Youth labor market vulnerabilities: evidence from Egypt, Jordan and Tunisia

• DOI: https://doi.org/10.1108/IJM-04-2021-0239
• Published date: 26 January 2022
• Date: 26 January 2022
• Pages: 1670-1699
• Subject Matter: Economics,Labour economics
• Author: Shireen Alazzawi,Vladimir Hlasny

Youth labor market vulnerabilities:

evidence from Egypt, Jordan

and Tunisia

Shireen Alazzawi

Economics Department, Santa Clara University, Santa Clara, California, USA and

Research Fellow, Economic Research Forum, Cairo, Egypt, and

Vladimir Hlasny

Economics Department, Ewha Womans University, Seoul, Republic of Korea

Abstract

Purpose –The purpose of this paper is to investigate the prevalence and drivers of employment vulnerability

among youth in Egypt, Jordan and Tunisia, and their propensity to transition to better jobs over time.

Design/methodology/approach –The analysis is based on longitudinal data from Labor Market Panel

Surveys spanning 6–20 years. The authors use transition matrices to examine the prevalence of transitions

between labor market statuses for the same individuals over time, distinguishing between youth and non-

youth, and men and women, as well as multinomial logistic regressions that control for individual and family

background, including previous labor market status, family wealth and parental education.

Findings –The paper finds that youth in all three countries were disadvantaged in terms of labor market

outcomes with most young men in particular ending up in vulnerable jobs while women of all ages were most

likely to exit the labor market all together, unless they had formal jobs. Moreover, youth who started out in the

labor market in a vulnerable job were unlikely to move to a better-quality job over time. Family wealth, parental

education and father’s occupation were found to be important determinants of labor market outcomes and

vulnerability, even after a long period of work experience.

Social implications –The paper finds that wealth effects, parental education and occupation effects follow

workers throughout their careers, implying low equality of opportunity and inter-generational and lifetime

mobility.

Originality/value –The findings indicate worsening labor market outcomes over time, heavily influenced by

family background. High levels of vulnerable employment persistence, regardless of skill and experience,

reinforce the importance of initial labor market outcome on the quality of lifetime employment prospects.

Keywords Employment vulnerability, Youth, School-to-work transitions, Labor market transitions, Egypt,

Jordan, Tunisia

Paper type Research paper

1. Introduction

Youths in theMiddle East and North Africa (MENA) face notoriouslyprecarious employment

prospects. Youth unemployment there is the highest in the world, at 25.8% in 2019.

Unemployment among young women in the region is twice that of young men, reaching 42.6%,

and has been growing at a much faster rate than that of young men (ILO, 2021). While youth

unemployment is a major problem in the region, a more concerning issue is that even those who

IJM

43,7

1670

JEL Classification —J21, J62, N35

The authors are grateful to Ragui Assaad, Meltem Tayfur, Francesco Pastore, four anonymous

referees and participants at the ERF Annual Meeting, Kuwait, March 2019, the Middle East Economics

Association Annual Conference in Philadelphia, USA, January 2019 and the UNU-WIDER

“Transforming Informal Work and Livelihoods”workshop November 2020, for helpful comments

and suggestions on earlier versions of this paper.

Funding: The authors received financial support for the research from the United Nations

University- Wider “Transforming informal work and livelihoods”project.

Conflict of interest: The authors are not aware of any conflict of interest.

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0143-7720.htm

Received 14 April 2021

Revised 15 November 2021

10 December 2021

12 December 2021

Accepted 13 December 2021

International Journal of Manpower

Vol. 43 No. 7, 2022

pp. 1670-1699

© Emerald Publishing Limited

0143-7720

DOI 10.1108/IJM-04-2021-0239

are employed tend to work in vulnerable jobs that are informal, lacking job security and stability,

paid leave, social and health insurance and safety (WEF, 2012). The share of youth in informal

employment is as high as 85% in Arab states and 87.5% in Northern Africa, far higher than that

for adults (61 per cent) (ILO, 2020a,b). Arab states have the highest youth–adult gap in the world

in terms of informal employment, which reflects the worsening labor market conditions

available to youths compared to older cohorts (ILO, 2020b). Such vulnerabilities are often closely

associated with, and reinforce, multiple dimensions of social and economic deprivation, as well

as entrenched inequality of opportunity and income,and may persist across generations.

Thereare a number of well-known structural challenges in theMENA region’s labormark ets

that stem primarily from the strong state of duality between “good”formal jobs, in both the

public and private sectors, and “bad”informal jobs(Assaad, 2014a). This duality is a direct result

of the social contract that existed in the 1950s through the 1970s, and relied on a state-led

industrialization model in most of these economies. This contract started to fray and disappear

by the 1980s, following exchange rate and budget crises that forced most of these economies to

move towarda neoliberaleconomic developmentmodel (Devarajan and Ianchovichina, 2018;El-

Haddad, 2020). The availability of formal public-sector jobs gradually declined over the next

several decades without a parallel increase in formal private-sector jobs, leaving new labor

market entrants at a considerable disadvantage compared to older cohorts (Assaad, 2014a). In

Egypt, Jordan and Tunisia, for example, job creation and access to formal jobs have all

deteriorated over the last several decades, while the share of informal wage work has increased

(Assaad and Krafft, 2015;Assaad et al., 2019a;Shahen et al.,2020). Structural factors such as

corruption, unequal rights and lack ofeconomic inclusionand poor political participationhave

translated into poor employment outcomes particularly among youth (Fakih et al., 2020).

Public sector jobs offer higher wages, benefits and long-term job security while informal

private sector jobs often do not, placing a wedge between the lucky public-sector hires, and

those who must take informal-sector jobs or migrate to search for jobs elsewhere (Barsoum,

2015;Barsoum and Abdalla, 2020;Binzel, 2011). Restrictive employment contract laws and

high ratios of formal minimum wages to mean wages in some MENA countries may also push

down labor demand and are harmful to employment (Ag

enor et al., 2004). The aspiration of

attaining a public-sector job discourages young MENA workers of higher socioeconomic

standing from considering lower-quality jobs (Assaad et al., 2010;Egel and Salehi-Isfahani,

2010). By contrast, those without the advantage of connections must make do with informal

and irregular private-sector jobs or are forced to migrate to sustain their livelihoods (Binzel,

2011;Hlasny and AlAzzawi, 2018). Skills mismatch is also a major drag on employability in

the region. Many young people face a large gap between their educational attainment and the

skills required by existing jobs (Dibeh et al., 2019a;Matsumoto and Elder, 2010), primarily due

to low quality of education that further lowers their attractiveness in the labor market at a

time of low formal job creation (Assaad and Krafft, 2021).

At the same time,this large pool of unemployed workersaspiring for formal jobs empowers

large corporateemployers to exertpower over their hiring,restraining employment.Studies for

Egyptand Jordan have concludedthat the type of highereducation, a measureof human capital

and skill, has little impact on employment outcomes, while circumstances such as family

background and social class play the largest role in choosing the limited hires from large

applicant pools (Assaad et al.,2018b;Krafft and Assaad, 2016). When the majority of jobs

availableto a particular group are informaljobs, without job security in theform of a contract,

paid sick andvacation leaves, social securityand health insurance, thissignifies a higher level

of instabilityand risk faced by these workersin all aspects of their lives,and a lower quality of

life. Such practicesexacerbate the degree of inequality of opportunity. It is thus importantto

analyze the extent of suchvulnerable employment and to examineits evolution over time.

Our study contributes to existing literature by investigating the drivers of employment

vulnerabilityamong youth,and their propensityfor upward mobility overtime. Our paper adds

Study on youth

labor market

vulnerabilities

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