Labor market exclusion is at the root of poverty and vulnerability in the Middle East and North Africa (MENA), says a new World Bank report, which proposes a series of actions that governments in the region can take to make social protection systems more inclusive and efficient.
COVID-19 and Russia’s invasion of Ukraine have had — and are continuing to have — a devasting impact on living standards. But even before these crises, most countries in MENA were already struggling with poverty and vulnerability as work opportunities in the region are limited, particularly for women and youth, and most workers are engaged in low-productivity informal jobs. While creating more and better jobs requires a dynamic, competitive, and vibrant private sector, the report, Built to Include: Reimagining Social Protection Systems in the Middle East and North Africa, argues that social protection policies can play a crucial role in reducing labor market exclusion by facilitating access to productive employment, protecting workers, and providing a safety net for people that are left behind.
However, according to the report, social protection policies in countries across MENA are falling short of that role. For example, most of the poor do not receive income support, and most workers are not covered by pensions or unemployment insurance. And social protection policies are ill-prepared to meet the challenges resulting from an ageing population, as well as the impacts of advancing technology and climate change.
“Countries in the MENA region need to build inclusive and adaptive social protection systems to respond to the immediate crises they are facing today, while simultaneously reducing labor market exclusion down the road in a fiscally responsible way,” said Ferid Belhaj, World Bank Vice President for the Middle East and North Africa. “The World Bank is committed to working with countries across the region as they undertake reforms to expand and increase the level of protection of those in need while ensuring financial sustainability.”
The report identifies reform priorities to make social protection systems in MENA more inclusive and efficient. The first order of priority is to build a shock-responsive system to deliver income support and opportunities to the poor, which some MENA countries are already making good progress on. The next priority should be to expand the coverage of social insurance among vulnerable informal workers. That should be accompanied by expanded support to enhance the productivity of informal workers and to increase the employability of youth and women — along with the elimination of barriers to women’s employment. This will require more resources, but not at any cost. In a tight fiscal environment, MENA countries need to tackle the reform of generalized energy and food subsidies. They also need to re-design their pension systems to support active ageing, including by eliminating incentives for early retirement.
“While there is no single reform path, there are some guiding principles that can be followed to move toward a more inclusive social protection system,” said Cristobal Ridao-Cano, Lead Economist and Lead Report Author. “Many countries across the Middle East and North Africa have already started their reform journeys, offering examples of how the reform sequence could look like and how to gain political support for reform.”
According to the report, evidence from countries in the region and around the world that have already started down a reform path suggests ways to build political support. Actions that countries can take include establishing a vision and ensuring clear and frequent communication to explain why decisions have been taken and how people can best benefit from social protection programs. In addition to packaging and sequencing of reforms, ensuring political leadership and ownership will also be key.
Source: The World Bank
Add Comment