More than 18 Million Jobs Needed!

IMF Blog, October 31, 2010

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Publication: Masood Ahmed, October 31, 2010.
Focus: Six oil-importing countries in the Middle East and North Africa region—Egypt, Jordan, Lebanon, Morocco, Syria, and Tunisia.
Labor force growth and job needs:
- For the past two decades, average unemployment has been in the vicinity of 12 percent and was still in double digits in 2008.
- Youth unemployment is at over 20 percent in the region; in some countries it is even higher.
- Some estimates suggest that as much as 15 percent of the combined labor force of these countries is working in countries abroad.
- Over the past decade, the labor force in these six countries has grown on average by 2¾ percent a year.
- These countries need to create about 18½ million full-time jobs over the next decade to provide employment for young people looking for their first job and to bring down unemployment.

Skills mismatch:
- Job seekers do not have the skills required by firms active in domestic and international markets.
- Despite substantial improvements in access to education, firms regularly complain about the lack of suitable skills among job seekers; schools and universities often fail to produce graduates with the skills needed.
Public sector hiring incentives and wage differentials:
- Hiring practices by the public sector have created expectations that private firms often cannot meet.
- Governments in the region tend to look for applicants with university degrees, often placing little emphasis on the type of degree.
- Public sector wages are relatively high; for example, the Egyptian public sector on average pays 48 percent more than private firms.
Reduced ability to migrate for work:
- Historically, many workers moved abroad in search of work, but increasing competitive pressure from other emerging markets and sharply higher unemployment in advanced economies mean fewer employment prospects abroad than before.

Promote growth:
- Growth is not the sole answer but remains essential to reducing unemployment.
- Challenges to growth include slower growth among traditional trading partners in Europe and increased competition from fast-growing emerging markets.
- Policy actions: streamline cumbersome regulations and improve the business environment to raise growth; better integrate into global supply chains; view other emerging markets as partners for cooperation as well as competitors.
Help job seekers acquire the right skills:
- Better align education with market-required skills by involving firms or chambers of commerce in curriculum development.
- Implement well-designed training programs for the unemployed to increase employability.
- Encourage public-private partnerships to deliver practical, market-aligned skills training.
Untangle social protection from labor regulations:
- Provide help to citizens hit by misfortune without creating rigidities that harm job creation.
- Allow firms flexibility to lay off workers during severe downturns while protecting individuals through a tight and targeted social safety net that includes an unemployment insurance system.
- Aim to strike the right balance between labor market flexibility and social protection.

Jordan: ‘Injaz’—a partnership between the Ministry of Education and the private sector launched in 1999 (now expanded to cover a dozen countries in the region)—provides children with teamwork skills, entrepreneurial thinking, and work-readiness training.
Egypt: Cairo University’s Career and Entrepreneurship Development Office offers practical training and internship programs to empower students to innovate, start businesses, and acquire market-demanded skills.
Regional: The Education for Employment Foundation works with corporations and industries to assess demand for skills and provide correspondingly tailored training programs for young people.

Source: IMF blog post “More than 18 Million Jobs Needed!” (October 31, 2010).