ILO Tripartite Meeting of Experts on“Youth Employment in the Arab States”

Jordan(Amman), 6-8 April 2004

Presentation of

Youth Employment: Employers’ View to Promote

Youth Employability in The Arab Countries

By

Ms. Naila Haddad

Director, Labour and Investment Division

General Union of Chambers of Commerce, Industry

and Agriculture for Arab Countries

Objectives of the paper

To elaborate on an Arab employers’ view that will promote employment creation for young people in the Arab countries.

Methodology

• A quick revision of strategies and activities promoting youth employment will be addressed.

• The paper will also try to shed light on the importance of youth employability; and the different strategies adopted to promote youth employment in the Arab countries.

• In order to do so, the paper will focus on a number of Arab countries, selected pending on the availability of data, to describe the status of youth unemployment/ employability in the region.

• The paper will not however focus on gender issues as it is being treated elsewhere in the Seminar.

Data used in the paper

• The data used in this paper consists of already published data with the main source being KILM – 3rd Edition.

• Shortage or lack of labour data in the Arab countries necessitates that the paper limits the analysis of data to Egypt, Morocco, Syria, Tunisia, United Arab Emirates and Yemen, and to resort to other means of analysis whenever possible relying on already published research and empirical research findings in the region and elsewhere in the world.

1 -Main features of the Arab labour force

• Around 12.5 million unemployed, not to mention high disguised unemployment levels

• MENA region experienced increasing unemployment rates during the past few years.

• The region is marked to have the highest unemployment rates in the world.

• New youth entrants to the labour market are estimated to be in the range of 2.5 million annually, and expected to rise to 3 million during the decade 2000- 2010, putting much pressure on the need to create jobs for these new entrants in order to maintain current unemployment levels, which are already high.

• Youth unemployment rates are estimated to be much higher than unemployment rates in the MENA region reaching as high as 25.6 % in 2003 for the region as compared to 21.0 % in Sub-Saharan Africa.

It is as such that a collective action is deemed necessary to address the question of unemployment in general and youth

2- Youth unemployment

• Youth unemployment is conducive in illustrating the lack of jobs for young persons in the labour market.

• Its Importance stems from the fact that experiencing unemployment at lower ages might have a negative and permanent impact in hampering young people’s productive potentials and future employment opportunities.

2 -Youth unemployment measures

• Four distinct measurements comprise the indicator, each indicative of a certain aspect. These being:

Youth unemployment rate

Ratio of youth unemployment rate to adult unemployment rate.

Youth unemployment as a proportion of total unemployment.

Youth unemployment as a proportion of the youth population.

These four measures help in the assessment of the situation of young people in the labour market, where youth unemployment might reflect negatively on future prospects of joining the labour market at later ages, often resulting in long-term unemployment or in what is called “discouraged unemployment”.

2- Youth unemployment measures in the selected countries, latest available year:

Latest KILM available figures on youth unemployment measures for the selected countries reveal:

• Youth unemployment rate was in the range of 20.4 % in Egypt (1999), and around 15.4 % in the Morocco(1999) and 6.3 % in UAE 1995. (Table 2.1.)

• Ratio of youth unemployment rate to adult unemployment rate: Egypt 5.9 (1999) , Morocco 1.6 (1999), and UAE 5.7 (1995) . (Table 2.2.)

• Share of youth unemployed to total employed comprised a large share of the unemployed, comprising more than 60 % in Egypt (2000), 48 % in Yemen (1999) and 47 % in UAE (1999). (Table 2.3.)

• The percentage share of youth unemployment to youth population did not exceed 6.9 % in Egypt (1999), 7.4 % in Morocco (1999), and 3.0 % in UAE (1995) (Table 2.4),

One can either conclude that a large share of the youth population are pursuing education or are in the informal sector.

Moreover, having youth unemployment rates exceeding adult unemployment rates in

Egypt, Morocco and UAE, might mean that a sizable proportion of these unemployed youth are being integrated in the labour market upon reaching adulthood.

2 -Youth unemployment: Long run trends in the selected countries:

• Figures for different years are only available for Egypt and Morocco and for a limited number of years.

• For the years 1990,1998, 1999: Both countries had decreasing Youth unemployment rates over time, and especially in Morocco. (Figure 2.1)

Figure 2.1 Youth unemployment rate (%)

0

5

10

15

20

25

30

35

40

Egypt/MF

Morocco/MF

Egypt/MF 23.1 20.4

Morocco/MF 31.1 35 15.4

1990 1998 1999

2 -Ratio of youth unemployment rate to adult unemployment rate overtime:• Ratios of youth unemployment rates to adult unemployment rates overtime

reveal that both countries experienced a decline in these ratios, despite the fact that they are still high, especially in Egypt. (Figure 2.2).

Figure 2.2 Ratio of youth unemployment to adult unemployment rate

0

1

2

3

4

5

6

7

Egypt/MF

Morocco/MF

Egypt/MF 5.9 4.9

Morocco/MF 2.8 2.4 1.6

1990 1998 1999

2- Youth unemployment as a proportion of total unemployment over time:

• Available data reveal that while Morocco witnessed a steady decline in this proportion, Egypt on the other hand witnessed a fluctuation from 61.5 % in 1998 to 59.5 % in 1999 to 64.5 % in 2000. (Figure 2.3)

Figure 2.3 Share of youth unemployed to total unemployed (%)

0

10

20

30

40

50

60

70

Egypt/MF 61.5 59.5 64.5

Morocco/MF 45.5 41.2 38.2

United ArabEmirates/MF

53.5

Yemen/MF 48.4

1990 1998 1999 2000

2 -Share of youth unemployed to total youth population

• The share of youth unemployed to total youth population exhibited also a decline in Morocco from 11.1 to 7.4 during the period 1990-1999, and a slight decline in Egypt during 1998-1999. (Figure 2.4)

Figure 2.4 Share of youth unemployed to youth population (%)

0

2

4

6

8

10

12

14

(%)

Egypt/MF 7 6.9

Morocco/MF 11.1 12.9 7.4

1990 1998 1999

2 -Data limitations:

Shortage in data and its coverage necessitates the need for more effort to be done on data collection and dissemination which enables researchers to draw concrete inferences on the status of youth unemployment in the both Egypt and Morocco, as well as in other Arab countries.

3- Some factors affecting youth employment / unemployment in the selected countries:

• A major determinant of the labour supply is the size, age- sex composition and spatial distribution of the working age population. Labour supply is also determined by age-sex specific activity rates, which are in turn dependent on demographic and socio economic factors such as Fertility, level of household income, educational attainment and health status.

• Labour demand is affected by a spectrum of socio-economic factors ranging from demographic to socio-economic environment and policies, among others. Together, labour supply and labour demand determine employment/unemployment levels.

3 -Youth and Population:

• In general, Arab countries tend to have high population growth rates due to high fertility rates and the rapid decline witnessed in mortality rates. This growth in population has resulted in an increase in the size of new entrants to the labour force.

• Available data reveal that the size of youth populations for the selected countries have been growing over the period 1980 –2001 as figure 3.2 shows.

• Moreover, despite the decline witnessed in population growth rates during the period, the proportions of youth population to total population have been increasing in the respective countries, except in Tunisia and UAE where these proportions witnessed slight declines, (Figure 3.3)

Figure 3.2 Youth population (000)

0

2000

4000

6000

8000

10000

12000

14000

Egypt/MF/15-24 8165 9748.4 11351 12697 12696

Morocco/MF/15-24 3941 2460.22 2989.63 3104.27 6003

Syrian Arab Republic/MF/15-24 1710 2480 2941 3236 3721 3813

Tunisia/MF/15-24 1305.7 1673 1813 1865.46

United Arab Emirates/MF/15-24 183.65 236 376.65

Yemen/MF/15-24 1514 2384 3043

1980 1990 1995 1997 1998 1999 2000 2001

Fig. 3.3 Youth population as per cent of total

0

5

10

15

20

25

1980 1990 1995 1997 1998 1999 2000 2001

Egypt Morocco Syrian Arab Republic Tunisia United Arab Emirates Yemen

3 -Youth labour force:

• Figure 3.4 depicts age-specific labour force participation rates for latest available years for the selected countries. In general it can be observed that youth labour force participation rates were by far less than participation rates for ages 25-34, 25-54, 35-54, and 15-64.

• Moreover, when considering the share of youth labour force as a percentage of total labour force overtime, it can be observed that Egypt, Morocco, Tunisia, and UAE witnessed during the respective periods, decreasing shares. This is in consistence with world governing trends where falling labour force participation rates among the young are considered as a natural result of increased participation of the youth in education rather than discouraged young workers.(Figure 3.5)

3 -Youth labour force:

Figure 3.4 Age-specific labour force participation rates, latest available year (%)

0

20

40

60

80

100

MF/15-24 47.8 48.2 38.8 34 48 47.2

MF/15-64 76 57 51.4 49.2 56.9 54.1

MF/25-34 84.1 69 63.2 52.4 64.7 62.2

MF/25-54 84.3 64.5 60.8 58.7 63.4 60.2

MF/35-54 84.4 59 58.7 63.2 62.4 58.2

MF/55-64 69 51.4 38.1 46.3 43.7 47.5

1995/United Arab Emirates

1995/Yemen 1997/Tunisia 1999/Egypt 1999/Morocco 2001/Syrian Arab Republic

3 -Youth labour force:

Figure 3.5 Youth labour force as a percentage of total labour force,1980-2001

0

10

20

30

40

Egypt 24.038452 20.295792 21.922762 21.356579 23.206756

Morocco 32.311978 23.089045 26.199328 22.500863 28.038197

Syrian Arab Republic 32.929468 32.265861 30.737305 32.306256 30.889204 34.121219

Tunisia 33.928739 31.25218 28.648165 24.320777

United Arab Emirates 19.098264 9.4455852 13.492794

Yemen 32.04578 36.149187 33.500914

1980 1990 1995 1997 1998 1999 2000 2001

3 -Education:

• High adult illiteracy rates continue to persist, especially among females in the selected countries despite the relative decline witnessed overtime.

• In 1997, the Arab countries adopted a strategy to eradicate illiteracy among adults by the year 2001.

• Available data shows that achievements to a certain extent were realized in this realm in the countries under consideration during the period 1980-2003, as figure 3.6 shows.

Figure 3.6 Adult illiteracy rates, 15 years and over

0

10

20

30

40

50

60

70

80

90

Egypt/MF 60.7 56.8 52.9 48.9 47.2 46.4 45.5 44.7 43.9 43.1 42.3

Morocco/MF 71.4 66.5 61.3 56.1 54 53.1 52.1 51.2 50.2 49.3 48.3

Syrian Arab Republic/MF 46.7 40.6 35.2 30.1 28.3 27.4 26.5 25.6 24.7 23.9 23.1

Tunisia/MF 55.1 47.4 40.9 35.3 32.8 31.5 30.3 29 27.9 26.8 25.8

United Arab Emirates/MF 34.6 31.2 29 26.6 25.5 25 24.4 23.8 23.3 22.7 22.2

Yemen/MF 80 74.1 67.3 59.9 57.3 56.1 54.9 53.6 52.3 51 49.7

1980 1985 1990 1995 1997 1998 1999 2000 2001 2002 2003

3 -Education:

• Available data on enrolment rates in tertiary education overtime exhibited upward trends in most of these countries. (Figure 3.7)

• No recent specific data is available on the levels of education of unemployed youth in these countries, though it is often estimated that youth with higher educational attainment levels tend to suffer most from higher rates of unemployment,

• Available figures for Morocco and Tunisia for the years 1995 and 1997 respectively, show that contrary to what is being alleged, those with primary education suffered from higher unemployment rates than those with tertiary education.

3 -Education:

Figure 3.7 School enrolment-Tertiary (% gross)

0

5

10

15

20

25

30

35

40

45

Egypt 16.1 18.1 15.8 20.2 25 39

Morocco 5.9 8.7 10.6 11.1 11.2 9.4 9.3 10.3

Syrian Arab Republic 16.9 17.1 18.2 15.4 14.8 6.1

Tunisia 4.8 5.5 8.5 13 15.1 17.3 19.3 21.7

United Arab Emirates 3.1 6.8 9.2 11 12.9 12.1

Yemen 4.1 4.2 4.3 10.8

1980 1985 1990 1995 1997 1998 1999 2000

3 -Demand for labour

• A good indicator to reflect the demand for labour in a certain economy would be to consider employment to population ratios over time. Although the data available is not age specific, however they can reflect to a certain extent the ability of the economy to create jobs and absorb unemployment.

• Available data show that employment to population ratios were only 45.2 % in Egypt (1999), 22.1 % in Morocco (1999), 48.6 % in Syria (2001), 40.9 % in Tunisia (1997) and 28.2 % in Yemen (1998).

• Concerning demand for labour overtime, available data for Egypt show that employment to population ratio has witnessed a slight increase during the period 1980-1999, where as it suffered from a sharp decline in Morocco 1999 (Figure 3.9)

• Available data on employment by sector overtime shows that employment in the services sector has expanded on the expense of both agriculture and industry.

• Moreover when looking at employment by 1 digit sector it can be observed that employment is highly concentrated in the sectors of construction, wholesale and retail trade, public administration and defense, as well as education, besides those employed in agriculture and manufacturing.

3 -Employment to population ratio

figure 3.9 Employment to population ratio, trends

0

10

20

30

40

50

60

Egypt/MF 41.1 46.3 46.3 45.3 42.3 39 45.6 45.4 46.2 45.1 43.7 45.2

Morocco/MF 42.9 41.4 39.5 22.1

Syrian Arab Republic/MF 48.6

Tunisia/MF 40.3 40.9

Yemen/MF 28.2

1980 1983 1984 1989 1990 1991 1992 1993 1994 1995 1997 1998 1999 2001

4-A revision of strategies and activities promoting youth employment in the Arab countries

The advent of restructuring programs has resulted in many ways in aggravating the unemployment situation.

• To address this arising issue, many countries adopted the initiation of social safety nets targeting the groups that were mostly affected by restructuring programs and privatization. These programs were later expanded in coverage and means to address the unemployment question, and especially the unemployment of the youth.

• Many Arab countries adopted measures to create social funds for development that provides guidance, counseling, training and sometimes subsidized credit facilities to encourage entrepreneurship and small and medium size enterprises (SMEs).

• Moreover, some countries adopted measures to upgrade and improve the services rendered by public labour administrations and employment offices especially in the realm of matching jobs with vacancies notified by the employers.

4- A revision of strategies and activities promoting youth employment in the Arab countries - Private sector involvement:

Private sector involvement in these programs has been done either on the individual enterprise level or in coordination with national employers organizations and associations.

The private sector was represented in some of the board committees of these programs, some enterprises provided on the job training in collaboration with public entities, others provided counseling and centers for development for entrepreneurship and promotion of SMEs.

4- A revision of strategies and activities promoting youth employment in the Arab countries – Impact of programs

Impact of governments’ and private sector’s efforts:

• Limited in scope and effect, especially when their impact is considered against the challenge of unemployment facing the Arab Countries.

• Project evaluations are often lacking, making it more difficult to assess the achievements and successes of these programs and projects.

4- A revision of strategies and activities promoting youth employment in the Arab countries – Things to do:

Rigorous evaluation of the impact of these programs on employment, as well as the costs incurred, who bares the costs, and the real beneficiaries, enabling to draw lessons and make these programs more efficient.

Assessment of the quality of jobs created, if any, and ensuring at the same time that a dead-weight loss is not incurred, neither are substitution effects nor displacement effects which could be inherent in the implementation of such initiatives.

Provision of a solid base of key data on youth unemployment, employment, inactivity rates, youth working in the informal sector and the levels of education of the unemployed youth, in addition to other labour market key indicators that will help in specifying target groups and the formulization of programs for the alleviation of unemployment.

Adoption of a holistic approach rather than a reductionist approach to the question of youth unemployment, envisaging the underlying causes of youth unemployment and providing preventive measures that will address this issue in relation to other segments of the labour market perceived in isolation from all other segments of the labour market, and the other factors that are at interplay.*

5- Towards the formulation of an Arab employers view to promote employment creation, especially for the youth:

• There is an urgent need to address the problems arising from low rates of economic growth, lack of jobs, increasing unemployment and poverty, and spatial unbalanced development effort, in the Arab countries.

• Globalization, new advancements in technology and privatization have added pressure on issues of development and growth, especially in developing economies where the national markets, including labour, are affected to a large extent by external variables rather than internal ones.

• Globalization itself has led to new modes and relations of production that extends beyond borders.

• Trade liberalization and policies adopted to attract foreign direct investments led to increased pressures on the creation of jobs in the national economies and added pressure on the capacity of national private sector to compete while adhering to international labour standards.

• Arab countries perceptions of globalization reflect a growing concern on the possible loss of jobs resulting from liberalization of trade and investment, and competition from developing countries with lower labour costs.

5- Towards the formulation of an Arab employers view to promote employment creation, especially for the youth:

• While oil funded infrastructure projects and increased public and private consumption, it also undermined the growth of local industries, agriculture, and increased the reliance on non-Arab foreign labour.

The above-mentioned challenges cannot be addressed solely by the Arab private sector. Rather an active tripartite dialogue should be created amongst the various actors to address these issues especially those relating to employment and development.

While addressing the issue of youth unemployment it is imperative to acknowledge that it is a result of a host of socio-economic and legislative factors and a reflection of aggregate unemployment levels and of the macro economic situation in general.

Employment opportunities cannot be enhanced without economic growth, and without a macro economic, educational, and legislative framework that encourages employment creation

5- Role of employers and their organizations in the Arab countries

• Employers and their organizations in the Arab countries can play an active role in enhancing youth employability by adopting a holistic approach that encompasses the socio-economic context and the role of the social partners in affecting change.

• This can be done by adapting the following plan of action that was proposed by the IOE(1998) to improve youth’s prospects for employment to the needs of the region:

Direct actions concerned with education and vocational training.

Direct actions concerned with creation of job opportunities.

Policy advocacy and policymaking

Although some of these actions are already being carried out by individual employers, or by enterprises and firms or by some employers’ organizations and associations. However there is a need for a more concerted effort in this regard ensuring representation, continuity and commitment of the social partners.

Thank You