Unemployment
Unemployment in the Middle East and North Africa (MENA) region is largely a youth phenomenon. Young people aged between 15 and 24 account for at least 40 percent of the unemployed in Jordan, Lebanon, Morocco, and Tunisia, and almost 60 percent in Syria and Egypt (Dadush 2018). The average youth unemployment rate in these countries was 27 percent back in 2008, the highest of any region in the world (Dadush 2018). Unemployment in many Middle Eastern countries tends to rise with higher levels of education: in Egypt, Jordan, and Tunisia, college graduate unemployment exceeds 15 percent (Angel-Urdinola, Kuddo and Semlali 2013). A question arises as to why unemployment in these countries is steadily at such a high level.
The situation described above, in particular, is due to demographic factors. Over the past decade, the combined labor force of Egypt, Jordan, Lebanon, Morocco, Syria, and Tunisia has grown at an average rate of 2.7 percent per year, that is, faster than in any other region in the world except Africa (Kabbani 2019). Labor force growth is expected to gradually decline in the current decade, but it will remain higher than in most other regions. An additional 10 million people are expected to join the workforce over the next ten years, up from 13½ million in the previous decade (Dadush 2018). In other words, demographic pressure is not expected to ease in the near future.
There is also a significant mismatch between the skills of young people and commercial companies’ requirements. Firms regularly claim the lack of qualifications among job applicants as a constraint on hiring, and unemployment rates are highest among the most educated youth (Assaad 2007). In addition, there is the problem of a bloated public sector that attracts job seekers with higher wages, better job security, and a social package.
The dominant role of the public sector as an employer distorts labor market outcomes and diverts resources from a potentially more dynamic private sector (Said 2012). Public sector recruitment practices tend to raise wage expectations and emphasize diplomas rather than actual experience, which affects educational choices and contributes to the formation of mismatches between available and required qualifications.
The highest unemployment rate is observed not only among young people but in female population. From 2007 to 2017, unemployment among women in the Middle East and North Africa increased by 1.98 p.p. (Dandan and Marques 2017). However, female unemployment is partly due to cultural reasons – the woman’s residence in the parental home before marriage, social restrictions on working hours for both unmarried and married women such as stigmatization of night work, as well as a lower level of education among females.
These unemployment rates cause significant social and economic costs. Coronavirus pandemic further complicated the situation on the labor market, critically reducing the volume of inbound tourism, street trading, and services. This led to fewer existing jobs and a negative trend in the creation of new ones. In addition, persons who experience long-term unemployment in their youth are at increased risk for other types of social pathologies: poor health and nutrition, a tendency to deviant behavior and radicalism. This correlation is supported by statistical data: according to ILO, youth unemployment in the regions from which the main stream of new adherents of radical Islam comes is 28.2% in the Middle East and 30.5% in North Africa (Brookings 2017).
This situation contributes to the attractiveness of ISIS for young people since the inability of some of them to meet their own hopes and the expectations of their relatives pushes them to seek radical opportunities. With this in mind, in developing solutions to youth unemployment, education authorities and governments can do, in particular, the following:
- Achieve alignment of curricula with the needs of the private sector; for this, public-private partnership mechanisms can be used.
- Invest in new training programs. The trends of the digital transformation of the economy and the features of the post-industrial labor market in the digital era, in particular, ‘distributed teams’ and remote work should be especially considered.
When developing appropriate policies, it is necessary to take into account the gender factor – in particular, expanding the opportunities for remote employment for women, which will give them the possibilities for professional self-realization without the need to enter into social conflicts. The development of the digital sector should be given the greatest attention, as it provides the broad potential for remote work, which is extremely important for women in MENA regions and, overall, in a lockdown environment. In turn, this implies the creation of large-scale training programs for “digital employees.”
Wage Structure and Inequality
In MENA countries, the gender pay gap is linked to latent discrimination practices deriving from them. Gender-based segregation is a characteristic phenomenon for this region, both enshrined in the legislation and imposed by tradition and social pressure (El-Hamidi and Said 2008). Women presence in higher-paid industries is still quite low in the whole MENA region, especially in STEM (Science, Technology, Engineering, and Mathematics) fields, where they constitute only a small part of the workforce.
However, “women in export-oriented manufacturing, as a rule, earn more than they would have in traditional sectors” (El-Hamidi and Said 2008, 5). It should be noted that in Jordan, inequality is even higher than in Egypt, mostly in the private sector (El-Hamidi and Said 2008, 7). Women are more likely than men to work without written contracts, labor laws, and trade unions, which opens up wide opportunities for unfair employers to discriminate in the area of wages. El-Hamidi and Mona Said (2008, 8) note that the wage difference between men and women ranges from 6 percent in the public sector to 76 in the private sector.
In addition, less employment, informal contracts lower wages, and shorter working hours condemn women to low social guarantees such as insurance payments and pensions. In MENA region, less than 10% of women receive pensions (Makdisi and Sidawi 2014). To date, the largest gender pay gap is found in the Middle East and North Africa region (Nayef and Rakhis 2017). In these countries, only 34% of managers are women, whose income gap with men in 2018 hardly changed over the year (McKinsey&Company 2020). These gaps can be attributed to inherent underestimation of predominantly female work, their skills as professionals, practices of discrimination, and performing large amounts of work without proper payment.
In modern conditions, the definition of wages is still the focus of labor economics. In the economic theory of labor, there are three concepts of wages. The first defines it as the price of labor, the second – as a monetary expression of the value of the commodity “labor force.” In terms of the modern theory of labor economics, which is shared by ILO, wages are interpreted as the price of labor services (Bessen 2015). In addition, there is an increase in the socialization of economic theories and the introduction of pragmatism into the theoretical concept.
The modern theory of human capital presents wages as what an employee with a certain level of training would receive, having a zero level of education and as the income from educational investments. The theory of Gary Stanley Becker, an American economist, Nobel Prize laureate (1992), considers all types of earnings structures: interpersonal, interfirm, interregional, determined by the relationship between employment and industry.
The need to analyze compensation on a dynamic, continuously changing basis is emphasized (Bessen 2015). This theory seems to be most applicable to the current situation on the labor market in MENA countries in terms of the gender pay gap since it is largely caused by non-economic factors. It includes traditions and cultural practices, as well as some features of the Islamic economy, with mechanisms of competitive advantages somewhat different from Western.
The pandemic has further exacerbated the existing gender gap issues. Men usually suffer more from unemployment during a recession because they are mainly employed in industries that are closely linked to economic cycles, such as construction or industry. In contrast, women are more employed in industries such as health care and education. However, in the current crisis, other factors influence employment – one of them is the ability to work remotely: for example, a business analyst may well work from home, while a cook or salesperson cannot. The pay gap between men and women exacerbates inequality: women not only lose their jobs faster, but they also get less for it.
Legislative measures are needed in the form of introducing gender quotas. They should be combined with incentive measures in the form of the development and widespread distribution of free trainings for entrepreneurs and senior management of companies.
They should be taught the advantages of organizational diversity and methods of effective diversity management. It should be explained as a source of significant benefits for the organization in the form of enhancing innovation potential, improving social capital, and increasing goodwill, as well as investment attractiveness for foreign investors. In addition, microfinance by active non-governmental organizations plays sound role in the development of the female labor market. Encouraging women’s entrepreneurship within a traditional culture can significantly improve the income situation of women in the MENA region.
References
Alshammari, Nayef, and Monira Al Rakhis. 2017. “Impact of Gender Inequality on Economic Growth in the Arab Region.” Research in Applied Economics 9(2): 18-31.
Angel-Urdinola, Diego F., Arvo Kuddo, and Amina Semlali. 2013. Building Effective Employment Programs for Unemployed Youth in the Middle East and North Africa. World Bank Publications.
Assaad, Ragui. 2007. “Unemployment and Youth Insertion in the Labor Market in Egypt.” The Egyptian Center for Economic Studies Working Paper 118.
Bessen, James. 2015. Learning by Doing: The Real Connection between Innovation, Wages, and Wealth. London: Yale University Press.
Brookings. 2017. “How Do Education and Unemployment Affect Support for Violent Extremism? Evidence from Eight Arab Countries.” Web.
Dadush, Uri. 2018. “Youth Unemployment in the Middle East & North Africa, and the Moroccan case.” OCP Policy Center, PP-18/22.
Dandan, Mwafaq M., and Ana Paula Pereira Marques. 2017. “Education, Employment and Gender Gap in Mena Region.” Asian Economic and Financial Review 7(6): 573-588.
El-Hamidi, Fatma, and Mona Said. 2008. “Have Economic Reform Paid Off? Gender Occupational Inequality in the New Millennium Egypt.” The Egyptian Center for Economic Studies Working Paper 128.
Kabbani, Nader. 2019. “Youth Employment in the Middle East and North Africa: Revisiting and Reframing the Challenge.” Brookings Doha Center, Policy Briefing. Web.
Makdisi, Jea Noha Bayoumi, and Rafif Rida Sidawi. 2014. Arab Feminisms: Gender and Equality in the Middle East. London: I.B. Tauris.
McKinsey&Company. 2020. Women at Work. Web.
Said, Mona. 2012. “Wage Differentials During Economic Reform and Crisis: Evidence from Egypt and Jordan.” Comparative Economic Studies 54: 65-101.