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all countries in the region. First, policy makers and citizens need to know what is happening in their labor market and how they are affected individually. Access to reliable and inclusive information therefore must be ensured. This requirement is discussed in more detail in chapter 10. Second, it is important that citizens can make their voices heard in an inclusive debate about political options. This means not only strengthening the institutions that represent traditional social partners (trade unions, employers, parliament, and the government) but especially establishing mechanisms to represent the new social partners (youth, women, the unemployed, and informal workers): their voices are essential for making socially optimal decisions on key elements of labor market regulation. Only an inclusive social dialogue can, for example, set a minimum wage that protects workers without harming the job entry chances of others. Only an inclusive social dialogue can negotiate collective wage agreements that balance inequality concerns with the entry chances of inexperienced youth or design a social insurance system that covers the entire workforce. An inclusive social dialogue can go as far as involving social partners in the governance of the social insurance system, as in Germany, where a diverse group of employee and employer representatives self-administer the social insurance system. There, representatives are elected by all those covered by social insurance. This form of governance can in principle enable smooth reforms, because all social partners have a direct insight into potential strains on the system. The Jordanian Social Insurance System (see case study in chapter 10) and the Tunisian pension funds also have clear roles for both employers and employee representatives in the governance of the system, albeit with less direct insight and access to information. Once these two important preconditions for successful consensus building are met, the recommendations will differ by country. The following sections explore some options.
Strengthening basic labor market institutions A small group of countries—including the Arab Republic of Egypt and the countries in the Gulf Cooperation Council (GCC)— would benefit from expanding essential labor market institutions. In these countries, the traditional social partners such as trade unions and employer representatives are not organized and diverse enough to hold a tripartite dialogue in which all stakeholders have equal standing. Other social partners are nonexistent, weak, or just emerging (Egypt). In line with this social landscape, which favors a “laissez-faire” environment, minimum wages or collective wage agreements either do not exist or are not based on a broad social consensus. Two essential institutions that merit strengthening in all countries of the region are labor inspection and employment services. Strengthening employment services is discussed in chapter 9. Evidence on labor inspection is currently available for Algeria and Tunisia. Both countries have developed these institutions with the official mandate of enforcing labor market regulations and establishing a presence in different parts of the territory. In Algeria, experts point out that labor inspectors officially intervene only reactively, at the express request of a complainant (Musette and MohamedMeziani 2011), similar to the model in northern European countries. In Tunisia, the mandate for labor inspection also covers managing labor disputes and reconciling the workers’ and unions’ dialogue with the employers.1 Tunisian labor market experts rate poorly the performance of the national labor inspection institution, whose coverage is limited to large formal sector fi rms, with smaller and informal fi rms operating under the radar. This situation contributes to strengthening the informal sector and thus to segmenting the labor market. The insufficient quantity and quality of human resources are frequently cited as the main causes of low performance and, together with the broad mandate and discretionary