Tunisia – Addressing Youth Unemployment

How can the transitional government begin to address youth unemployment in light of low growth? In the two decades prior to the 2011 uprising, Tunisia has grown at a steady rate, but the economy failed to produce jobs. Unemployment increased in 2011 to over 18 percent and remains high at around 17 percent. There are structural challenges that have contributed to structural unemployment, which the government can begin to address.

First, liberalizing restrictive labor market policies will have a direct impact on hiring more workers. In a joint report by the African Development Bank (AfDB), the Tunisian government, and the US government, researchers identified binding constraints to growth and employment in Tunisia. Constraints include high fiscal and regulatory costs of employing (and firing) workers, and barriers to entry, exit, and competitiveness of Tunisian companies. Moreover, financial sector barriers such as access and high cost of credit, restrictions on financial institutions and poor governance have placed Tunisia at 50 out of 185 countries in the World Bank’s 2013 Doing Business report. Undertaking financial sector reforms and streamlining procedural requirements will take some time but contribute greatly towards liberalizing labor markets.

Second, strengthening and consulting with the private sector will open up new employment opportunities. Currently, public services remain the primary contributor to growth, which is not enough to significantly reduce unemployment. Moving towards a strategy of engaging the private sector through public-private partnerships (PPPs) will help ease pressures on public finances and lower the cost and improve quality of public services. A regulatory law of PPPs already exists in Tunisia, but a new bill has been presented to the National Constituent Assembly (NCA) to amend the 2008 law to move away from concessions to a deferred payments system. Within this framework, there is also a need to ease business regulations to increase transparency and create mechanisms for accountability to attract foreign direct investment (FDI).

Finally, there is a need to reform the education system to produce graduates with skills that match private sector demands. The unemployment rate among university graduates hovers around 33 percent, and has been on the rise in recent years. It is no coincidence that there is large supply of labor but not enough demand in labor markets. This is because the quality of primary and secondary education is oriented towards a system of credentials as opposed to competitive skills.

Chosen excerpts by Job Market Monitor. Read the whole story at Addressing Youth Unemployment in Tunisia – Tunisia Live : Tunisia Live.

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