Is choice the key to tackling unemployment

If you travel to Tataouine in southern Tunisia along the Libyan border, one of the first things you see is a signpost that reads, “Tripoli 290 kilometers; Tunis 530 kilometers; Lampedusa 345 kilometers; Mosul 3100 kilometers.”  Tataouine was the set of the Star Wars movies, which gave a temporary boost to the local economy.  But today, this region has the highest unemployment rate in Tunisia, hovering at 37 percent.  Most of Tunisia’s public employment programs, including active labor market programs and job counseling, target university graduates, yet 70 percent of all unemployed in Tunisia do not have a university degree.  The sign is a constant reminder that migration in search of job opportunities, and the risks it entails, is about the only choice they have.

We teamed up with local government, civil society and the private sector to tackle this “choice challenge”.  Together we launched a project that asked a simple question: what happens when local communities and the private sector are given greater choice in designing pathways to sustainable livelihoods?  How do these pathways compare to traditional public employment and safety net programs that lack such choice?  The project combined social safety nets (cash transfers targeted to low-income, low-skilled unemployed) with paid, on-the-job training designed and delivered by local private employers and civil society groups.

So what did we learn?

First, the project reached vulnerable groups excluded from most public employment services. Of all beneficiaries that signed up, 70 percent were women and 74 percent were younger than 35. Nearly all beneficiaries, or 92 percent, had only a primary or secondary education.

Second, the project opened up career opportunities in untapped sectors and services.  Most beneficiaries who found work became salaried employees in small firms linked to their training (65 percent), with the remainder having become self-employed (35 percent) (Figure 1).  In on-the-job training with the strongest, most well-coordinated networks with employers, the transition to work was the smoothest, reaching a 90 percent job placement rate in fishery.

Why did beneficiaries react favorably to this program, though?  Over 75 percent rated their experience highly satisfactorily, as compared to an average of 16 percent among the few low-skilled beneficiaries of public employment programs.   The single biggest reason was the “opportunity to gain work experience”, cited by 72 percent of project beneficiaries.

Figure 1: Employment data to date available for a sample of 183 beneficiaries at 6 months after completing the program.

One of the biggest lessons we learned from the project was that areas employment programs can have an impact, but they need to be smart.  They need to be (1) adapted to the profile of the unemployed and (2) be tailored to local markets by giving greater choice and involvement to key stakeholders at the local level – public authorities, the private sector and civil society groups.  Moving forward, these efforts need to be coupled with boosting private investment and social security coverage for ensuring sustainability.  For Tunisians facing limited choices, broadening this kind of coordination would help link them to new opportunities.

This article originally appeared on The World Bank’s Voices and Views: MENA Blog. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Heba Elgazzar is a Senior Economist in the Human Development Department with the Middle East and North Africa Region of the World Bank.

Image: A general view of Tunisia’s Constituent Assembly is seen in session in Tunis. REUTERS/Zoubeir Souissi.