more term or sometimes even noncontractual work relationships (see figure 5.7) (although in Jordan, as an exception, youth have more stable contracts than prime-age workers). Temporary jobs can be problematic, because they can exacerbate any dualism in the labor market (Bentolila, Dolado, and Jimeno 2011). The Spanish experience shows how temporary contracts become a “permanent” perpetuation of insecurity—a
FIGURE 5.7 Types of work contracts in all sectors in the Arab Republic of Egypt, Jordan, Tunisia, and the West Bank and Gaza for the last available year, 2006–10 100 90 80 70 60 50 40 30 20 10 0
Percent
TABLE 5.3 Job turnover in the past year as a share of those currently working in the private sector in selected economies in MENA, 2006–10 Percent
46
37
1
10
69
3
53
51
44 7 48
27
46
49
19
7
35
45
55
53
3
6
37
41
Youth Prime Youth Prime Youth Prime Youth Prime age age age age Egypt, Arab Rep.
Jordan
Open-ended contract No contract
Tunisia
West Bank and Gaza
Fixed-term contract
Source: The Arab Republic of Egypt’s LMPS 2006, Jordan’s LMPS 2010, Tunisia’s LFS 2010, and the West Bank and Gaza’s LFS 2008. See the appendix for more information on these surveys.
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