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Exclusion from the labor market is at the root of poverty and vulnerability in the Middle East and North Africa (MENA), says a new World Bank report, proposing a range of measures governments in the region can take to make social protection systems more inclusive and make it more accessible. efficient.
COVID-19 and the Russian invasion of Ukraine have had – and continue to have – a devastating impact on living standards. But even before these crises, most MENA countries were already struggling with poverty and vulnerability, as employment opportunities in the region are limited, especially for women and youth, and most workers are 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 critical role in reducing the labor market. exclusion by facilitating access to productive work, protecting workers and providing a safety net for those left behind.
However, according to the report, social protection policies in the MENA countries do not fulfill 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 posed by an aging 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 face today, while at the same time reducing labor market exclusion in a fiscally responsible manner,” said Ferid Belhaj, Vice President of the World Bank for the Middle East and North Africa. “The World Bank is committed to working with countries across the region in implementing reforms to extend and raise the level of protection for 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 priority is to build a shock-resistant system to provide income support and opportunities to the poor, which some MENA countries are already making good progress on. The next priority should be to expand social security coverage for vulnerable informal workers. This should be accompanied by increased support to increase the productivity of informal workers and the employability of young people and women, together with the removal of barriers to women’s employment. This requires more resources, but not at all costs. In a tight fiscal environment, MENA countries must tackle the reform of general energy and food subsidies. They also need to redesign their pension systems to support active aging, including by removing incentives for early retirement.
“While there is no single reform path, there are some guiding principles that can be followed to move towards a more inclusive social protection system,” said Cristobal Ridao-Cano, chief economist and lead report author. “Many countries in the Middle East and North Africa have already started their reform paths, offering examples of what the reform series could look like and how to gain political support for reforms.”
According to the report, evidence from countries in the region and around the world that are already on reform paths suggests ways to build political support. Actions countries can take include setting a vision and ensuring clear and frequent communication to explain why decisions have been made and how people can best benefit from social protection programs. In addition to the package and sequence of reforms, ensuring political leadership and ownership will also be critical.
Distributed by APO Group on behalf of The World Bank Group.
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