Amman – Jordan

1. JOBS AND SKILLS DEVELOPMENT IN MENAOpening Opportunities for AllHaneenSayedRegional Youth Co-Coordinator and Human Development CoordinatorMiddle East and North Africa RegionWorld Bank February 21, 2012 Amman – Jordan

2. Outline • The story about jobs & skills in MENA is one of labor markets exclusion/segmentation. Insider/Outsider. • Barriers to more and better (skilled) jobs: • Dynamics of private sector growth • Effects of institutional framework (labor market regulations, public sector, intermediation, etc) on labor supply, informality, unemployment • Quality and incentives of skills development systems • The way forward: some ideas to do things differently (not necessarily different things); and ST versus MT

3. Some Facts about Jobs & Skills in MENA: Youth The young are predominantly employed in the informal sector, and the rate of inactivity is higher than unemployment Youth unemployment in MENA is higher than in any other region in the World High unemployment rates among university graduates in most countries, but the bulk of the jobless are youth with low education. 3

4. Europe and Central Asia Non - GCC Middle East and North Africa Latin America and the Caribbean 39,563,225 98,354,753 19% 27% 64,134,984 40% 97,042,933 60% 265,038,680 167,940,747 73% 81% Insiders Outsiders Insiders Outsiders Insiders Outsiders Jobs in MENA: Insiders/Outsiders - a story of exclusion Share of Working Age Population Holding a Formal Job (2010 Estimates) Source: WB own elaboration using United Nations Population Data and data from ILO KILM. Regional estimates include all countries where data is available. Estimates from MENA include only Non-GCC countries (Yemen, West Bank & Gaza, Syria, Morocco, Iraq, Lebanon, Jordan, Iran, Algeria, Tunisia, and Egypt)

5. Employment Growth - a story of exclusion Insiders Formal workers Public sector workers Outsiders Youth Adult men Unemployed Women Entry barriers Informal workers

6. Youth civic participation – a story of exclusion • Youth active participation through formal venues is still limited (though online activism has surged recently: Facebook users in Arab countries increased 78 % between January & December 2010) • Few young people spend time in organized civic activities, except sports. • Youth (esp. in disadvantaged communities) point to the lack of access to official documents/information as a barrier to active participation.

7. Barrier 1: A private sector that thrives on privileges and low competition Low value added and low skills content sectors are the largest contributors to job creation - Jordan Net employment creation is insufficient given population growth rates Net Employment Growth vs. GDP p.c. growth 7

8. Majority of the labor force is unskilled and employment is concentrated in low productivity services (Lebanon) * wholesale and retail trade, repair of motor vehicles; transportation and storage, accommodation and food service activities, real estate activities **information and communication; financial and insurance activities; professional, scientific and technical activities

9. A private sector that thrives on privileges and low competition – main factor behind little and low quality job creation • MENA firms lack dynamism and creative destruction (firm turnover) that characterize fast growing (East Asian) economies. • Firms and business managers in MENA are much older relative to other regions • Incumbent firms enjoy privileges and face less competition: number of registered firms per capita is low. • Regulatory uncertainty • Access to finance is the privilege of the few

10. Private Sector Growth - a story of exclusion Insider Firms Outsider Firms State-led firms Established family firms Older firms Young firms Large firms Firms that never were Small and micro firms Entry barriers Informal firms

11. Barrier 2: Institutional framework keeps outsiders out • Wages: floors and high tax wedges • Contractual labor law • Public sector terms • Social insurance design Share of Firms Identifying Labor Regulations as major constraint as Major Constraint in Doing Business in MENA (%) Tax Wedge in Various Countries(%)

12. Some facts about jobs & skills in MENA: Poor labor market intermediation mechanisms Personal contacts constitute the most important and used mechanism to find jobs Source: Lebanon and Syria Employer-Employee Survey, 2010

13. Some facts about jobs & skills in MENA: Inadequate quality of education Student’s performance in standardize tests is below world average 13

14. Some facts about jobs & skills in MENA: mismatch of workers skills and employer needs Percent of firms that identify inadequately educated workforce as a major constraint for business operation and growth Source: World Bank at: www.enterprisesurveys.org

15. Barrier 2: Inadequate skills and lack of meritocracy • Youth needs to succeed in a “double transition”: • Becoming employable : acquiring right skills, competencies and diplomas. • Current skills development systems lack quality and relevance in education (technical but especially job-readiness skills) • Getting a job: many employable graduates cannot cash in their human capital • Non-meritocratic hiring practices (If there is no meritocracy in hiring practices, the economic returns in investing in quality education are limited!) • Poor formal intermediation systems

16. Why is skills formation not relevant to needs of the labor market in MENA? – working hypotheses / constraints 1. The private sector and the education sector operate in isolation • Lack of communication between sectors and thus lack of responsiveness of private sector needs; • The private sector is not involved in financing/curriculum development; • Little provision of training; • Lacking knowledge about certificates and qualifications

17. Why is skills formation not relevant to needs of the labor market in MENA? – working hypotheses / constraints 2. Public sector as main “client” of the education and skills system and thus main shaper of student expectations and choices 1. The private sector and the education sector operate in isolation • Aspiration for insider jobs in public sector incentivizes best students to pursue university education but lack of jobs results in queuing • The system is designed to create signals (not skills) for public sector hiring despite its diminishing absorbing capacity

18. Why is skills formation not relevant to needs of the labor market in MENA? – working hypotheses / constraints 2. Public sector as main “client” of the system and thus main shaper of student expectations and choices 1. The private sector and the education sector operate in isolation • Little quality assurance of outputs, e.g., skill evaluation • No tracking of outcomes, e.g., graduate tracer surveys feeding into career counseling • Lacking performance incentives for teachers 3 Focus on inputs, lack of: evaluation of outcomes, accountability mechanism

19. Why is skills formation not relevant to needs of the labor market in MENA? – working hypotheses / constraints 2. Public sector as main “client” of the system and thus main shaper of student expectations and choices 1. The private sector and the education sector operate in isolation • Varying degrees of entry rigidities (e.g., quotas) ; • High-stakes public examinations • Lack of mobility within education and training system (2nd chances) 3 Focus on inputs, lack of: evaluation of outcomes, accountability mechanism 4 Logic of selection through rigid admission policies

20. Why are Skills Important? • Skills are at the core of improving employment and of increasing productivity and growth • Evidence suggests that as countries grow the demand for skills changes. Productivity is increasingly driven by high level cognitive skills (e.g., analysis or problem solving) and by non-cognitive or behavioral skills (discipline effort). • Commonly used measures of education and training capture only a small partof what makes an individual’s human capital.

21. A Skills Survey: what skills do we need to measure and how to measure them? • Cognitive, socio-emotional and technical skills are important determinants of labor market success, yet few studies take direct measurement of such skills. • A new survey instrument (STEP Survey) that unpacks the definition of skills. Employers/employee matched survey. • Survey moves beyond traditional measures of skills • Cognitive (literacy, numeracy and problem solving) • Socio-emotional (personality, behavior and preferences) • Technical (skills used to accomplish specific tasks) • Example of findings from Lebanon Survey (MILES): • Cognitive skills are important determinants of earnings – yet the unemployed and first time job seekers have lower scores. • The unemployed and first time job-seekers are also less likely to have the “right” non-cognitive skills – which are important determinants of successful entrepreneurship. • Policy Implications: There is role for remedial programs and training in life skills, but need to start early as cognitive skills are build in early years

22. The Way Forward – Can the Arab Spring lead to new opportunities for all? • Governments are under pressure to deliver results • Citizens do not trust governments to deliver • Demand for change, new political and social forces demanding seat at the table • But these issues are structural and need time to be addressed • However, there is no time…

23. The medium and long term solutions out there… we know them LEVERAGE COMPLEMENTARITIES WITH OTHER MAJOR REFORMS DESIGN INTERVENTIONS TO REDUCE MARKET FAILURES ENABLING INVESTMENT CLIMATE • To improve productivity of informal, disadvantaged workers and youth • To increase female LFP • New jobs for youth • Enhance business regulations • Ease trade restrictions • Promote access to finance IMPROVE EDUCATION QUALITY & SKILLS REFORM REGULATIONS JOBS • Invest in ECD • Reform admission policies • Focus on key 21st century skills: critical thinking, problem solving and other soft skills • Labor regulation and taxes • Introduce or improve unemployment insurance MODERNIZE LABOR INTERMEDIATION & PUBLIC EMPLOYMENT SERVICES PROMOTE INNOVATION POLICIES & FACILITATE K.E. GENDER & YOUTH PUBLIC SECTOR REFORM • For both domestic and international markets • Improve diagnosis, policy dialogue and indicators in gender issues • Taylor interventions to improve productivity of young informal workers • Invest in incubators and bridge institutions between producers, financers and consumers of knowledge 23

24. In the short term • Leverage dialogue with new social actors: • Engage CSOs in dialogue on labor market reforms; Involve CSOs and private sector in monitoring effectiveness of labor market programs; reforming regulations on civil society organizations ; private sector councils to drive skills agenda. • Invest in access to information and data: • Benchmarking and evaluation of skills systems; Promoting Employment Observatories; Expand participation to international learning and skills assessments; Promote external private sector skills certification; Collect and diffuse M&E data • Help governments realize early credible gains that don’t compromise medium term: • Short term jobs for excluded workers: Public works and infrastructure, CCTs for youth appropriate to skills levels (e.g. community service work); Targeted wage subsidies (women, first-time job-seekers). • Expand access to new sources of employment: Entrepreneurship development programs, Micro-credit, Employability skills training and counseling, Leverage ICT for e-learning, intermediation, outsourcing.

25. Reworking skills development systems • Public private partnerships • Involve private sector in curriculum reform and training • Promote entrepreneurship • ·Strengthen demand for TVET by diversifying provision modes and facilitating on-the-job retraining • Create incentives to expand the private tertiary education sector and to increase institutional and program diversification (polytechnics) • Improve design of ALMPs • Design ALMPs to increase productivity of informal workers • Expand employment services including counseling and information services • Promote soft skills/cognitive skills in general education curriculum • Create environment with right incentives to invest in productive education • Invest in Early Childhood Development and expand choices in secondary education • Reform assessment and certification systems to increase transparency, flexibility and portability • Performance based incentives to improve teacher quality • Establish M&E systems (including tracking surveys) and use data for policy making and institutional improvement

26. Innovative Initiatives in MENA Jordan New opportunities for Young Women (NOW) • NOW is a pilot program for Jordanian women to address the large gender gaps in employment rates . • Objective: designed to rigorously evaluate the effectiveness of the following two active labor market policies: short-term wage subsidies and employability skills training. • Activities pilot program, students received 45 hours of instruction in team building, communication skills, presentation skills, business writing, customer service, interviewing skills, and positive thinking. • Impact: 4 months into the wage subsidy program, approximately 1/3 of those offered the vouchers had found a job using them. Lebanon Young National Volunteer Service Program • Objective: increase youth civic engagement which in the medium term will contribute to improved social cohesion across /regions by: (i) expanding youth volunteerism not only in their communities; and (ii) improving the employability of youth through enhanced (soft) skills. • Activities the program will expand volunteering activities (small grants to NGOs, schools, universities; youth summer camps; and week-end volunteering activities), develop the institutional capacity of Ministry of Social affairs and stakeholders to effectively utilize young active volunteers. • Impact: Around 2,000 volunteers with job skills by working on 33 new projects led and implemented by NGOs, universities and schools. -6-

27. Innovative Initiatives in MENA Tunisia Emergency Grant to Support Young Tunisians Affected by Multiple Shocks • Objective: Emergency income support and employment to 3,000 youth in central-west Governorates of Kasserine and Siliana to meet their basic needs • Activities: cash-for-work, training, internships, and self-employment opportunities through 3 components: (i) Cash-for-Work for Youth Engaged in Community Projects & Services; (ii) Conditional Cash for Youth Training & Internships; Job-matching and monitoring through mobile platforms, with private partnerships; (iii) Conditional Grants for Youth Self-Employment. • Outcomes and Impact: Achievement of job placement rates of 15-30% after program; 50 percent coverage among young women; 40-50 percent of micro-enterprises supported by the project operate after 12 months Regional Youth Initiatives Arab Region Entrepreneurship Education Policy – ARAEIQ • Objective: Integrating entrepreneurship education in national education policies throughout the Arab world • Impacts: More than I million youth undergoing entrepreneurship education by 2015 Institutional Development to Strengthen Youth participation • Objective: Directly supporting the development of national/regional youth-led platforms for greater voice in decision-making, as well as regional youth policymaking institutions, such as the League of Arab States and Arab Youth Observatory. • Impact: Creation of formal institutional avenues for youth participation and independent youth- led platforms established in at least 2 Arab countries, by 2013

28. Take away… • A dynamic private sector is key for job creation (role of competition, innovation, and entrepreneurship) • Set the right incentives for systems to produce relevant skills • Effectively link up skills development with the private sector • Improve quality and invest in ECD • Relax focus on regulating inputs and put more emphasis on results (including measurement and evaluation) • Exclusion is no longer affordable socially or economically

29. Rebalancing Act Unemployed Women Youth Informal workers Outsiders Insiders Formal workers Public sector Adult men 29