ILO: Lebanon’s economic model failing


Lebanon needs to rethink its economic model after decades of setbacks that have affected its socio-economic stability, an International Labor Organization official said Tuesday.

On the occasion of the publication of a major ILO-United Nations Development Program report, senior regional policy specialist Mary Kawar told The Daily Star that Lebanon’s labor market needed to be restructured.

“Rethinking Economic Growth: Towards Productive and Inclusive Arab Societies,” examines the two decades leading up to the Arab uprisings, and calls on governments to take bolder steps and create more egalitarian systems.

In Lebanon, Kawar said, the inequality of the education system remains a major issue for labor supply.

“Governmental spending on public education is 1.8 percent of GDP. This is less than half what other Arab countries spend on education,” she said, adding that disparities in the quality of the public system and private education remain extremely high in the country.

In terms of labor demand, the Lebanese economy is small relative to domestic demand, as evidenced by the high migration rates, the expert added.

“The structure of the economy is locked in low productivity, low value-added jobs and low wages. Services today account for 70 percent of employment,” Kawar said.

Most service sector jobs require low skills and do not provide young people with decent jobs, she added. The report shows job dissatisfaction in Lebanon is among the highest in MENA at 75 percent.

Another major problem is the number of unprotected workers employed by the large informal economy. These people are found not only in underground businesses but also in formal enterprises, Kawar said.

While Lebanon’s unemployed are mostly well-educated, this does not mean low-skilled people have a better chance of getting a job.

“These people cannot afford to stay unemployed and as such take up any available job,” Kawar said. “In addition, the unregulated labor market in terms of having migrant workers keeps wages down for this group of people.”

While migration is a traditional feature of the Lebanese economy, where remittances play a crucial role, migrants in Lebanon are vulnerable to labor rights abuses, Kawar added.

“There is a need to regulate migrant workers first [to improve their] human rights and second as a means to create better jobs for the Lebanese,” she said.

“As long as employers have unlimited access to cheaper foreign labor, the employment situation is not likely to improve.”

Citing the report, Kawar said labor and economic policies should be aimed at economic growth, sharing benefits and extending social protection.

“If financial, industrial trade and investment policies do not account for social impact then they will not create enough decent jobs and any economic growth will eventually only benefit a few,” she said.

The promotion of participatory and inclusive talks are also necessary to shore up employment conditions: “Social dialogue and mature industrial relations can play a critical role in determining a balance between employment protection regulations and socially acceptable minimum wages.”

On a regional level, the report argues that policies pursued during the 1990s and 2000s enabled Arab countries to tackle debt and inflation and spur economic growth, yet at levels that lagged behind the rest of the world.

“Between 2000 and 2010, the Arab region had the lowest productivity growth rate of any world region except Latin America – 1.5 percent for North Africa and 1.2 percent for the Middle East, against a world average of 1.8 percent,” the report says.

Shoring up economic growth in the next decade will hinge on good governance – which alone can help attract higher rates of investment and enable structural and institutional reforms.

The report adds that the challenges facing the region have spiked prices of commodities and paved the way for economic recession.

“In 2010, Arabs were more likely to find work than they were two decades ago,” said Zafiris Tzannatos, lead author of the report. “But the question is: What type of work?”



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