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Jobs for Shared Prosperity
Time for Action in the Middle East and North Africa


MAIN MESSAGES
Message #1: Labor markets in the Middle East and North Africa make poor use of
the available human talent and resources, thus inhibiting the economic potential
of countries and people in the region.

The Middle East and North Africa has a large       jobs underscore the fact that human capital is
reservoir of untapped human resources, with        not allocated to its most productive use. The
the world’s highest unemployment rate among        fact that access to desirable jobs depends more
youth and the lowest participation of females in   on circumstances beyond individual control
the labor force. High-paying or formal jobs are    than on merit leads to an inequitable
few, and private employment is overwhelmingly      distribution of employment opportunities.
of low value added. Overall, the region’s labor    Finally, while some of the most coveted jobs are
markets can be characterized as being              in the public sector and provide high individual
inefficient, inequitable, and locked in a low-     returns, these are not necessarily associated
productivity     equilibrium.    High     wage     with the highest productivity for society.
differentials and low mobility to better-quality


Message #2: Change the rules to create a dynamic private sector that capitalizes
on the full range of the region’s human capital.

The slow growth of firms and their limited         regulations, making them transparent and
capacity to generate quality employment are        easily understood and holding the authorities
directly linked to the rules governing the         that administer them accountable, could
business environment. Uneven enforcement of        provide a remedy. Access to credit could be
regulations, access to credit on the basis of      expanded by increasing bank competition,
privilege and connections, and lucrative           embracing regulatory reforms, and building
markets still protected by multiple legal and      information systems, which would allow banks
regulatory barriers have combined to stifle        to lend to more firms and small borrowers. A
competition.     However,     an   aggressive      comprehensive reduction of barriers restricting
simplification of business procedures and          entry and exit into protected markets would

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Main Messages


create the incentives to invest and innovate and    thereby increase the demand for labor.
Message #3: Let skills flow into productive private sector jobs by realigning
employment conditions in both the private and the public sector and rethinking
labor regulation. Lower the barriers holding back women who want to work.

Strict regulations and a public sector that         relatively cheaper than hiring workers. The
continues to offer better employment                introduction of unemployment insurance and a
conditions severely limit the flow labor to the     well-targeted social safety net would allow
most productive sectors of the economy. While       governments to ease labor regulations and
these restrictions protect a minority of existing   gradually phase out the very costly energy
workers, they have contributed to high rates of     subsidies. Specific policies would be needed to
informal     employment      and    joblessness,    lower the barriers that women who want to
especially among the youth and women. These         work face so as to guarantee a safe working
distortions are further exacerbated by energy       environment and support for the extra
subsidies that make investment in machinery         domestic burdens that they shoulder.


Message #4: Make young people employable by closing information gaps,
improving quality and relevance of skills, and partnering with the private sector
in training.

Although young people and families in The           productive workforce. More meritocracy signals
Middle East and North Africa invest heavily in      market needs more clearly to education and
education and training, the majority of youth       training systems. By doing so, it creates demand
cannot capitalize on such investments and use       for the “right� skills in the “right� areas and
their skills to best advantage. The quality and     reduces mismatches. Finally, the quality of
relevance of the skills acquired are low and the    education and its value in the labor markets
importance of merit in gaining a job is limited.    need to be assessed regularly through
Meritocracy in access to education and hiring,      standardized tests, and the results fed back as a
the availability of multiple pathways in            basis for reform and as a way to empower
education, and the provision of second-chance       users.
options are key elements for developing a


Message #5: Use short-term interventions to respond to immediate needs while
building the credibility and consensus for medium-term, game-changing reforms.

Establishing the right environment for the          (i) improving access to data and information, (ii)
implementation of reforms requires a broad          including the full range of social actors in the
consensus on the nature of the employment           reform dialogue and (iii) implementing short-
problem and building inclusive constituencies       term programs that deliver visible results and
for change. Some of the critical first steps are    thereby support the credibility of the process.

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