Female labor force participation
In economics, the production function is essentially a function of the labor, capital and technology. An increase in GDP of the economy requires an increment in the production of goods and services. However, Production is dependent on the labor. So, economic growth of the country is significantly dependent on labor supply and the productivity of the labor force. The labor market of Middle East and North Africa is rigid that is discouraging the increase in the employment opportunities even during the expansionary period (Karshenas, and Moghadam). Considering the fact that in Morocco, Egypt, Tunisia, Yemen and Palestine, the employment rate has decreased and the decrease is consistently observed over the last 10 years. There are several factors that affect the participation of females in the labor force. This essay describes several factors especially the dominating factors such as culture and high income from oil that are contributing to low female participation rate in labor market of MENA and the suggested policies in order to control the prevailing condition of unemployment.
The employment opportunities in the Middle East and North African countries is low due to the ideological and cultural realm of the social life that is playing crucial role in determining the parameters of activities of women. Women in MENA are suffering from the higher wage discrimination due to the cultural differences prevailing in the countries. The MENA societies are becoming male dominating and are not allowing women to come forward. Wage being a significant determinant of the labor force is putting women off from becoming a part of labor force. This situation is however allowing less skilled males to join the labor force and they are being encouraged to fill the gap that is caused by women that are discouraged to work due to the wage discrimination arising due to the common culture of male dominance existing in the countries. It is however important to note that in MENA countries the rate of unemployment is higher among youth, women and educated as shown in the following figure 1, in which unemployment record from 2000-2009 is shown.
Figure 1: High Unemployment levels in MENA among Youth, Women and Educated
Furthermore, the attitude of women is related to the background and family characteristics associated with culture and also on the negative attitudes of women towards working women that is also a cause of reduction of labor supply of women. The traditional point of view and attitude exert indirect impact on the labor supply (Vella). With the passage of time, a wider difference is emerging between female and male participation rate in the labor force as shown in the figure 2 below.
Figure 2: Male and Female Participation Rate across MENA
The above figure is showing remarkable difference between the participation rate of males, which is quite larger and female participation rate, which is quite small. Several models and theories in cultural context can describe the reason of low participation rate of females. Considering the model and empirical working of Mincer, he has explained that the earning of husband have a negative impact on the participation rate of wives in labor force (Treas). The earning power of wives contributes positively to the labor force. Moreover, the contribution of wives to labor force increases if the earning of husband is lower than the permanent earning (Mincer).
Moreover, Gary Becker’s Theory of Allocation of Time also describes the decision of females in MENA region by considering the full income and household. Becker’s theory can however be applied to the decision of women to participate in the labor force. This theory describes that the people assign their time to their work and other activities by considering the time that is foregone for doing that task. They analyze the associated cost and the time forgone because they want to utilize time in the more productive activity. But, in case of females of MENA, the decision of women to work outside is backed by the decision of their husbands that is stopping them to join any sector for job. Furthermore, the participation rate of females in the labor force in MENA is low also because of the higher income from oil. In the developing countries, the trend of oil wealth is keeping women away from the labor force and is also reducing the political appearance and influence of females (Ross). This argument can be justified on basis of three claims.
Firstly, in the middle and low income countries, the females enter in the labor force where low paying jobs are offered, and the factories are export oriented. Secondly, they take these jobs because of optimism that such jobs can empower them politically and socially. Thirdly, when when a country has significant petroleum and other mineral wealth, the export oriented industries become unprofitable that increasingly discourages females and stops them to go outside the house and work elsewhere. This is leading to gender inequality in MENA region. In this case the paradigm of Dutch Disease is noteworthy that also points out to the fact that as the production of oil increases, the participation of females to labor force declines and this reduces their political power. This is the reason that the female labor force participation is low in MENA region as compared to other countries and rest of the world as indicated in figure 3.
Figure 3: MENA has relatively low Female labor Force Participation Rate
So, by analyzing the whole scenario, the need of the hour is that in order to encourage women for involvement in the labor force the education level of females and income should be increased. This is due to the fact that the duration of work of a woman depends on two main effects which are substitution effect and income effect. Firstly, Probable earnings increase with the increase in education, which also increases not working cost, which will ultimately increase the work duration. This is a positive outcome. Secondly, the target of income is achieved faster when earnings are high. The higher income can then be consumed for greater leisure and the individual has not to do more work. The substitution effect will be stronger than income effect if educated women participate more in the labor force (Tansel). The Government should also play its role in order to create awareness of the rights among the females so that they can live their lives freely without any pressure or influence from their husbands. Furthermore, the government of every country should try to create equal employment opportunities for males and females.
References
Karshenas, Massoud, and Valentine M Moghadam. "Female labor force participation and economic adjustment in the MENA region." Research in Middle East Economics. 4. (2001): 51-74. Print.
Vella, Francis. "Genderr Roles and Human Capital Investment: The Relationship Between Traditional Attitudes and Female Labor Market Performance." Economica. 61.242 (1994): 191-211. Print.
Mincer, Jaccob. "Family Migration Decisions." Journal of Political Economy. 86.5 (1978): 749-773. Print.
Treas, J. “The effect of women's labor force participation on the distribution of income in the united states”. Annual Review of Sociology, 13.10 (1987): 259-288.
Ross, Michael. “Oil, Islam, and Women”. American Political Science Review, 102.1 (2008): 107 – 123
Tansel, A. (1994) Wage Employment, Earnings and Returns to Schooling for Men and
Women in Turkey, Economics of Education Review, 13(4): 305-320
Economics
15 December 2013
Unemployment
Persistent pattern of unemployment is also a major problem in MENA countries. Unemployment rate of the MENA countries is highest as compared to other countries in the world, which can also be seen in the following figure 4. The unemployment rate of MENA is 29% that consist of people in workforce that are unemployed or those that are employed part time in search of finding full time employment opportunity (Aggour).
Figure 4: Total and Youth Unemployment by Regions
The youth share with ages ranging from 15-24, total employment is double than the total rate. Furthermore, 25 % of the unemployment among youth rate is exceeding the rate in any other region of the world. The rate has however approached about 30 percent in Tunisia as shown in the above figure. However, recent political and social events in the countries have also contributes to the decline in the economic activity and have paved the way to increase unemployment. The unemployment has increased remarkably in 2011 in the MENA countries and the largest increase if observed in Tunisia approximately 7% point and in Egypt about 3.5% points. Mostly, in this region education is not a guarantee against the prevailing unemployment. The fact is that unemployment is likely to increase with the schooling, increasing 15% for the people with tertiary education in Jordan, Egypt and Tunisia. In most of the world’s regions, the unemployment duration is shorter for the youth than it is for the adults, which reflect the natural capability of youth to move frequently between the jobs. But, in majority of the MENA countries, the unemployment of youth appears to be the consequence of the waiting for right employment opportunity.
In the MENA countries, long term structural unemployment is evident. This is arising due to the reason that the people are not getting the suitable job that matches their skills. The job market is getting tight and people are finding it difficult to get their desired employment opportunity that also matches with their personal and professional skills. The youth is particularly mostly affected by the poor unemployment conditions. This is due to the reason that they are waiting for the right job in these countries. So, the spell of unemployment can be longer, particularly for the educated young population, who need more time in order to find the better job that match their skills. It is a very important point because the unemployment duration, instead of its occurrence is quite detrimental to the accumulation of the human capital.
There are several causes of unemployment in the Middle East and North African countries. The most obvious being demographic transition, mismatch of skills, rigidity of labor market, high oil prices, larger public sector with highest wage bill of central government and high reservation of the wages. Also the unemployment rate is high in MENA countries due to the fact that most of the people, especially females voluntarily decide not to do job or work outside, which is also reducing the number of people that are interested for the full time employment opportunities.Among the commonly included MENA countries, the Tunisia is most affected by downturn in the economic activity as shown in the following figure 5.
Figure 5: Unemployment in MENA countries
The figure 5 shows that the unemployment rate of Tunisia is the highest among the commonly included MENA countries. The country is experiencing uncertain situations and unrest due to higher unemployment rate and high inflation that are leading to poor economic growth in the country (Hibou). the high unemployment in Tunisia is due to the improper management of the demand and supply factors and due to improper government policies and poor implementation practices (Broecke). In Tunisia, the educated youth is mostly affected the economic downturn, as they are not finding appropriate job and are compelled to do low paying jobs. The condition of the country can be improved with the reduction in the transactional costs, improving the governance in the economy, enhancing transparency and regulatory framework predictability and making transparency in the market stronger (Haouas, Sayre, and Yaqoubi).
The unemployment problem in MENA region can be controlled by increasing the flexibility in the labor market. This will increase the demand of labor in order to facilitate integration of the young workers in the labor market. The economists and analysts should be involves in helping the mineral and oil rich countries to manage their available natural resources effectually and emphasis should be on the funds for natural resources, investment-saving decisions and the expenditure strategies and policies. The oil importing countries of MENA should increase the employment opportunities in order to absorb individuals that are unemployed. The business climate should be improved because this can help in increasing the employment opportunities and helps in fostering the competition in the product market and also help to reduce the claims on wages.
For the encouragement of young unemployed, training programs should be conducted and the programs that support SME i.e., Small and Medium Enterprise development should be introduced. He mismatches of skills should be addressed as this will help to reduce the unemployment among youth and help them to find decent job opportunities. Furthermore improving the hiring policies and practices in the public sector and improvement in the compensation policies can also help in building the confidence of unemployed and this will encourage them further to search a suitable job for themselves. The size of the public sector should be reduced because larger sectors crowd out the private investment and they include higher taxes that have damaging and devastating effects on the aggregate demand and ultimately on the labor market. The ongoing political and social turmoil should be controlled in order to create more and better opportunities for people.
References
Aggour, Sarah. "MENA has the highest unemployment rate." Daily News, 06 Aug 2013. Web. 15 Dec. 2013.
http://www.dailynewsegypt.com/2013/08/06/mena-has-the-highest-unemployment-rate/
Hibou, B. “Domination & Control in Tunisia: Economic Levers for the exercise of Authoritarian Power”. Review of African Political Economy. 33.108 (2006): 185–206. Print
Broecke, Stijn. "Tackling graduate unemployment in North Africa through employment subsidies: A look at the SIVP programme in Tunisia." IZA Journal of Labor Policy. 2.9 (2013): 1-19. Print.
Haouas, IIham, Edward Sayre, and Mahmood Yaqoubi. "Youth Une mployment in Tunisia: Characteristics and P olicy Responses." Topics in Middle Eastern and African Economies. 14. (2012): 395-415. Print.
