Maghreb struggles with job creation

02 August 2011

Overall jobless figures across North Africa have been in decline, yet unemployment is still widespread and has triggered civil unrest. Governments need to make job creation a top priority

Key fact

The proportion of people in the labour market in Egypt is 32.5 per cent compared with 69 per cent in southeast Asia

Source: Carnegie Middle East

Headline unemployment rates have been falling across the Maghreb region as a declining birthrate has eased pressures on the labour market. Yet, any observer of recent events across the region could be forgiven for believing the opposite.

The shortage of jobs has been one of the main factors fuelling the social tensions and political instability that the region has experienced over the past eight months.

Anger among jobless youths was a critical ingredient in the outburst of public anger that swept Tunisian President Zine el-Abidine Ben Ali from power in January. It has also emerged as an important contributory grievance behind the series of protests seen on the streets of Moroccan and Algerian cities, albeit with less dramatic political consequences.

Maghreb states are in no position to offer the sort of lavish welfare support affluent Gulf economies provide

Despite this, there has been a long-tem fall in unemployment across the Maghreb. Between 2000 and 2009, the official jobless rate fell from 15.7 per cent to 13.3 per cent in Tunisia, from 13.4 per cent to 9.1 per cent in Morocco and from 30 per cent to 10.2 per cent in Algeria.

Employment paradox

So what explains the paradox between jobless numbers falling towards European levels and the widespread evidence of unemployment among the educated youth of North Africa and the resulting public anger about the lack of work?

Why is employment such an incendiary issue, when the situation appears to have been improving steadily over a number of years?

The answer lies in the detail of labour market and population data. This explains why the shortage of jobs has a painful impact in North African countries and shows how some categories of the workforce are much more severely affected by unemployment than others.

The Maghreb states are in no position to offer their citizens the sort of lavish welfare support affluent economies of the Gulf provide to cushion their nationals against periods without work. Even where it exists, the social safety net is sparse. Moreover, the jobless often come from families struggling with other problems, particularly the shortage of affordable housing. The economic downturn in Europe has also squeezed many family budgets, dampening the flow of remittance payments from North African migrant workers in the EU.

In measuring the social impact of unemployment, what marks out the Maghreb states is the shortage of work their economies offer in comparison with emerging countries beyond the Middle East and North Africa region.

A recent study by Beirut-based think-tank Carnegie Middle East found that the proportion of the population participating in the North African labour market ranged from 42.8 per cent in Mauritania to just 32.5 per cent in Egypt. By contrast, in southeast Asia, 69 per cent of the population works or is seeking work, while in Latin America the proportion is 65 per cent.

The low proportion of North Africans engaged in the labour market means that those who are working or looking for work must support more than half the national population, which is not generating any income.

Among North African women, the proportion of those in the paid labour market is even smaller, ranging between 24.5-27.4 per cent in Egypt, Libya, Morocco and Tunisia.

In Algeria, perhaps as a result of the country’s socialist traditions, 34 per cent of women participate in the market for paid work. Only in Mauritania, at 43.4 per cent, is female labour participation at a level comparable with, for example, sub-Saharan Africa.

That so few women seek paid work in North Africa may result from deep-seated conservative social attitudes. The fact they are not in the jobs market also reduces the official rate of unemployment.

Financial impact of women not working

However, the low participation of women in the workforce has a financial impact, limiting the income of many households and leaving them in a more vulnerable position, when male members of the family cannot find work.

Another feature of the North African economy is that many people working outside the public sector are occupied in informal activities such as street vendors and farm hands, where pay may be lower and less secure, and there are no job-related social benefits, such as pensions. In 2007, the informal sector accounted for almost half of all urban private-sector jobs in Algeria.

On average, the youth jobless rate in North African countries is double that for the population as a whole

A major worry for the future has been the weak performance of Maghreb economies in creating new employment. Carnegie’s research found that the decline in the official jobless rate could be largely explained by the fact the birthrate has also fallen, reducing the flow of new entrants into the marketplace.

In 1980, on average, each woman in Morocco, Algeria and Tunisia gave birth to six children. By 2007, the average had declined to 2.5 children. So unemployment was reduced largely because the growth in the Maghrebi workforce slowed down, rather than any job-creating economic dynamism.

Looking forward, this means the challenge of creating employment still exists for North African governments – because it seems unlikely family size will continue to decline at the rapid pace seen since 1980.

Today’s reduced birthrates provide breathing space, but in the long term, governments will have to assume the birthrate will stabilise. As a result, the economies of the region will need to become more effective at creating jobs.

Recent events show that residents of North African cities already see the shortage of jobs as a major problem. Furthermore, although headline unemployment rates have fallen, the accuracy of the official figures is questioned by some local commentators.

Fantasist employment figures

In Algeria, one detailed independent analysis of the published employment data dismisses the government’s figures as “fantasist” and argues that the official statistics service needs to be removed from ministerial control and given the independence that would allow it to take a more objective view.

Critics say the authorities’ story of unemployment falling is dramatically at odds with official data that shows a slump in the creation of businesses. This would suggest a gloomier picture in the jobs market.

Algeria is not the only country where official statistics have been questioned. In Tunisia, the now deposed Ben Ali regime published an official jobless rate for graduates of 21.6 per cent, but information has subsequently emerged suggesting the true figure may be about 35 per cent.

Even on the basis of the official data, it is clear unemployment is much higher among young people. On average, the jobless youth rate in North African countries is double that for the population as a whole and has been rising. In Morocco, unemployment among those aged 15-29 increased from 15.3 per cent in 2003 to 17.6 per cent in 2006; in Tunisia more than 30 per cent of the young adult population is jobless.

Algeria, according to government statistics, is an exception to this pattern, with the official rate of youth unemployment plunging from 45 per cent in 2003 to 21.5 per cent in 2008. But independent analysts are sceptical of these figures.

The position is particularly difficult for North Africans with higher education. The disenchantment of Tunisian unemployed graduates was one of the main triggers of the protests against the Ben Ali regime in December and January. But the problem affects the whole region.

In Morocco, 54.2 per cent of those with higher level qualifications in the 15-24 age group are jobless, according to the country’s Haut Commisariat au Plan [HCP – National Economic Planning Commission].

The commission found the chances of finding work are inversely proportional to a person’s level of educational attainment: the rate of unemployment for 15-24 year-olds drops to 25.4 per cent for those with mid-level qualifications and to a mere 8.8 per cent for those with no qualifications at all.

To a lesser degree, this pattern also applies to older Moroccans, with an unemployment rate of 28.6 per cent for the best-qualified people in the 25-34 age group.

The jobless rate for the most highly educated 35-44 year-olds is only 9.7 per cent, which shows how the problem has become gradually worse, most severely affecting those who entered the labour market in the past few years.

Such trends have worrying implications for governments seeking to develop the skills of the workforce to suit the demands of economies in the 21st century.

Many young Maghrebis may now question the point of pursuing higher education if this actually reduces their chance of finding work, rather than enhancing their prospects. An important contributory factor to graduate unemployment across North Africa may be the drive to improve the efficiency of the public sector, and its administration. Students studying arts subjects or law can no longer assume that this will lead to a public service post.

Labour demand in the Maghreb

Another problem is the wider pattern of labour demand within the Maghreb.

Planners in emerging markets hope the availability of well-educated young people will stimulate more diverse and higher value-added economic activity. Although North Africa has some highly successful individual businesses, the process of skills upgrading and diversification does not seem to be happening at a sufficient pace.

Ahmed Lahlimi Alami, head of Morocco’s HCP, has reported most of the 156,000 jobs created each year over the past decade have been in sectors such as agriculture and construction, where the main need is for lower-skilled labour.

Moreover, many of these positions are highly insecure, casual or seasonal and few offer “decent” conditions, Alami has warned. The HCP has found two-thirds of Moroccan workers have no contracts, and in rural areas only 4.5 per cent have social security coverage (compared with 32 per cent in urban areas). Many working roles classified as full-time in fact amount to helping out on a family farm.

A further cause of to graduate unemployment is the difficulty of adapting the higher education system to the demands of a fast-changing economic environment.

For example, Morocco produces 300-400 nuclear physics graduates a year. This was once viewed as a modern subject; but currently it is of little relevance in a country that has neither civil nor military nuclear activities.

In the meantime, employers appear disenchanted, often grumbling that today’s graduates are poorly equipped for the real world of business. One Casablanca-based company chief says his firm has to run in-house training programmes to teach new recruits basic skills they should have learnt at university.

To ease social tensions, the government announced a scheme to recruit 4,000 unemployed graduates without obliging them to pass through the normal competitive entry process. But even Morocco’s state treasury and the national chamber of commerce were reluctant to cooperate, apparently fearing this meant giving in to lower standards.

Employment is an incendiary issue capable of toppling long-standing regimes. Tackling it will have to be given much higher priority.

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