Working papers

This work asks whether the unemployment rate in Algeria should be calculated to also include young people who say they want to work but have not recently searched for a job, especially regarding labour market policies that are meant to appease a young population. To this end, two separate approaches suggested by Kingdon and Knight (2006) are followed. Firstly, the propensity to actively look for work among young men claiming to be ready to work is documented as decreasing financial wealth. This points towards these non-searchers being voluntarily out of employment. In a second step, it is found that they display the same pattern of below average subjective life satisfaction as those searching unemployed across a number of different measures. Thus, the two tests do not point in the same direction. However, with regard to designing active labour market measures, it would seem sensible to consider the discussed group of young men, since the frustration associated with the lack of professional possibilities seems to extend to many who are not actively looking for work. For young women, both analyses fail to yield conclusive results.

The purpose of this article is to assess the relationship between employment intensity and sectoral output growth, in order to examine whether an economic sector was jobless or created more jobs. Using panel data for 10 sectors over the period 1983–2010 for three Middle Eastern (Egypt and Jordan) and North African countries (Tunisia), we estimate employment value-added elasticities at the sectoral level, using a random coefficient estimation technique. Our main findings show that while manufacturing is the most important sector for creating jobs in Egypt, services are more important in Jordan and Tunisia. For all countries, the mining sector is insignificant. Indeed, this shows to what extent this sector is capital intensive, does not have a significant value-added and thus does not create jobs. A more detailed look at the decomposition analysis shows that the contribution of employment growth to value-added was higher than that of labour productivity. Yet, Tunisia’s growth of value-added was chiefly explained by labour productivity growth. As per Jordan, its growth was mainly attributed to growth in employment, whilst its productivity growth was negative.

Tunisia faces important employment challenges. In fact, the country has a high unemployment rate. The labour market is often fragmented. Labour productivity is generally low. The high level of informal employment illustrates the vulnerability of employment creation. For all these reasons and more, it is important to assess where progress has been made and to identify key opportunities and obstacles to the creation of productive employment. The present study offers an employment diagnostic analysis of Tunisia from the demand side. It goes on to address the determinants of demand for supply and cost of labour. The study will span micro and macro aspects of job creation and proposes an inquiry into a country-wide job diagnosis. The application of the methodological framework reveals three broad categories of binding constraints. (i) Cost of finance would constitute a binding constraint on growth and productive employment. (ii) Poor governance (weak property rights and rule of law), corruption and a complex judicial system have imposed high economic costs and appear to be a major constraint. (iii) Labour market regulation and the financial cost of labour can explain the weak productivity growth, small firm size and scaling up difficulties, and the high level of informal employment.