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From the 1980s to the early-to-mid-1990s, many countries in the Arab world experienced slow economic growth, rising unemployment, and even declining per capita incomes, reflecting macroeconomic mismanagement, lack of competitiveness, and low international oil prices. Reforms were introduced to address fiscal and structural imbalances (including high deficit, debt and inflation rates), while recognizing that the public sector could no longer act as the “employer of last resort.” The outcome—some described it as an “Arab Renaissance”—resulted in an acceleration of economic growth and included a robust employment response.

The drop in unemployment is all the more remarkable because it took place concurrently with the demographic “bulge,” due to past high fertility rates; rapidly increasing female labor force participation rates; and a slowdown, if not stagnation, in public sector recruitment. Where the Arab region fell short was in creating quality jobs. After the financial crisis, the uprising in Tunisia in December 2010 brought this issue—including inequality, insecurity, and lack of social dialogue—to the fore.

Job Quality in the Arab Region

In the Arab region, the disconnect between the quality of work and employment creation is pronounced. According to the International Labour Organization, “decent employment” combines: employment creation; adequate social protection; minimum standards and rights at work; and the promotion of social dialogue. Since the 1990s, while employment rose in the region, new jobs have been created mostly in sectors that tend to have short or casual work weeks and low hourly wages, and do not benefit from social insurance

Traditionally, job quality was assured in the broader public sector. By the 1990s, the public sector share of total employment was the highest among developing countries. Subsequently, increasing employment and offering relatively generous wages and/or benefits became unattainable. Though information on wages is notoriously lacking in the Arab region, information on the wage share in GDP suggests that it has declined significantly over time, especially in North Africa, where most employment gains were seen. The litmus test is household consumption, where the share in GDP declined about 9 percentage points in the last two decades, a nearly 15 percent reduction in relative terms. These factors suggest that only a small part of the substantial increase in GDP between 1990 and 2010 was transferred to workers and, via their labor earnings, to households.

An Unfinished Agenda

Policy makers need to examine the quality of new jobs. In addition to improving the quality of labor force surveys, attention should be also paid to the collection of information on working conditions, social programs and, of course, good data on earnings.

Improving job quality would mean striving for high-value-added jobs and productivity gains by strengthening local competitiveness. This process could enable the payment of higher wages. It will also reward and thus provide incentives for better education, since the rising education level in the region has yet to be met by a corresponding increase in labor demand for educated workers.

The Arab region cannot afford to return to the economic decline or even stagnation of the past. Citizens’ expectations about their future were deteriorating in the 2000s, despite the fast economic growth underway. These prospects may be even lower now, especially in countries striving to come up with new governance schemes amidst political uncertainty, if not outright conflict.

Zafiris Tzannatos is a senior international consultant for strategy and policy based in Lebanon. He was previously Chair and Professor of the Economics Department at the American University of Beirut. He is a former ILO advisor and has served as Advisor to Managing Director of the World Bank, where he was also Manager for Social Protection in the MENA, as well as, Leader of the Global Child Labor Program that he initiated. His publications include 14 books and monographs, and more than 200 reports and papers in the areas of labor economics, education, gender, child labor and, more broadly, social policy and development strategy. He holds a Ph.D. in Economics.