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November, 2012

A Reform Agenda for Improving Publicly Provided ALMPs in the MENA Region

Diego F. Angel-Urdinola Arvo Kuddo Amina Semlali Rene Leon-Solano Anne Hilger

Content 1. Rationale and Relevance 2. ALMPs In MENA Private Provision Public Provision

3. Challenges for effective delivery of publicly provided ALMPs

4. Policy framework to improve the performance of publicly provided ALMPs

2

Rationale and Relevance Joblessness and Informal Employment in the MENA

region are amongst the highest in the world.

19%

27%

6%

48%

Non-GCC Middle East and North Africa

Formal workers Informal workers

Unemployed Inactive

27%

37%

5%

31%

Latin America and the Caribbean


Unemployed Inactive

40%

16% 6%

38%

Europe and Central Asia


Unemployed Inactive

Source: World Bank (2012)

Youth bulge : the share of the population between 15 to 24 years-old in MENA accounts from 20 to 25% of the

overall population (compared to 18 % worldwide)

Rationale and Relevance The Recent Food/Financial Crises and recent Political Transition has

undermined growth and Investment in the Region

Source: World Bank (2012a)

2700

2800

2900

3000

3100

3200

3300

3400

-5.0

0.0

5.0

10.0

15.0

20.0

2005 2006 2007 2008 2009 2010 2011

(x10

00)

Perc

ent

Tunisia

Employment

% change in Pc GDP

Rationale and Relevance Skills mismatches are Prevalent

01020304050607080

Syria (2009)

Lebanon (2009)

Egypt (2008)

Algeria (2007)

Jordan (2006)

Morocco (2007)

West Bank and

Gaza (2006)

Yemen (2010)

Large (100+) Medium (20-99) Small (5-19)

Percent of firms that identify inadequately educated workforce as a major constraint for business operation and growth

Source: World Bank at: www.enterprisesurveys.org

7

6.8

13.8

24.8

32.6

33.8

42.5

43.2

54.4

0 10 20 30 40 50 60

Germany (2005)

Korea (2005)

Spain (2005)

South Asia

Africa

East Asia & Pacific

Latin America & Carbbean

Eastern Europe and Central Asia

Middle East and North Africa

Rationale and Relevance Labor market mobility remains quite constrained

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

% Jobless % Employed % At school

6 Years

Source: Tunisia 2011 Labor Force Survey

School-to-work transition in Tunisia (year 2011)

Rationale and Relevance Formal employment networks are largely lacking

Source: Angel-Urdinola, Kuddo, and Semlali (2012)

48.3

0.3 2.8 3.8 3.6

12.5 16.9

21.5

27.9

72.6

30.8

62.3

15.2 14.5

5.7

12.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Egypt Lebanon Yemen Syria*

labor office asked employers friends other

Rationale and Relevance In this context, ALMPs can contribute to correct market failures

related to labor demand, labor supply, and information asymmetries

Source: Angel-Urdinola, Semlali, and Brodmann (2010)

WDR: ALMPs help but are not a Panacea (Available Data from Developed Countries)

Impact on employment Approx. 12 months after program

Source: Card, Kluve, and Weber (2011)




10

Training is the main ALMP delivered by private providers, although private intermediation is

booming (Private Provision: Jordan, Tunisia, Lebanon, Yemen, Syria, Morocco, Egypt, Algeria, WBG)


90.7

4.0

2.72.7

Training

Entrep. Training

Emp. Svs

Self-Emp. Prom

Privately provided ALMPs tend to target high-skilled youth

(Private Provision: Jordan, Tunisia, Lebanon, Yemen, Syria, Morocco, Egypt)


12.50

18.75

23.44

0.00

5.00

10.00

15.00

20.00

25.00

% Target women % Target low income groups % Target University graduates

Public providers deliver mainly training programs and intermediation services

(Public Provision: Jordan, Tunisia, Lebanon, Yemen, Syria, Morocco, Egypt)


30%

18% 18%

15%

9% 9%

3%

0%

5%

10%

15%

20%

25%

30%

35%

Training Intermediationsvs

Package Direct jobcreation

Employmentincentives

Start upinitiatives

Disabled

Public Employment Agencies are important providers of labor intermediation services



Walk-in centers Database search for job

offers

Posting job profile

Posting of CVs Alerts for matching

Egypt Yes Yes - Yes -

Jordan Yes Yes Yes Yes Yes

Lebanon Yes - - - -

Morocco Yes Yes - Yes -

Syria Yes Yes Yes Yes Yes

Tunisia Yes Yes Yes Yes -

Services for Job Seekers

Public Employment Agencies are important providers of labor intermediation services



Services for Employers Posting of job

advertisements Database search for

job profiles

Matchmaking Alert functions for

matching

Automated collection/

forwarding of applications

(Pre-) screening

Egypt Yes Yes Yes Yes - Yes

Jordan Yes Yes Yes Yes Yes -

Lebanon Yes Yes Yes - - -

Morocco Yes Yes - - - Yes

Syria - - - - - Yes

Tunisia Yes Yes Yes - Yes Yes

While publicly provided ALMPs tend to target high-skilled youth, they also target other vulnerable

segments of the population (Public Provision: Jordan, Tunisia, Lebanon, Yemen, Syria, Morocco, Egypt)


47%

35% 35% 35%

24% 24%

18% 18% 18%

12% 12% 12% 12% 12%

6% 6%

0% 0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%




17

Lack of Administrative Capacity (Affects intermediation services disproportionally)

Number of registered job seekers, 1000’

Total number of PEA staff

Number of PEA staff in contact with jobseekers and employers

Staff caseload***

Ratio of front-line counselors

to Total PEA staff (%)

Egypt 895.1 1600 1550 577 97

Jordan 28.0 133 63 444 47

Lebanon 12.2* 32 10 1222 31

Morocco 517.0 547 343 1507 63

Syria 1703.8** 397 120 14199 30

Tunisia 105.4 1200 850 124 71

Yemen - - 60 - -

Source: Angel-Urdinola, Kuddo, and Semlali (2012) Notes: *- Beirut only; **- Public sector only; including individuals queuing for civil service/public sector jobs;

Staff Caseload: Figure recommended by the ILO is 1:100

Source: Angel-Urdinola, Kuddo, and Semlali (2012) Notes: *- Beirut only;

Number of registered job seekers, 1000’

Number of registered job

vacancies, 1000’

Ratio of job seekers per one

registered vacancy

Average placements per month, 1000’

Egypt 895.1 222.9 4.0 40.1

Jordan 28.0 2.6 10.8 0.7

Lebanon* 12.2 3.6 3.4 -

Morocco 517.0 27.7 18.7 4.4

Tunisia 105.4 - - 1.6

Lack of Administrative Capacity (Affects intermediation services disproportionally)

System Fragmentation (Very common among training programs. Also, there is

rarely coordination between SSN and ALMPs)

Source: Angel-Urdinola and Semlali (2011)

Egypt

Although program monitoring is somehow developed in MENA, evaluation needs improvement



yes 15%

no 85%

Have you conducted an impact evaluation?

yes 63%

no 37%

Do you conduct Monitoring?

yes 7%

no 93%

Do you compare the benefits of the program to the costs?

yes 52%

no 48%

Do you conduct any type of tracking survey?

Lack of Governance and Accountability


Flaws in Program Design

Poor targeting practices • Programs in the inventory do not use a consistent targeting methodology

Program fragmentation

• Employment and social programs in MENA lack coherence are fragmented and sometimes duplicative (e.g. Tunisia)

Lack of graduation/exit strategies • Many employment programs in the MENA region lack a clear graduation/exit

strategy, thus making program beneficiaries dependent on government support

Program design is not conducive to insertion • Programs are often supply driven • Wage insertion programs are the main focus (despite the fact that there are

limited opportunities for wage employment) • Entrepreneurship programs are limited in focus and scope (often target low-skilled

individuals and rarely provide financing for start-ups.

Training programs in MENA are generally not designed according to international best practices

(Jordan, Tunisia, Lebanon, Yemen, Syria, Morocco, Egypt, Algeria, WBG)


0 20 40 60 80 100

% In Class Training

% On-the-job Training

% In-class and on-the-job

% providing hard skills only

% providing soft-skills

Private Sector

Public Sector


Training programs lack “good signaling” effects, although he public sector in doing better on training certification



50

11

0

10

20

30

40

50

60

Public Sector Private Sector

% of Training Programs Providing Certification





25

Policy Framework

Institutional Constrains Policy Directive Administrative capacity

- Insufficient counselors to Registered Unemployed

Develop PPPs

- Insufficient national coverage - Inadequate skills of counselors - Lack of performance incentives - Weak Intermediation Capacity

(prospection) - Poor data quality of registries

(nomenclatures, qualifications)

Establish Integrated SPL Systems System Fragmentation

- Too many public players in the provision of ALMPs

- Lack of integration of ALMPs and safety net systems

- Lack of inter-institutional coordination

Lack of Governance and Accountability

- Lack of results-based M&E systems/frameworks

Develop results-based M&E frameworks

- Lack of systems to promote user's feedback

- Lack of accreditation of private providers

- Lack of information about quality of private providers

Flaws in Program design

- Poor Insertion Rates - Poor targeting - Program fragmentation (too many

small programs and lack of coherence across programs)

Establish Integrated SPL Systems

- Lack of graduation/exit strategies - Private sector not involved in the

program design - Most programs designed to

promote wage insertion - Entrepreneurship programs are

limited in focus and scope

Promote Entrepreneurship among job seekers

Policy Directives Develop Results-based

PPPs

• Sub-contract with private providers using performance based contracts (based on placement rates) for provision of training and intermediation services

• Use ICTs to foster intermediation.

• Develop training programs in close coordination with the private sector (focus on soft skills).

• Liberalize and ease regulation bottlenecks for the provision of private intermediation services (e.g. Tunisia)

Develop Results-based M&E frameworks

• Adopt proper results based M&E systems and assure proper financing for periodic program evaluation;

• Pilot and evaluate programs before scaling-up nationally

• Develop periodic socials audits and user satisfaction surveys

• Develop proper and periodic accreditation systems for providers

Promote entrepreneurship among

job seekers

•Develop training on entrepreneurship awareness • Facilitate access to finance

• Develop programs to Enhance the productivity of potential self -employed workers (e-lancing, provision of market information, etc…)

Establish integrated Social Protection and

Labor systems

• Promote one-stops shops for ALMPs, unified registry, program consolidation

• Use ALMPs as graduation/exit strategies for existing safety nets programs

• Establish inter-ministerial committees/task forces on employment programs (centrally and regionally) and involve the private sector

• Develop National Qualification Frameworks

Source: Angel-Urdinola and Leon-Solano (2012)

In Summary…

• Given the current economic contexts, ALMPs in MENA could constitute an important policy lever to address unemployment and informality (especially in the short-run)

• ALMPs (privately and publicly provided) are widely used in MENA but display several design flaws and are largely ineffective.

• Public agencies in MENA face important institutional capacity constraints to deliver effective ALMPs.

• Publicly delivery of ALMPs in MENA could be enhanced through a 4 pillar policy framework:

1. Development of results-based PPPs 2. Establishment of integrated SP&L system 3. Development of results-based M&E frameworks, and 4. Promotion of entrepreneurship promotion.

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