Economic Research Forum (ERF)

Transparency, data gaps and labour market outcomes in MENA

2757
Data on labour market outcomes in many countries in the Middle East and North Africa are often difficult to evaluate. As this column explains, official labour market statistics in the region are typically based on ambiguous definitions, which makes it impossible to replicate them using independent data sources. Moreover, precise definitions are particularly relevant to assess women’s engagement in the labour market and the role of women in the societies of the region.

In a nutshell

The lack of data transparency and measurement inconsistencies in labour market statistics pose an important challenge to policy-making as they can distort the role of women in MENA societies.

Using precise definitions of labour force participation, the evidence suggests that low female labour force participation in MENA might be a generational issue.

Female labour force participation rates in Egypt almost double when women who are engaged in non-market economic activities are counted as employed.

Countries in the Middle East and North Africa (MENA) lag behind many other parts of the world in terms of their capacity to generate data. Advanced economies, for example, have modern data collection systems, generating publicly available data that is accessible to the research community, the media and civil society.

In our recent report (Arezki et al, 2020), we explore data gaps in labour market outcomes across MENA countries. We bring particular attention to issues of mismeasurement and definitions of labour market outcomes.

Measuring unemployment in MENA

Most advanced economies rely on the International Labour Organization (ILO) definitions of employment and unemployment rates, which are considered to be the gold standard. The unemployment rate computed as the share of unemployed individuals divided by the total labour force (unemployed and employed individuals) requires the definition of employment, unemployment and the target working-age population.

According to the ILO, the working-age population is restricted to those aged between 15 and 64 years old; an individual is considered to be unemployed if he or she is without work, available for work and seeking work; while an individual is considered to be employed if he or she is engaged in paid employment or self-employment.

Relying on information from national statistics websites across MENA countries, we report in Table 1 the inconsistencies between the ILO definition and the definitions employed in MENA economies. Indeed, we find that most MENA countries do not follow the ILO definitions for employment, unemployment and the working-age population. Moreover, in many cases, MENA countries do not report the definitions they use.

Table 1: Consistency of employment and unemployment across MENA

Source: Authors’ summary based on information from national statistics websites.

 

We use data from the Labour Market Panel Surveys across three MENA countries – Egypt (in 2018), Jordan (in 2016) and Tunisia (in 2014) – to compute total unemployment rates following various definitions and national unemployment rates collected from national statistics agencies.

The difference between the market and extended definition in Table 2 is that the former considers only individuals who are employed in market economic activities to be employed while the latter additionally considers those who engage in non-market economic activities as employed.

As Table 2 shows, the unemployment rates computed using the Labour Market Panel Surveys vary widely depending on the definition employed. Moreover, none of the estimated unemployment rates coincides with the national estimates collected from statistics agencies across Egypt, Jordan and Tunisia.

Table 2: Estimated versus official total unemployment rates

Source: Labour Market Panel Surveys (ERF), national statistical agencies (CAPMAS in Egypt and INS in Tunisia) and ILOSTAT.

Female labour force participation: a generational issue?

The measurement of female labour force participation in MENA is another issue that brings attention to the importance of precise definitions and transparency.

Figure 1 shows how female labour force participation rates vary drastically according to the definition employed. We make a distinction between market and non-market economic activities, and also between broad unemployment (active job search is not required for the individual to be considered to be unemployed) and standard unemployment (active job search is required for the individual to be considered to be unemployed).

Figure 1 shows large discrepancies depending on the definition that we employ. Importantly, it highlights the importance of non-market or subsistence economic activities for women in MENA. In fact, female labour force participation rates in Egypt almost double when we consider women who are engaged in non-market economic activities as employed.

Figure 1: Female labour force participation rates

We observe similar patterns in Tunisia where female labour force participation rates are drastically higher when using the extended definition of employment compared with the market definition. Indeed, the ILO definition of employment incorporates both those engaged in paid employment and those who engage in self-employment as employed.

These measurement issues highlight the importance of definitions and data transparency as mismeasurement of female labour force participation rates can distort the role of women in MENA societies.

In recent decades, women in MENA have become increasingly educated. Figure 2 presents the share of women with no educational degree, with secondary education or less, and with above secondary by age cohorts. This figure shows that a large proportion of young women have high levels of educational attainment: secondary education or less; and above secondary education. On the other hand, older women have a greater incidence of being uneducated across the three countries: Egypt, Jordan and Tunisia.

Figure 2: Women’s educational attainment in MENA

We investigate whether the low female labour force participation rates observed in MENA are a generational issue. We find that the observed gap in female labour force participation rates between younger and older cohorts can be attributed to educational differences rather than family formation or the number of children within a household. Our estimates suggest that the explained part of the outcome differential is almost entirely due to differences in educational attainment.

Overall, our report brings attention to the importance of data transparency and accuracy for the measurement of labour market outcomes across MENA. Without precise definitions, it is impossible to replicate any of the official labour market statistics using independent data sources. Precise definitions are also particularly relevant for assessing women’s engagement in the labour market and the role of women in MENA societies.

Further reading

Arezki, Rabah, Daniel Lederman, Amani Abou Harb, Nelly El-Mallakh, Nelly, Rachel Yuting Fan, Asif Islam, Ha Nguyen and Marwane Zouaidi (2020) Middle East and North Africa Economic Update, April 2020: How Transparency Can Help the Middle East and North Africa, World Bank.

Tags: , , , , ,

  • ​Nelly Elmallakh
    ​Nelly Elmallakh
    Economist, World Bank's Office of the Chief Economist for the Middle East and North Africa

Most read

Beyond job creation: how can Egypt’s gender gap in work be closed?

More than 2 million jobs are needed each year to absorb new entrants into Egypt’s labour market and raise the country’s employment rate. The job challenge is even more acute for women, whose labour force participation remains low despite recent gains in education. This column reports on the second Development Dialogue, an ERF–World Bank Group joint initiative, which brought together students, scholars, policy-makers and private sector leaders at the American University in Cairo to consider how the country’s gender gap in work can be closed.

Digitalisation, global value chains and regional integration in MENA & SSA

Participation in global value chains is vital for countries pursuing structural transformation and inclusive economic development. This column summarises new evidence on how much production processes have been globalised in Africa and the Middle East relative to other regions; whether this process has taken place with partners within or outside the region; and whether it has taken place more in manufacturing or services.

How trade policy can reduce MENA’s cereal import vulnerability

Heavy dependence on imported cereals, combined with climate change, water scarcity and geopolitical uncertainty, continues to threaten food resilience across MENA. This column explains how an inclusive trade policy can play a key role in making the region’s food security less vulnerable to shocks.

The political economy of algorithms in the Middle East

The Middle East is entering a new political-economic era – one in which algorithms, data and artificial intelligence may become as strategically important as oil once was. Across the region, governments are investing heavily in digital infrastructure, smart governance and AI-driven economic transformation. This column outlines how AI and algorithmic governance are reshaping power, inequality and state capacity in the region.

The risks of a two-speed AI economy in MENA

Much of the debate about artificial intelligence in the Middle East and North Africa focuses on how many jobs it will replace. As this column explains, the more important challenge is that the new technology is likely to create a two-speed labour market, where countries with the capacity to invest in digital infrastructure and skills move rapidly ahead while others struggle to keep pace. Unless governments combine credible national reforms with targeted regional cooperation, AI could widen, not reduce, the economic divides across MENA.

From mega-investment to mega-productivity: closing MENA’s conversion gap

Across the Middle East and North Africa, governments are investing heavily in infrastructure, technology, diversification and new industries. Yet capital accumulation alone does not guarantee productivity growth. As this column argues, the region’s deeper challenge is its ‘investment-to-productivity conversion gap’: ensuring that large-scale investment translates consistently into stronger firms, technological diffusion, skills and better jobs. A different metric of success is required: not how much capital is deployed, but how much productive capability that capital leaves behind.

Sanctions and conflict: why corruption changes the equation

Why do sanctions produce such different political outcomes across the countries that have been targeted? This column reports research examining the role of pre-existing corruption in shaping the relationship between sanctions and subsequent conflict or political instability. The evidence indicates that trade sanctions are associated with higher conflict-related deaths where pre-existing corruption is high.

Why energy efficiency still struggles to attract finance in Egypt

Egypt has reduced energy subsidies and gradually adjusted domestic energy prices toward cost-recovery levels, improving the economic case for energy efficiency investments – but financing has not kept pace. Drawing on structured interviews with banks, developers and public officials, this column traces why energy efficiency projects in the country still struggle to attract capital, and sets out how a ‘financing ladder’ used elsewhere – from revolving funds to risk guarantees to green bonds – could close the gap.

The weak bread chain: cereal supply risks in six MENA economies

The Middle East and North Africa is one of the most food-import-dependent regions of the world, particularly for staple cereals such as barley, maize and wheat, and particularly in six countries – Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia. As this column reports, diversifying import sources has become an essential strategy for strengthening food security and improving resilience to geopolitical and climate-related disruptions.