Tunisia groaning under weight of unemployment

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Article Summary
A recent study proposes measures to reduce Tunisia's unemployment rate, especially among women and youths.

“Elements for a medium-term strategy on economic and social development in Tunisia” is the title of a study conducted under the direction of Chedly Ayari, a professor emeritus at Tunis El Manar University, and Jean Louis Reiffers, president of the scientific committees at the Institute of the Mediterranean and FEMISE (Euro-Mediterranean Forum of Economic Science Institutes).

The study tackles the unemployment issue, among others. It lists the reasons behind this phenomenon and suggests steps to resolve it.

The figures cited in the study are alarming, as the unemployment rate is very high. It was estimated at 17.6% in 2012. Youth participation in the labor force remains low, with only 44.5% of youths between the ages of 20 and 24 contributing to the labor market, and 35% of youths aged between 25 and 29 being unemployed, according to statistics compiled in 2011.

The unemployment rate is excessively high among higher education graduates. This rate almost doubled between 2006 and 2014, increasing from 17% to 31.4% by early 2014.

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The [study] also points to significant inequalities between men and women in regard to access to work. Women suffer from unemployment more than men, at 43.5% compared to 20.9% among men. Inequalities also affect regions. In the central west [of the country], the unemployment rate stands at 28.6%; 26.9% in the southwest; 24.8% in the southeast; and 11.1% in the central east, according the FEMISE (2013). These disparities — considered to have been a trigger of the Tunisian revolution — have continued to increase in the past few years.

Regarding the causes of unemployment, the study explains that this endemic problem is due to a strong imbalance between supply and demand in the labor market. Demand clearly increased in the past few years (+51.6% between 2010 and 2013), while supply remained insufficient and declined during the same period (-49.6%).

In this regard, the study indicates that demand is highest in the governorates of Tunis, Sfax and Gafsa (8%, 6.9% and 5.6% of total demand, respectively). The first two are governorates with strong concentrations of population, while in the Gafsa governorate, demand has almost doubled.

Another reason for unemployment is the quantitative mismatch between higher education and the needs of the private sector. The qualitative aspect should also be taken into consideration. According to the study, graduates do not have the competencies required to enter the labor market. Despite massive investments in education, unemployment among young graduates continues to increase. In early 2014, the unemployment rate [among them] reached 31.4%, which is the highest rate in the Mediterranean basin and exceeds, by far, rates registered in other areas of the world, such as Latin America and the countries of the Association of Southeast Asian Nations (ASEAN).

The study concludes that this abnormally high rate is not in line with public investment in education. This rate also prevents [investments] from achieving the desired results, namely, improved capacity to absorb technological transfers and greater capacity to develop innovation within enterprises, etc.

In addition, the study indicates that the growth achieved in some sectors does not necessarily entail job creation. In clarifying this issue, the study defines the concept of the sectoral elasticity of jobs in relation to growth. In other words, how many additional points in job creation with every additional point in sectoral GDP growth.

In this regard, the study reveals that sectoral elasticity was significantly high in the agro-food industry (2.0) followed by the mechanical and electrical industries (0.9). In addition, elasticity was significant in the service sector (0.6), namely, in the trade sub-sector (1.0). On the other hand, other sectors, such as agriculture and textile, registered negative elasticity (-0.8 and -0.9, respectively).

Thus, it would be useful to target sectors with high elasticity in terms of job creation. “However, [we] should also make sure that [job] creation will be achieved in other sectors with high added valued and that will provide future growth,” the study stated. In this regard, it is recommended that measures be taken for the development of sectors like transport and telecommunication.

Among the other solutions to adopt, the study recommends “promoting small enterprises, improving the systems of professional training, and developing the competencies of the sectors in crisis.”

On the fiscal and financial levels, the study stresses the need to launch reforms to remove fiscal obstacles and boost investments. It is also [necessary] to “strengthen the capacities of the private sector to allow it to create jobs, especially for women, and to train youths in the competencies needed by businesses.”

The study also calls for relaxing labor legislation to strengthen competitiveness among enterprises. According to the study, legislation has been “strict” concerning dismissals and “flexible” regarding hiring. The study thus calls for reducing the obstacles to dismissals. Such flexibility is required, especially during periods of economic slump.

“However, a balance is required between the flexibility needed by the employers and the work conditions of employees (compensation, workplace security, and job security),” [the study] revealed.

Another condition for reducing unemployment would be to improve the efficiency of public bodies responsible for employment, such as the National Agency for Employment and Independent Work (ANETI) and the Tunisian Solidarity Bank. Most of these bodies are understaffed, and their situation has significantly deteriorated since the revolution (for instance, the ANETI has one counselor for 1,000 unemployed people, whereas before the revolution, it had 1 counselor for 600 unemployed),” the study argued.

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