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A report from the International Monetary Fund.
In the aftermath of the Arab Spring, when thousands of young women and men fought for the opportunity to realize their aspirations and potential, the question of jobs continues to be crucial in the Middle East and North Africa region. This report uses jobs as a lens to weave together the complex dynamics of employment creation, skills supply, and the institutional environment of labor markets. Consistent with the framework of the 2013 World Development Report on jobs, of which this report is the regional companion, this work goes beyond the traditional links between jobs, productivity, and living standards to include an understanding of how jobs matter for individual dignity and expectationsâ "an aspect that was clearly central to the Arab Spring. Just as important, this report complements the economic perspective with an analysis of political economy equilibrium, with a view to identifying mechanisms that would trigger a reform process. As such, the report has three objectives: First, it seeks to provide an in-depth characterization of the dynamics of labor markets in the Middle East and North Africa and to analyze the barriers to the creation of more and better jobs. It does so by taking a cross-sectoral approach and identifying the distortions and incentives that the many actorsâ "firms, governments, workers, students, education, and training systemsâ "currently face, and which ultimately determine the equilibrium in labor markets. Second, the report proposes a medium term roadmap of policy options that could promote the robust and inclusive growth needed to tackle the structural employment challenge for the region. Third, the report aims to inform and open up a platform for debate on jobs among a broad set of stakeholders, with the ultimate goal of contributing to reach a shared view of the employment challenges and the reform path ahead.
The report Jobs or Privileges: Unleashing the Employment Potential of the Middle East and North Africa shows that policies that lower competition and create an uneven playing field are common and constrain private sector job creation. These policies take different forms across countries and sectors but share several common features: They limit free entry in the domestic market, exclude certain firms from government programs, increase regulatory burden and uncertainty on the majority of firms, insulate certain firms and sectors from foreign competition, and create incentives that discourage domestic firms from competing in international markets. Jobs or Privileges demonstrates that these policies are often captured by a few privileged firms with deep political connections and persist despite their cost to society. As such, MENA countries face a critical choice as they strive to generate greater private sector growth and more jobs: promote competition, provide equal opportunities for all entrepreneurs, and dismantle the current system of privileges for connected firms or risk perpetuating the current equilibrium of low job creation. However, the millions of workers, consumers, and the majority of entrepreneurs who bear the brunt of that cost are often unaware of the adverse effects of such policies on the jobs and economic opportunities to which they aspire. This lack of information and awareness limits the scope for the internal debate and policy dialogue necessary for reform.