The Creation of Good Jobs is Key to Sound Economy
Beirut, April 11, 2013 – Lebanon is officially classified by the international community as an “Upper Middle Income Country.” But its economy lags behind other countries of similar status largely because of serious deficiencies in the dynamics of the labor market, where youth unemployment is high at 34 percent, and women account for only 24 percent of the work force.
These were some of the findings of a new World Bank report, unveiled Thursday, April 11, 2013, at the Economic and Social Council (ECOSOC) in Beirut. The report, entitled “Good Jobs Needed: The Role of Macro, Investment, Labor, Education, and Social Protection Policies”, is the result of a three-year technical cooperation program between the World Bank and the Government of Lebanon
The report, part of the World Bank’s support to social dialogue in the country, develops a new strategy. It involves coordinating investment, labor, skill development and social insurance policies, in order to foster employment, facilitate labor market transition out of inactivity and unemployment, gradually reallocate labor from low to high productivity activities, and expand access to social protection.
It provides a detailed analysis of the main characteristics of the Lebanese labor market and focuses on the issues and constraints generated by the existing economic and institutional structures. The document draws on the results of an innovative and first-of-its-kind Employer-Employee Survey implemented as part of the project, which includes detailed questions on the types of skills that workers have and employer want. The analysis of alternative policies and their macroeconomic impacts relied on a dynamic general equilibrium model for the Lebanese economy.
“The discrepancy between growth and job creation is not unique to Lebanon. But it finds a particular resonance in this country,” said Ferid Belhaj, the World Bank’s Middle East Director. “Between 1997 and 2009, the gross domestic product expanded at an average rate of 3.7 percent per year, yet employment grew by only 1.1 percent. This is a problem that needs to be addressed.”
Belhaj added: “To absorb the growing number of job seekers, spur growth and meet the challenge of unemployment, Lebanon needs to create 23,000 jobs per year over the next decade.”
“According to our findings, only 46 percent of the working age population participates in the labor market,” said Haneen Sayed, Human Development Coordinator for Lebanon, Jordan and Syria and co-author of the report. “Of those in the labor market, 11 percent are unemployed, and 50 percent work in informal jobs. Even more worrisome and alarming is the very high unemployment rates among youth (34 percent, or 1 out of 3.)”
In addition, the jobs that the economy has created have been concentrated in low productivity sectors that employed mainly low skilled workers. Although the Lebanese education system has been generating a high numbers of skilled graduates for years, many of them migrate for job opportunities outside Lebanon. The majority of workers who remain – employees and self-employed – have only secondary education or less; around 40 percent have no education or only primary education.
Another important issue to address is the high prevalence of informal employment and relatively low transitions into formal employment. Around 20 percent of the labor force is informal wage employment lacking access to social insurance and labor regulations. Another 30 percent is self-employed in low productivity activities and is also not covered by the mandatory programs. These dynamics call into question the current design of the social insurance system and labor regulations, which fail to cover the majority of the labor force and provide incentives to work outside the formal sector.
In the presentation at the launch ceremony, David Robalino, the Labor Team Leader at the World Bank and co-author of the report, said: “To promote the creation of quality jobs and increase employment levels, there are a number of useful policy changes that can be made.”
“Creating an encouraging and efficient business environment, reforming social security and rethinking training to help workers get skills they need for high productivity jobs are key areas of reform underscored by the report,” he said.