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RURAL YOUTH UNEMPLOYMENT AND COPING STRATEGIES IN THE NEAR EAST AND NORTH AFRICA (NENA) REGION by Samir Radwan IFAD Governing Council Roundtable on Promoting Livelihood Opportunities for Rural Youth Rome, Feb. 14-15, 2007 I. INTRODUCTION Youth Unemployment in general, and rural youth unemployment in particular, constitute the most serious problem in NENA Region. The region has the highest world rates in total and youth unemployment (Table 1). Table 1: Regional Unemployment Rates (2003) Region Industrialized countries Transition economies East Asia South East Asia South Asia Latin America & Caribbean MENA Africa - Southern Sahara % Rates of Unemployment Adult Youth Total 5.7 13.4 6.8 7.7 18.6 9.2 2.4 7.0 3.3 3.4 16.4 6.3 2.3 13.9 4.8 5.4 16.6 8.0 7.8 25.6 12.2 6.0 21.0 10.9 Source: Samir Radwan “Employment of Arab Youth”, ESCWA, Beirut, May 2006 -Youth Unemployment: an average of 53 % of total unemployment: Table 2: Youth Unemployment as a share of Total Unemployment Countries Syria (1998) Bahrain, Jordan, Egypt, Algeria (2000, 2001, 2000, 1992 for the 4 countries respectively) Qatar, UAE, Yemen (1997, 2000, 1999 respectively) Morocco, West Bank and Gaza (2000) Youth to total unemployment % 73% 55 – 65% 40 – 50% 37% Source: World Bank, 2004, MENA Development Report "Unlocking the Employment Potential in MENA: Towards a New Social Contract" -A 50% decrease in youth unemployment is estimated to lead to 1.7% to 4.11% increase in GDP. (Based on 2003 GDP: US$ 1939 billion. Source: ILO, "Global Employment Trends for Youth. GDP data from IMF: World Economic Outlook, data base, April 2004). II. UNEMPLOYMENT PROFILE Table 3 indicates that urban unemployment is higher than rural unemployment in some countries, which can be explained by rural-urban migration in escape from the concentration of poverty, underemployment and poor basic services in rural areas. In Yemen for example, the rural out-migration is significant due to heavy concentration of land ownership. In Morocco, the lack of job opportunities in rural areas discourages job seekers. Table 3: Total and Rural Unemployment Algeria1 Djibouti2 Egypt3 Jordan4 Lebanon5 Morocco** Somalia6 Syria** Tunisia** Turkey7 West Bank and Gaza** Yemen** Year 2005 2002 2004 2003 2001 2002 2002 2004 2002 2005 2004 2004 Total (%) 15.3 59.5 9.9 15.5 11.5 11.6 47.4 8.4 15.6 11.5 27.0 40.0 1 Enquete Emploi Aupres Des Menages -2005- Collections Statistiques No. 126- Office National des Statistiques - Alger,2006 2 UNDP, 2002, Profil de la Pauvrete a Djibouti Egypt Human Development Report 2005 3 4 Rural (%) 42.0 … 9.7 19.4 … 3.9 40.7 9.2 15.1 (2001) 8.2 … 10.0 (1999) Economic Research Forum, August 2005, Jordon Country profile FEMISE 2005, Lebanon Country Profile, Institut de la Mediterranee 6 Source: UNDP and the World Bank, Somalia Socio-Economic Survey, 2002; UNDP Somalia Human Development Report, 2001 7 TURKSTAT, Household Labor Survey 2005 ** Tina Beuchelt- February 2006-IFAD-Rural Unemployment in the Near East and North Africa Region 5 Table 4: Highest World Gender Gap in Labor Force Participation Number of Region Males Females participating % % females per 100 males World 79.4% 53.9% 68 Industrialized countries 70.3% 50.5% 76 Transition economies 65.7% 53.1% 91 East Asia 85.1% 73.1% 83 South East Asia 82.9% 60.5% 75 South Asia 81.1% 37.4% 44 Latin America & Caribbean 80.5% 49.2% 64 MENA 76.8% 28.2% 36 Africa - Southern Sahara 85.3 % 63.2% 77 Source: ILO, "Global Employment Trends for Women", 2004 Figure 1: 30 Males 25 Females % 20 Rural Unemployment by Gender in some NENA Countries 15 10 5 0 Algeria Djibouti Jordan Morocco Syria Tunisia Algeria (2005): Enquete Emploi Aupres Des Menages -2005- Collections Statistiques No. 126- Office National des Statistiques – Alger, Janvier 2006 Djibouti (1995): UNDP, 2002, Profil de la Pauvrete a Djibouti Jordan(2003): The Hashemite Kingdom of Jordan Department of Statistics (DOS), yearly report 2003 Morocco (2002) Activite, Emploi Et Chômage En 2002 Rapport De Synthese Direction De La Statistique, Royaume Du Maroc Haut Commissariat Au Plan Syria (1999) and Tunisia (2001): Tina Beuchelt- February 2006-IFAD-Rural Unemployment in the Near East and North Africa Region (from Employment Strategy of Tunisia, World Bank 2004) The Unemployment Problem in NENA is essentially a youth problem, with the highest rates of unemployment in the 15-29 years age bracket. As to Education Level, unemployment is higher among graduates of secondary schools and above in a number of countries. The agriculture sector did not succeed in solving problems of rural unemployment, poverty and inadequate food security. The sector’s contribution to employment and value added had a downward trend in most countries (Table 5). Table 5: The Agriculture Sector's Contribution to Employment and to Value added (%) Algeria Egypt Jordan Morocco Syria Tunisia West Bank & Gaza Employ't 1977: 31 1976: 47 1995: 12 2000: 30 1979: 11 1993: 6 1971: 58 1999: 44 1970: 50 1991: 28 1975: 39 2001: 22 1980: 23 2000: 14 Value Added 1977: 8 2000: 9 1979: 7 2000: 2 1971: 20 2000: 14 1970: 20 2000: 24 1975: 18 2000: 12 1987: 19 2000: 8 1976: 28 2000: 17 Source: Data extracted from: The World Bank 2004, MENA Development Report, Unlocking the Employment Potential in the Middle East and North Africa: Toward a New Social Contract. The Unemployment Problem takes different forms: a) Labor Surplus Diversified Economies b) Marginalized c) Oil Rich Economies Patterns of Rural Development: (i) (ii) The transition to a Market Economy negatively affected the small landholders and the landless. (Urban bias). Globalization and trade Liberalization but major access problems: (a) the difficulty to compete with heavily subsidized products of advanced countries, (b) supply-side constraints related to the need for capacity building. III. COPING STRATEGIES (1) The Supply Side Demographics: Rapid population growth and delayed decline in fertility led to a 3% growth rate in working age population in last decades (world highest rate), now 2.7%. (a) Productivity can be enhanced by involving the private sector in the design of training material, and by considering the privatization of training services, establishing skill standards, upgrading the training centers. (b) Rural-urban disparities in education and learning achievements: “ruralization” needed through a decentralized education system. (c) Increased ICT-penetration in rural areas improves rural people's 'employability' ; thus the need to address problems of illiteracy, high ICT-cost , inadequate ICT-infrastructure in marginalized areas and insufficient online Arabic material/software. (d) Female employment can be increased through enhanced infrastructure: roads, transportation, proximity of schools & childrearing facilities, women extension agents, and improved access to credit (ID-cards, birth certificates). (2) Structural Factors (a) Earlier agrarian reforms did not solve the problems of land concentration. Meanwhile, land fragmentation hampers the use of modern technology & raises costs of production &marketing. (b) Success stories: establishment of firms to manage a number of farms according to economies of scale was encouraged; and coop's strengthened through capacity building. State's role is to provide technical assistance to new owners & simplify land leasing & registration procedures. (c) Irrigation water better managed by rationalized consumption through cost recovery (tariffs), decentralization & community participation, technological support & capacity building, & setting institutional & legislative frameworks. (3) Drivers/Inputs to Rural Development (a) Technology: constraints to technology-adoption can be reduced by establishing buffer prices in face of the uncertainty vis-à-vis returns to investments, and establishing insurance systems as a droughtmitigation policy. (b) Access to credit can be enhanced if Microfinance Institutions (MFIs) apply best practices including full autonomy in pricing & collection, and if they access international finance based on MFI 'rating' by acceptable international rating firms. (c) Business Development Services (BDSs) can support off-farm business for rural diversification purposes (vocational training, assistance in marketing and in formalization of status). (4) Institutional and Legal Frameworks (a) NENA's CSO sector needs strengthening. Farmers & nonfarm laborers face difficulties in forming/joining unions. Domination by large landowners could be reduced if rural coops are strengthened. (b) Active Labor Market Policies (ALMPs): There is a need to strengthen the employment search offices, expand their services to the informal sector and set up village local offices. ALMPs have better impact if targeted to particular categories. “Youth sub-minimum wage” could be set at a lower level. (c) An improved environment for investment and openness to the world economy leads to enhanced competitiveness. (d) Increased regional migration by effectuating Arab migration agreements, and enhancing integration (through skill standards & on-line labor market information).