Workforce issue resists short-term remedies

Friday 11/03/2016
Tunisian students take the high school graduation exam.

Washington - Throughout the Middle East and North Africa (MENA) region, in addi­tion to evident political turmoil, core issues of governance, transparency/corrup­tion and equitable economic devel­opment/jobs that drove the Arab uprisings have not been addressed adequately.

While Morocco and Tunisia have new constitutions, governing structures and some new leader­ship, these core issues are resist­ing short-term remedies, an indi­cator that without more progress, no countries are immune to future upheavals. One underlying reality from North Africa to the Gulf Coop­eration Council (GCC) is that demo­graphic pressures persist as young people continue to be frustrated in their efforts to obtain education and training for meaningful jobs.

There may not be agreement among leaders and those-in-wait­ing regarding strategies to improve governance or promote effective transparency regimes but there is consensus that progress in the eco­nomic development/jobs directly affects stability and security, wit­ness the plethora of business pro­motion measures being enacted in Egypt as an example.

However, ossified public educa­tion systems mean that effective remedies for reducing the educa­tion-employment gap in a market-driven economy remain elusive. Added to these constraints on up­grading the local education/train­ing sector is the effect of external factors such as the steep decline in oil prices, subsequent downturns in the GCC economies leading to fewer Gulf investments in non-oil producing countries and the re­sulting challenges to growth op­portunities for local and expatriate labour.

The issue of workforce devel­opment across the MENA is well-studied; what is not clear is the way forward.

Challenges in the MENA and elsewhere require solutions with actionable insights into at least four variables:

— The supply side — how is the education/training sector perform­ing vis-à-vis the market? What are the characteristics of those in the system?

— Characteristics of the available labour force — formal and informal — and how these influence the employ­ment sector.

— The demand side — what are employment trends in transitions from traditional to more contem­porary market sectors? Are they sustainable?

— What are the internal and ex­ternal forces reshaping labour demand and the condition of the eco-space for innovation and en­trepreneurs?

On the supply side, generations of subsidised public education for mostly public employment has resulted in inadequately skilled labour requiring extensive retrain­ing to perform in the private sector where skills and competencies are required.

In addition, attitudes towards certain categories of work are largely negative. It is difficult for supply to meet demand as educa­tion/training facilities outside the GCC have few skilled faculty, train­ing material and soft skills inputs to enable new workers to view jobs as steps in a career.

National labour policies, such as the nitaqat in Saudi Arabia, are only partially successful in cajoling locals to take jobs in construction and crafts vacated by expatriates.

The informal economy, where the bulk of low-level entrepre­neurism takes place, is the focus of many initiatives but regula­tory regimes have yet to foster ac­crediting skilled informal labour and mainstreaming them into a business ecosystem that supports their financial, legal and logistical needs. And the generosity and wis­dom of international donors have too often resulted in mismatched and competing efforts to upgrade labour standards and policies.

On the demand side, much em­phasis has been placed on entre­preneurship although most Arab economies are labour-intensive and services/agriculture-focused. Digital technology can enhance en­trepreneurial capacity to innovate regardless of the sector. For exam­ple, harnessing mobile phones to enhance home repair service deliv­ery can give entrepreneurs in this field a competitive edge and path to greater prosperity, even though the skills provided are often basic and low-cost.

Another wrinkle is that foreign direct investment is often directed towards capital-intensive indus­tries where project start-ups re­quire thousands of jobs usually unrelated to the hundreds who then operate the facility. Harness­ing supply chains and services for industries has had good results but the resulting employment is not adequate for the great demand throughout the region where the majority of the population is under 30 years of age.

One study noted that “the pro­portion of young people is consid­ered by many observers a ticking time bomb that requires working on sound economic and social pol­icies to accommodate these young people in the process of political, economic, and social transforma­tion desired in the Middle East”.

Greater coordination among donors, streamlined labour regu­latory regimes, respectable wage scales and conditions and inclu­sive hiring policies are keys to bet­ter outcomes.

World Bank Vice-President for MENA Hafez Ghanem recently met with Islamic Development Bank of­ficials and ministers from Moroc­co, Jordan and Tunisia to promote an education for competitiveness initiative “aimed at supporting a renewed reform agenda for educa­tion in the MENA region, one that promotes critical thinking, creativ­ity and innovation to contribute to inclusive growth, social develop­ment and global competitiveness”.

Without a more integrated, ho­listic approach to addressing la­bour within economic growth strategies, unrest will continue to be a factor in the public space in Arab countries.