Economic Research Forum (ERF)

Tunisia’s labour market in an era of transition

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Unemployment in Tunisia has been high for many years – and it is particularly prevalent among youth, women and people with higher levels of education. This column outlines the findings of a new book on the country’s labour market and the implications for policy-makers.

In a nutshell

A rapid rise in education in Tunisia has been accompanied by fairly low returns to education and the inability of education to promote significant upward social mobility.

Current labour market policies ensure neither efficiency, in the form of higher employment, nor equity, in the form of greater labour protection.

While Tunisian women experience particular difficulties in accessing the labour market, they have made substantial progress in gaining greater control over aspects of their lives that affect their wellbeing and that of their families.

Why has unemployment been high and persistent for decades in Tunisia? And why has youth unemployment been higher in Tunisia than in neighbouring countries, and more severe for women and the more educated?

These are among the questions discussed in our new edited volume (Assaad and Boughzala, 2018). Its ten chapters discuss all aspects of the Tunisian labour market: labour supply; labour demand; the mismatch between supply and demand; labour market institutions and regulations; wage formation; gender issues and the problems that educated women face in labour market participation, especially in lagging regions of the country; returns to schooling in the face of the rapid rise in educational attainment; and the size and composition of migration flows.

The book argues that labour supply pressures have remained high despite the advanced stage of the demographic transition in which Tunisia finds itself. Most of the supply pressures emanate from the rapid growth of university graduates, coupled with the slow evolution of demand for skilled labour and the mismatch between the supply and demand for skills.

The number of university graduates from public institutions alone grew at a rate of 12% per annum between 1994 and 2004, a rate five times higher than the rate of growth of the working age population.

This tremendous growth in the number of graduates has been accompanied by a closing and even a reversal of the gender gap in education – a trend that has resulted in the explosive growth in the number of young women seeking employment. According to data from Tunisia’s Institut National de la Statistique, nearly two out of five (38%) Tunisian women born since 1990 are obtaining higher education compared with under a quarter (24%) of men in the same cohorts.

The rapid rise in education has been accompanied by fairly low returns to education and the inability of education to promote significant upward social mobility. Estimates presented in the book show that the private returns to education in Tunisia are low by international standards.

On the demand side, our analysis shows that while larger firms create more formal jobs, they are not growing fast enough in number and size to meet the growing demand for formal employment in the economy.

In exploring the reasons for the slow growth of formal employment and the expansion of unemployment in Tunisia, we focus on policies and institutional weaknesses that increase the cost of formal employment, and thus lead to the growth of the informal sector and informal employment. We argue that current policies ensure neither efficiency, in the form of higher employment, nor equity, in the form of greater labour protection.

The analysis presented in the book demonstrates that various segments of the labour market differ in terms of wage conditions, social protection and mobility, affecting career development and the wage structure of the economy. For example, many workers in informal or insecure jobs have difficulty exiting informal employment and sometimes have little choice but to alternate between informality and insecurity.

On gender issues, we show that young women have experienced even more severe challenges getting into the labour market than young men. Unemployment rates are highest among female university graduates, and more so in the lagging regions and in rural areas.

Despite slowing growth of the working age population and the contraction of the youth population, there have been no major changes in rates of labour force participation among women. The low participation rate for women is a striking phenomenon given the remarkable growth of education they have achieved. Educated young women in rural areas and inland regions are more likely to be ‘trapped’ by the opportunities available in their local labour markets, which seldom correspond to their educational qualifications.

Despite the difficulties that Tunisian women experience in accessing the labour market, they have made substantial progress in gaining greater control over aspects of their lives that affect their wellbeing and that of their families. These shifts have contributed to changes in the institution of marriage. Women are marrying later and they are likely to be living in more autonomous nuclear family arrangements upon marriage. They are also marrying men who are either equally educated or less educated than themselves.

These fundamental changes in educational attainment and patterns of marriage and women’s work in Tunisia have occurred along with a far-reaching demographic transition. Fertility has declined from six children per woman in the late 1970s to two children per woman in the early 2000s. The shift towards urban living in Tunisia, the rapidly rising education levels and the rising desire on the part of Tunisian women to participate economically may push fertility even lower in the future.

Finally, the book discusses the size and composition of migration flows from Tunisia, the external effects of migration on non-migrants and the interactions between migration and other labour market outcomes, mainly unemployment. It also tackles the evolution of migrants’ profile, mainly in terms of skills.

The analysis in the book is based mainly on the Tunisia Labor Market Panel Survey (TLMPS) of 2014, one of an expanding series of labour market panel surveys conducted by ERF in collaboration with national statistical offices. Far richer than currently available data on the Tunisian labour market, the TLMPS is designed to delve much deeper into various aspects of the labour market that are either excluded or covered only lightly by the regular National Survey of Employment and Population carried out quarterly by the country’s Institut National de la Statistique.

For example, as detailed in Assaad et al (2016), besides collecting detailed information about current employment characteristics, unemployment and earnings, the TLMPS 2014 individual-level questionnaire also collects detailed retrospective data on individuals’ education, employment, residential and marital trajectories. It also collects data on the parental background of all individuals in the sample, as well as on the assets owned by the household to allow for analyses that relate various outcomes to social class and socioeconomic status.

The analyses and results presented in this book provide a first cut at the kinds of analyses that are possible using the rich data provided by the TLMPS. Now that the data from TLMPS 2014 is available for public use by researchers through the ERF Open Access Micro Data Initiative, we hope that researchers from Tunisia and elsewhere will use them to undertake more in-depth studies of various aspects of the Tunisian labour market and related topics, so as to inform policy-making and public debate in Tunisia.

Further reading

Assaad, R, and M Boughzala (eds) (2018) The Tunisian Labor Market in an Era of Transition, Oxford University Press.

Assaad, R, S Ghazouani, C Krafft and DJ Rolando (2016) ‘Introducing the Tunisia Labor Market Panel Survey 2014‘, IZA Journal of Labor and Development 5(15).

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