Overview
Introduction
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obs are crucial for individual well-being. They provide a livelihood and, equally important, a sense of dignity. They are also crucial for collective well-being and economic growth. However, the rules and the incentives that govern labor markets in countries of the Middle East and North Africa (MENA) region have led to inefficient and inequitable outcomes both individually and collectively. In particular, several underlying distortions prevent a more productive use of human capital and have led to a widespread sense of unfairness and exclusion, of which the “Arab Spring” was a powerful expression. MENA has a large share of untapped human resources. Unemployment and inactivity are more prevalent in MENA than in other middle-income regions like Eastern Europe and Central Asia and Latin America and the Caribbean (figure O.1), as a high proportion of the working-age population, particularly women, is inactive or experiences high unemployment. Three out of four working-age women do not participate in the labor force and constitute 80–90 percent of MENA’s inactive population (see figure O.2). Unemployment is persistently higher than in other regions and
overwhelmingly affects youth and women. In some countries, such as the Arab Republic of Egypt and Tunisia (figure O.3), the highly educated are more likely to be unemployed. In most countries however, the majority of the unemployed are still medium- or lowskilled individuals. Among those who are employed, low-quality jobs—those characterized by low pay and productivity, and lack of access to social security—tend to be the majority. The formal private sector— quite likely the most productive segment of the economy—is small, and in no country in MENA for which data are available does the formal private sector employ more than 20 percent of workers. At the same time, public sector employment continues to be large in the Persian Gulf countries and in countries such as Egypt, Iraq, Jordan, and, to a lesser extent, Tunisia, making up between 60 and 80 percent of total formal employment (see figure O.5). How can one interpret the realities of labor markets in MENA? What are the barriers to creating more and better-quality jobs? What policy options do governments have for addressing these challenges? And, finally, what political-economy processes might facilitate and enable reform? This report tries to answer these questions by 1