This conference was held at the European Parliament, Brussels and was coordinated by Claire Hédon, journalist at RFI. The speakers were : Gilles Pargneaux, Euro MP and member of the Delegation for Relations with Maghreb Countries and of the Delegation to the Parliamentary Assembly – Union for the Mediterranean (UfM); Mohamed Slassi Sennou, President of the Training Commission of the Maroccan business confederation, Confédération Générale des Entreprises du Maroc (CGEM); El Mouhoub Mouhoud, Professor of Economics at Paris Dauphine University; Jean-Claude Bouly, Professor at the arts and crafts school, Conservatoire National des Arts et Métiers (CNAM), Small Businesses and Craft Trades Chair, director, CNAM Entrepreneur(s); Nicole Madariaga , economist in the Macroeconomic Analysis and Country Risk Division at Agence Française de Développement.
Despite significant growth in the 2000s, the economies of Southern and Eastern Mediterranean Countries (SEMCs) have been unable to absorb the massive influx of young graduates onto the labor market: 19% of unemployed youth in Morocco, 25% in Egypt, 42% in Tunisia. There is an essential need to focus on two areas in order to reverse this trend: Diversify economies towards sectors that are capable of generating employment-friendly productivity shocks, and take action on structural factors that constrain job creation.
Focus on innovative sectors able to act as a channel for labor
- While “productivity gains have fundamental effects on economic growth”, their effects on employment vary depending on their nature (Nicole Madariaga):
Intrasectoral gains: technological innovation or development in a given sector create new production lines with greater added value, while generating productivity gains that foster job creation. Conversely, productivity gains related to an improvement or mechanization of production processes save labor and reduce the need for workers.
- Movements of labor between sectors (intersectoral gains): when they occur from a low-productivity sector towards a more productive sector, where there is a higher level of added value (for example, from agriculture to high technologies), there is a “productivity shock”, which promotes employment.
Yet the economies of SEMCs are highly focused on a small number of sectors with little added value or a low technological content, such as textiles in industry or call centers in the service sector. In addition, “labor movements have taken place between sectors that were not characterized by a great difference in the initial productivity” (Nicole Madariaga). In short, there have been virtually no intersectoral productivity gains related to labor movements, while intrasectoral gains have been higher, but are not produced by innovation efforts and therefore continue to create little employment. Consequently, SEMCs need to diversify their economies, while establishing one or several leading sectors that attract labor and are able to benefit from significant technological gains or a strong development, such as “the agri-food industry, renewable energies or tourism” (Gilles Pargneaux), but also the automotive and aeronautical industries, which have already shown very good results in Morocco, or again NICTs or the construction industry.
Take action on structural factors that hinder job creation
These solutions of sectoral diversification and development can only be efficient provided that action is taken at the same time on the structural obstacles that hinder job creation in SEMCs:
Employment rates among the lowest in the world, in the region of 40 to 50% (against 65% in Latin America or East Asia), with a female participation in the labor force of 22%, against 73% in East Asia. “The low female employment rate is a major reason for the inertia of economies.” (El Mouhoub Mouhoud).
Youth largely face unemployment. Once again, the phenomenon primarily affects women. In 2013, 120,000 jobs were created in Morocco, whereas there were 400,000 first-time jobseekers. In addition, rural dwellers do not manage to have access to employment in cities because the rents are too high.
Crisis in the mass education system. Per capita education expenditure has been regularly decreasing. Education systems come up against difficulties to maintain their quality, and the match between diplomas and the needs of the economy: “Real demands are expressed by companies, but they do not meet the appropriate profiles” (Mohamed Slassi Sennou).
The weight of the informal sector constrains the competitiveness of the formal sector and obstructs its capacity to create employment. Corruption and “rentier” phenomena on the labor market are factors that inhibit entrepreneurship and employment.
Inadequate regional integration. As there is no agreement between governments, there have been an increasing number of bilateral agreements, in particular with the European Union, to the detriment of regional agreements, which would reduce transaction costs between neighboring countries, and consequently to the detriment of regional economic development.
Six drivers have been identified to address these structural factors:
- Develop public policies to promote employment for women and young people;
- Improve training and the match between skills and business needs;
- Reflect on the tax policy that needs to be adopted to address informal labor;
- Support entrepreneurship and the diversification of production;
- Establish national sectoral strategies and enhance the public/private dialogue;
- Promote regional integration via common policies, for example in the agriculture and energy sectors.
FOR FURTHER INFORMATION:
- Download the conference summary (in French)