Coordinated by Claire Hédon, journalist at RFI, this conference was held on September 19th 2013 at Agence Française de Développement. The speakers were :
- El Mouhoub Mouhoud, Professor of Economics at Paris Dauphine University
- Nicole Madriaga, economist in AFD’s Macroeconomic Analysis and Country Risk Division
- Mohamed Chafiki, Director of Studies and Financial Forecasts at the Moroccan Ministry of Economy and Finance
- Mohamed Soual, Chief Economist at the Office chérifien des phosphates (OCP)
- Hafez Ghanem, Senior Researcher at the Brookings Institution think tank
Please find below the summary :
Economies in Southern and Eastern Mediterranean countries have been hit hard by the international crisis and Arab revolutions. Their formal employment rates are among the lowest in the world (40 %) and young people, who arrive in large numbers on the labor market, are the first victims of unemployment. What are the solutions for creating employment in countries in the region?
Promote a better match between training and business needs
In the Mediterranean region, there is a mismatch between employment supply and demand. For example, “two-thirds of graduates from higher education in Morocco leave school with a training in disciplines that are not major concerns for businesses” (M. Soual). Consequently, businesses are often obliged to train their employees themselves. Young graduates, for their part, struggle to find a job. Their “only choice is between downgrading at local level (by turning towards unskilled jobs in the public sector) and forced expatriation” (E. M. Mouhoud). In the region, the brain drain is two to three times above the average in intermediate countries. Training should therefore be aligned with market needs and organized for the vocational integration of young graduates.
Diversify production by focusing on innovative sectors with high added value
In connection with the previous point, the current productive specialization in Mediterranean countries does not generate employment. The European Union is the main client of Mediterranean countries and has fostered their specialization in unproductive sectors and goods with low added value. This does not promote job creation, particularly for skilled work. Yet “by transferring the labor force from an unproductive sector (such as the agricultural sector) to productive sectors (industry and services), it is possible to achieve productivity gains” (N. Madriaga). These productivity gains can be sources of employment if they are based on innovative activities, rather than on streamlining the labor-saving production process. Consequently, Mediterranean countries should diversify their production, which is currently excessively polarized, by specializing in innovative or high added value sectors. Why not in the aeronautical or car industries, like in Morocco, or in NICTs, which are likely to offer skilled employment to young graduates?
Join hands to conquer new markets
Suppliers in Europe are today affected by its economic slowdown. Mediterranean countries must therefore come up with solutions to allow them to conduct more favorable trade negotiations with their European trade partners, and open the door to new markets. This requires a rapprochement, a dialogue and agreement between the countries in the region. They will need to break with their habits of “individual and specific integration”, which has to date been the practice of each country with the EU. They will also need to find “sectoral complementarities” in order to “defend the international competitiveness of the Mediterranean region” (M. Chafiki). They will thus be in a position to conquer new markets, particularly in South Africa.
Reform land tenure and real estate for greater equity in access to employment
“Mediterranean countries are characterized by a marked territorial breakdown” (E. M. Mouhoud). Growth and employment are geographically focused on large cities. Yet the price of real estate is prohibitive for part of the population, which therefore does not have access to the main employment areas. In addition, tax legislation favors real estate investment to the detriment of other sectors that have a potential to generate greater employment.
Support SMEs, the main providers of employment
SMEs “face heavy burdens that hinder their development” (H. Ghanem), particularly in terms of tax and administration. In addition, the burden of corruption and the fact that certain sectors of the economy are captive to political powers do not foster investment. Consequently, the vast majority of SMEs remain in the informal sector (almost 80% in Egypt). Fighting corruption, easing administrative and tax burdens and launching initiatives that promote investment in SMEs would be ways to strengthen these players – the main providers of employment in the Mediterranean region.
For further information, download the report (in French)