Labour Market Structure and Unemployment in OIC Countries

Labour Market Structure and Unemployment in OIC Countries Dr. Kenan Bağcı 29 April 214, Ankara

Outline 1. Labour force participation and inactivity 2. Employment Employment-to-population Employment by sector Status in employment / Vulnerable employment 3. Productivity Educational attainment Labour productivity 4. Unemployment Total unemployment Youth unemployment Reasons for unemployment in OIC countries

1. Structure of Labour Market in OIC Structure of Population from Labour Market Perspective Total Population Working Age Population (15-64 years) [A] Children (-14) and Elderly (65+) Labour Force (15-64 years) [B] Inactive Population [C] Adult (25-64 years) Youth (15-24 years) Inactive Population (Youth and Adult) Employed [D] Unemployed [E] Employed [F] Unemployed [G] Inactive Population (Youth and Adult)

1. Structure of Labour Market in OIC Structure of Labour Market in OIC Countries OIC Labour Market (15-64 Years) Aggregate of the 57 OIC countries 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% Inactive (Youth) Unemployed (Youth) Employed (Youth) Inactive (Adult) Unemployed (Adult) Employed (Adult) 17.6% 16.1% 2.5% 2.% 12.6% 1.9% 23.6% 24.4% 2.1% 2.4% 41.5% 44.% % 2 21 22 23 24 25 26 27 28 29 21 211 212

1. Structure of Labour Market in OIC Labour Force Participation Labour force participation rate (LFPR) measures the proportion of people aged 15 and above that engages actively in the labour market, either by working or actively searching for a job. In 212, LFPR in the world is 64.1%. OIC Other Developing Developed Gap between developed decreased from 2.4% to 1.1% 7 68 66 64 62 6 58 56 54 52 68.5 65.9 61.1 6.4 58.7 59.3 2 21 22 23 24 25 26 27 28 29 21 211 212 Gap between other developing decreased from 9.8% to 6.6% Despite the recent progress, LFPR in OIC countries is steadily lower. As of 212, LFPR in OIC is 59.3%. 4.7% of population remains inactive.

1. Structure of Labour Market in OIC Labour Force Participation LFPR by Gender Averages of the 57 OIC, 99 other developing and 33 developed countries for which data are available 2 25 212 Female participation increases only in OIC and developed countries 9 8 7 6 5 4 3 2 1 38.4 OIC 4.6 56. Other Developing 53.1 51.8 53.2 78.7 77.7 8.9 78.6 Developed OIC Other Developing 7.9 68.1 Developed Male participation decreases in all country groups Female Male There are large discrepancies between male and female LFPR in OIC. LFPR among female in OIC is more than 12% lower than others. LFPR among male in OIC is well above the average of developed countries.

1. Structure of Labour Market in OIC Labour Force Participation Top countires in LFPR Among the 57 OIC countries Labour Force Participation Rate (15+) LFPR in Palestine is only 41%, which is the 3rd lowest in the world 1 9 8 7 6 5 4 3 2 1 41. 41.3 42.2 43.6 43.7 44.8 47.2 47.5 47.9 48.5 72.8 73.2 76.5 77.5 77.6 79.3 8.9 83.5 84.4 86.7 LFPR in Qatar is only 86.7%, which is the 3rd highest in the world Countries in the middle east show lower participation rates Countries in the Gulf and sub-saharan Africa regions show higher participation rates

1. Structure of Labour Market in OIC Labour Force Participation Youth LFPR Averages of the 57 OIC, 99 other developing and 33 developed countries for which data are available OIC Other Developing Developed Gap between developed decreased from 7.2% to 2.8% 58 56 54 52 5 48 46 44 42 4 56. 53.1 49.4 47.2 45.9 44.4 2 21 22 23 24 25 26 27 28 29 21 211 212 Gap between other developing decreased from 1.1% to 5% Youth LFPR in OIC countries is steadily below the averages of other developing countries and developed countries. As of 212, youth LFPR in OIC is 44.4%.

1. Structure of Labour Market in OIC Labour Force Participation Youth LFPR by Gender Averages of the 57 OIC, 99 other developing and 33 developed countries for which data are available 2 25 212 Young female participation increases only in OIC countries 7 6 5 4 3 2 1 32.3 OIC 32.7 47.6 41. Other Developing 5.7 45.8 59.1 64.1 55.6 57.1 Developed OIC Other Developing 55.3 48.5 Developed Young male participation decreases in all country groups Female Male LFPR among young male in OIC countries is comparable with other country groups but among young female is steadily below the averages of others. As of 212, LFPR in OIC is 32.7% among female and 55.6% among male.

2. Employment Employmet-to-Population Ratio (E2P) E2P is the proportion of a country's working-age population that is employed. A high ratio means that a large proportion of a country's population is employed, while a low ratio means that a large share of the population is not involved directly in market-related activities OIC Other Developing Developed Gap between developed decreased from 3.2% to.6% 66 64 62 6 58 56 54 52 64.3 57.3 54.1 62.5 55.5 54.9 Gap between other developing decreased from 1.2% to 7.6% 5 2 21 22 23 24 25 26 27 28 29 21 211 212 E2P in OIC countries is steadily below the averages of other developing countries and developed countries, despite the recent progress. As of 212, E2P in OIC is 54.9%.

2. Employment Employmet-to-Population Ratio E2P Ratio by Gender Averages of the 56 OIC, 89 other developing and 33 developed countries for which data are available 2 25 212 Female E2P ratio increases only in OIC and developed countries 8 7 6 5 4 3 2 1 76. 73. 72.7 74.7 66.9 62.5 52.5 5.3 48.3 48.9 35. 36.9 OIC Other Developing Developed OIC Other Developing Developed Male E2P ratio decreases in all country groups Female Male E2P among young male in OIC countries is comparable with other country groups but among young female is steadily below the averages of others. As of 212, E2P in OIC is 36.9% among female and 72.7% among male.

2. Employment Iraq Jordan Mauritania Iran Algeria Syria Yemen Tunisia Lebanon Egypt Senegal Guinea Gambia Benin Uganda Togo UAE Mozambique Burkina Faso Qatar Saudi Arabia Gabon Palestine Jordan Suriname Iraq Mauritania Egypt Iran Tunisia Niger Bangladesh Uganda Gambia Benin Senegal Mozambique Togo Qatar Burkina Faso Employmet-to-Population Ratio Top countires in E2P Ratio, Total and Youth Among the 56 OIC countries for which data are available Employment to Population (Total) Employment to Population (Youth) 1 9 8 7 6 5 4 3 2 1 35.8 86.2 8 7 6 5 4 3 2 1 12.8 72.6 Countries in the MENA region show lower E2P ratios Countries in the Gulf and sub-saharan Africa regions show higher E2P ratios

2. Employment Employment by Sector Share of Agriculture, Industry and Services in Employment Among the 42 OIC, 11 other developing and 33 developed countries for which data are available OIC Other Developing Developed 8% 75.4% In OIC countries, 36.5% of labour force employed in agriculture 7% 6% 5% 4% 3% 2% 1% % 43.5% 36.5% 35.3% 39.2% 24.9% 19.7% 21.1% 2.8% Agriculture Industry Service In OIC countries, 43.5% of labour force employed in services Share of agriculture sector in total employment is highest in OIC countries Share of industry sector in total employment is lowest in OIC countries Share of services sector is somewhat higher than other developing countries

2. Employment Employment by Sector Top countires in sectoral employment Among the 42 OIC countries for which data are available 84.8% of labour force in Burkina Faso employed in agriculture sector 9 8 7 6 5 4 3 2 1 Agriculture Industry Services 8.5 84.8 65.6 66 68.5 7.7 73.1 76 77.2 8.5 51.9 32.7 33.5 35.3 36.9 8.5% of labour force in Jordan employed in services sector African countries employ larger share of labour force in agriculture Gulf countries employ larger share of labour force in services and industry

2. Employment Vulnerable Employment Vulnerable employment reflects working under inappropriate conditions and persons in vulnerable employment are more likely to have limited or no access to social security or secure income. It accounts for almost 48% of total employment in the world. Female Male Total Only in OIC countries, female workers are more vulnerable 7 6 5 4 3 2 1 65. 5.3 58.1 54.8 54. 55.8 8.5 13. 11. There is very large difference between developed and developing OIC Other developing Developed Almost 2/3 of female workers are in vulnerable employment. Male worker vulnerability is fairly better than the vulnerability in other developing countries.

2. Employment Vulnerable Employment Top countires in vulnerable employment Among the 34 OIC countries for which data are available Share of vulnerable employment in total employment (%) Vulnerable employment in UAE is only 1%, which is the lowest in the world 1 9 8 7 6 5 4 3 2 1 1 92.4 Vulnerable employment in Sierra Leone is 92.4%, which is the 3rd highest in the world VE is below 1% in UAE, Bahrain, Kuwait and Jordan. VE is above 85% in Bangladesh, Mozambique, Togo, Burkina Faso, Benin and Sierra Leone.

3. Productivity Educational Attainment Shares of Labour Force with Primary, Secondary and Tertiary Education Among the 3 OIC, 76 other developing and 33 developed countries for which data are available 45 4 35 3 25 2 15 1 39.4 22.6 OIC Other Developing Developed 35.9 34.2 23.9 24.2 15.1 18.5 41.8 8 7 6 5 4 3 2 1 61.4 Primary Secondary Tertiary 71 54.7 53.5 55.8 5 44 25.1 24.2 5 Primary Secondary Tertiary As the share of labour force with secondary and tertiary education increases, the ability to adopt new skills and absorb new knowledge increases. Labour force in OIC has lower level of education compared to others.

3. Productivity Thousands Burkina Faso Uganda Sierra Leone Mali Benin Bangladesh Senegal Kyrgyzstan Cameroon Afghanistan Lebanon Iran Bahrain Turkey Gabon UAE Kuwait Saudi Arabia Qatar Brunei Labour Productivity Labour productivity is usually defined as the output per unit of labour input or output per hour worked. It helps to identify the contribution of labour to the GDP of a country and provides a base for cross country comparison and explanation of income disparities. 8 7 2 25 212 67,131 75,532 12 1 8 1.1 6 5 4 3 2 1 12,87 15,878 13,99 1,56 6 4 2 3. 5.8 OIC Other Developing Developed Output per worker in OIC countries has increased from US$ 12, in 2 to US$ 15,9 in 212. The labour productivity gap between the developed and developing countries remained substantial.

4. Unemployment Total Unemployment Unemployment rate reflects the number of jobless people who want to work, are available to work and are actively seeking employment. In 213, unemployment in the world is estimated to be 6%, with around 22 million unemployed people. OIC Other Developing Developed Gap between other developing increased from 1.7% to 2.4% 1 9 8 7 6 5 4 3 2 1 7.7 6.1 6. 8.1 7.4 5. OIC have lower unemployment rate than developed since 29 2 21 22 23 24 25 26 27 28 29 21 211 212 Unemployment in OIC decreased from 8.7 in 25 to 7.4 in 212. Better performance of other developing countries in reducing unemployment widened the gap with developed countries

4. Unemployment Total Unemployment Total Unemployment by Gender Averages of the 56 OIC, 89 other developing and 33 developed countries for which data are available 2 25 212 Female unemployment decreases only in other developing countries 12 1 8 6 4 2 1.7 8.8 9.1 OIC 6.2 5.7 5.2 Other Developing 6.6 6.6 8.1 7.7 7.2 6.5 Developed OIC Other Developing 5.9 5.7 6.1 5.2 4.8 8.2 Developed Male unemployment increases only in developed countries Female Male Female unemployment is highest in OIC countries with 9.1%. Female and male unemployment have fallen significantly in OIC countries since 25.

4. Unemployment Total Unemployment Top countires in Unemployment Among the 56 OIC countries for which data are available Unemployment Rate (Total) Unemployment in Qatar is only.6%, which is the lowest in the world 35 3 25 2 15 1 5.6 1 1.5 3.1 3.1 3.3 3.4 3.8 3.8 3.8 2.3 21.7 23 17.6 12.8 13.1 14.7 14.8 15.1 31 Unemployment in Mauritania is 31%, which is the highest in the world In Qatar, Benin and Kuwait, unemployment rate is below 2%. In Gabon, Guyana, Palestine and Mauritania, the rate is over 2%.

4. Unemployment Youth Unemployment Youth unemployment refers to the share of the labour force ages 15-24 without work but available for and seeking employment. The global youth unemployment rate is reached 13.1% in 213. OIC Other Developing Developed Gap between other developing increased from 4.5% to 4.7% 2 18 16 14 12 1 8 6 4 2 16.3 12.3 11.8 17.2 15.6 1.9 OIC have lower youth unemployment rate than developed since 29 2 21 22 23 24 25 26 27 28 29 21 211 212 Youth unemployment in OIC decreased from 18.3 in 25 to 15.6 in 212. Better performance of other developing countries in reducing youth unemployment widened the gap with developed countries

4. Unemployment Youth Unemployment Youth Unemployment by Gender Averages of the 56 OIC, 89 other developing and 33 developed countries for which data are available 2 25 212 Female unemployment decreases only in other developing countries 25 2 15 1 5 21.3 17.2 17.6 OIC 12. 11.3 12.112.4 11.1 Other Developing 15.8 16.7 15.8 14.5 13.8 11.7 12.5 1.81.7 Developed OIC Other Developing 18.4 Developed Male unemployment increases only in developed countries Female Male Unemployment among young female is highest in OIC countries with 17.6%. Unemployment among young male in developed countries exceeded the rate in OIC countries.

4. Unemployment Youth Unemployment Top countires in Unemployment Among the 56 OIC countries for which data are available Unemployment Rate (Youth) Unemployment in Qatar is only 1.7%, which is the 2nd lowest in the world 5 45 4 35 3 25 2 15 1 5 1.7 1.8 4.2 4.7 5 5.3 6 6.9 7.2 7.3 29.3 31.3 32.1 33.4 34.6 34.8 35.7 36.8 42 45.3 Unemployment in Mauritania is 45.3%, which is the 1th highest in the world Qatar and Benin have youth unemployment rates beow 2%. In 9 OIC countries, youth unemployment rate is over 3% and in 2 of them it is over 4%.

4. Unemployment Youth Unemployment Share of youth unemployed in total unemployed (%) Among the 56 OIC countries for which data are available OIC Other Developing Developed Gap between other developing decreased from 13.5% to 7.6% 6 5 4 3 2 1 54. 41.5 28.4 46.1 38.5 24.3 Gap between developed decreased from 25.6% to 21.8% 2 21 22 23 24 25 26 27 28 29 21 211 212 Share of youth unemployed in total unemployed is highest in OIC countries, but the share is falling. As of 212, the share in OIC is 46.1%, down from 54% in 2.

4. Unemployment Reasons for Unemployment in OIC Countries Insufficient job creation: The available jobs do not increase proportionately with the increase in population. Skills mismatch: Mismatch between the supply of skills and demand by employers causes structural unemployment. Lower productivity: Uncompetitive technology leads to lower productivity and firms with lower productivity cannot survive. Macroeconomic instability: Uncertainty in economic policy and developments causes insecurity in investment decisions of firms. Seasonality: In certain sectors, including tourism and infrastructure, available jobs are restricted to certain seasonal periods. Technological unemployment: Increasing number of companies is automating their production facilities. Hence, people are replaced by machines, thus leaving a huge pool of people unemployed. Conflicts and political instability: Existence of conflicts and political instabilities naturally prevent job creation.

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