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Globalization, Social Policies and Labor Issues in the Arab World
Regional Workshop, 9-10 October, 2000, Beirut

Globalisation, Social Policies and Labor Markets in Arab Countries: Concepts and Correlations concept paper ( pdf )

Dr. Leila Ahmed El-Khawaga, Professor of Economics, Faculty of Economics and Political Science Cairo University

Concept Note Summary

The workshop addressed the main issues raised by the increasing pressure of globalization and other external factors on social policy reform in the Arab world with a focus on labor markets and labor policies, particularly in the four countries of Egypt, Morocco, Lebanon and Jordan.

The paper briefly review the external factors that might have played a significant role in undermining growth and affecting labor markets in the region such as the high debt bill, the increased competition from other developing regions with cheaper and better qualified labor, the global trend towards automation, with a decreased need for unskilled labor over time, the gradual application of the World Trade Organization rules with its high impact especially on countries depending on raw material exports, and the spread of information and communication technology, which have made most of the Arab world's labor stock and its local industries obsolete.

In addition, the paper briefly refers to the fiscal crisis of the Arab welfare states and the increasingly unsustainable weight of the public sector in the region. This crisis has led to the last decade's measures of austerity, lifting of subsidies, liberalization of trade and privatization as responses to pressures to reform. These policies have included decreased public expenditures on infrastructure, social services, the provision of subsidized education and the ability to guarantee employment for all. Globalization, crisis of the welfare states, restructuring and related public policies have had significant impact on labor markets and labor issues.

The paper then focuses on major labor issues in the region under the impact of restructuring and globalization. It will address problems such as the magnitude and increasing rate of unemployment and under employment, the growing unemployment of youth and graduates, the increasing share of the informal sector in total employment, the erosion and compression of wages particularly in the public sectors, the labor market segmentations and its impact on market rigidity, the low labor productivity and the saturation with unskilled and semi-skilled manpower, the insufficient new job creation in relation to new entrants into the labor force, the restrictive impact of labor laws and labor market regulations.

The paper will explore, in particular, the sectors likely to be hardest hit by the globalization process including excess labor made redundant by restructuring and privatization; labor associated with small industries and services for which subsidies have been withdrawn; workers unable to adapt because of their age or lack of skills; women workers first sacrificed to restructuring needs; long-term unemployed whose unemployability might increase with time.

The paper will then focus on policies, measures, programs and institutions in the four countries, trying to alleviate the social impact of globalization and restructuring, checking the deterioration in living conditions among the poor and the workers and helping them move as rapidly as possible into new jobs and areas of higher labor productivity.

For that purpose, the paper will identify and review, in the four countries, policies, best practices and leading institutions that are contributing to ease employment restructuring.

These could include short-term measures such as targeting programs and safety nets, measures to help the unemployed identify appropriate jobs including labor market information systems and employment offices, measures to alleviate through transfer the restructuring process (unemployment benefits, severance pays, social assistance, public works programs).

They could include also medium-term programs such as retraining and skill development, allowances to support small business start-ups, developing training centers for entrepreneurial and vocational training, reforms of the basic education curriculum, etc.

They could include finally longer-term transformations such as the reform of labor legislation and regulations, reforms of the tax system and the fiscal institutions, reforms of the public institutions, and promotion of more transparency, public accountability, decentralization and participation of the citizens and civil society in public policy formulation, implementation and evaluation.

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