Tunisia - World Bank: The unfinished report!
16 February 2015
Read by 2166 persons
The business sector helping employment is the current urgent priority for the entire MENA region. Businesses are faced with a choice. Either they play their part and create jobs. Or they choose the easy route and rely on privileges. The alternative suggested by the World Bank only addresses part of the reality on the ground. This report leaves a feeling of incompleteness.
"Jobs versus privileges" is the theme of the latest World Bank report, presented to the public on Monday, January 26th at the IACE (Arab Institute of Business Leaders) headquarters. The report condemns the privileges and other special advantages that politically connected companies can grant themselves. Once again, the issue of collusion between power and money resurfaces.
By privileges, the report refers to all non-regulatory obstacles that politically connected companies can create against their local or international competitors, which tends to stifle competition. The Bank criticizes this stifling of competition because it undermines economic dynamism and slows job creation. The causality raised by the World Bank is harmful. But is it the only issue in question?
The report's terms: how to unleash the potential for job creation?
The report focuses on the experience of two countries, namely Tunisia and Egypt, which are hard hit by unemployment. Beyond these two countries, it is the entire MENA region, the report emphasizes, which is particularly affected by unemployment on a global scale. To this end, the report studies job creation flows from all onshore companies in the two countries over a period from 1996 to 2010.
The mix of employment policies in the two countries, combining the old methods of recruitment in the public service, in public sector companies or private companies with support bonuses, has only yielded disappointing results. The situation is stagnating. Of the working-age population, only 19% of workers have permanent contracts (CDIs). This rate is 40% for Eastern European or Central Asian countries. This injustice disproportionately affects women, of whom only 28% are employed. Most shocking is that university graduates are the worst off. One in three graduates is unemployed.
Companies hire upon creation
The study reveals that Tunisia created 582,000 jobs between 1996 and 2010. More than 90% of these jobs were created by start-up companies. These companies hire within the first four years after their creation. The problem is that these companies have between 1 and 4 employees. The Tunisian productive fabric therefore remains too atomized. As a result, the study shows that these companies have a virtually zero expansion rate.
The reality is that the productivity of these units is so low that they have a modest impact on the market and remain in a vegetative state.
Another discouraging fact is that in Tunisia, entrepreneurial fertility is very low. 1.2 SARLs are created per 1,000 people per year. This rate is 3 in Chile and 4 in Bulgaria, two countries comparable to ours.
Politically connected companies hinder employment
In addition to this inherent fact, another obstacle to employment arises. The report criticizes companies close to power, particularly those in the service sector, which, due to their politico-administrative connections, create barriers to entry, hindering the arrival of local and foreign competitors in their market. This is not done through laws or regulations but through discretionary authorizations required from new developers. This means that entire sectors are on average 64% controlled by politically connected companies.
Not being challenged by competitors, these companies are content to exploit their advantageous position without having to develop. In the end, they do not create jobs. And in reality, the waste is double for the country because, in addition to growing unemployment, it causes a waste of resources due to high production costs.
Public authorities are free to rectify the situation
The obstacles to competition raised by the report are real in our country. But they are not the only cause. The collusion of power and money does harm wherever it occurs. Unfortunately, the phenomenon is universal.
For a long time in France, we talked about the capitalism of the 200 families. The phenomenon also exists in America. Dick Cheney, vice-president of George W. Bush, had one foot in the White House and the other on the board of directors of the oil company Chevron. Some connections are also attributed to Donald Rumsfeld, Secretary of Defense under G.W. Bush, with the military-industrial complex. This does not prevent the scourge from needing to be controlled and eradicated.
The Ben Ali/Trabelsi clan is currently neutralized, but Transparency International reports continue to index the country. However, we believe that the report has missed a more sensitive reality, namely that the Tunisian economic model has run out of steam, and this may be the reason for its current inertia. Growth must be sought where it is found, that is, in the knowledge economy, in regional autonomy, in the modernization of the machinery of industrial companies. And all this is not mentioned in the report.
Ali Abdessalam.
Webmanagercenter.com
Published February 2, 2015.
Posted online February 16, 2015.
"Jobs versus privileges" is the theme of the latest World Bank report, presented to the public on Monday, January 26th at the IACE (Arab Institute of Business Leaders) headquarters. The report condemns the privileges and other special advantages that politically connected companies can grant themselves. Once again, the issue of collusion between power and money resurfaces.
By privileges, the report refers to all non-regulatory obstacles that politically connected companies can create against their local or international competitors, which tends to stifle competition. The Bank criticizes this stifling of competition because it undermines economic dynamism and slows job creation. The causality raised by the World Bank is harmful. But is it the only issue in question?
The report's terms: how to unleash the potential for job creation?
The report focuses on the experience of two countries, namely Tunisia and Egypt, which are hard hit by unemployment. Beyond these two countries, it is the entire MENA region, the report emphasizes, which is particularly affected by unemployment on a global scale. To this end, the report studies job creation flows from all onshore companies in the two countries over a period from 1996 to 2010.
The mix of employment policies in the two countries, combining the old methods of recruitment in the public service, in public sector companies or private companies with support bonuses, has only yielded disappointing results. The situation is stagnating. Of the working-age population, only 19% of workers have permanent contracts (CDIs). This rate is 40% for Eastern European or Central Asian countries. This injustice disproportionately affects women, of whom only 28% are employed. Most shocking is that university graduates are the worst off. One in three graduates is unemployed.
Companies hire upon creation
The study reveals that Tunisia created 582,000 jobs between 1996 and 2010. More than 90% of these jobs were created by start-up companies. These companies hire within the first four years after their creation. The problem is that these companies have between 1 and 4 employees. The Tunisian productive fabric therefore remains too atomized. As a result, the study shows that these companies have a virtually zero expansion rate.
The reality is that the productivity of these units is so low that they have a modest impact on the market and remain in a vegetative state.
Another discouraging fact is that in Tunisia, entrepreneurial fertility is very low. 1.2 SARLs are created per 1,000 people per year. This rate is 3 in Chile and 4 in Bulgaria, two countries comparable to ours.
Politically connected companies hinder employment
In addition to this inherent fact, another obstacle to employment arises. The report criticizes companies close to power, particularly those in the service sector, which, due to their politico-administrative connections, create barriers to entry, hindering the arrival of local and foreign competitors in their market. This is not done through laws or regulations but through discretionary authorizations required from new developers. This means that entire sectors are on average 64% controlled by politically connected companies.
Not being challenged by competitors, these companies are content to exploit their advantageous position without having to develop. In the end, they do not create jobs. And in reality, the waste is double for the country because, in addition to growing unemployment, it causes a waste of resources due to high production costs.
Public authorities are free to rectify the situation
The obstacles to competition raised by the report are real in our country. But they are not the only cause. The collusion of power and money does harm wherever it occurs. Unfortunately, the phenomenon is universal.
For a long time in France, we talked about the capitalism of the 200 families. The phenomenon also exists in America. Dick Cheney, vice-president of George W. Bush, had one foot in the White House and the other on the board of directors of the oil company Chevron. Some connections are also attributed to Donald Rumsfeld, Secretary of Defense under G.W. Bush, with the military-industrial complex. This does not prevent the scourge from needing to be controlled and eradicated.
The Ben Ali/Trabelsi clan is currently neutralized, but Transparency International reports continue to index the country. However, we believe that the report has missed a more sensitive reality, namely that the Tunisian economic model has run out of steam, and this may be the reason for its current inertia. Growth must be sought where it is found, that is, in the knowledge economy, in regional autonomy, in the modernization of the machinery of industrial companies. And all this is not mentioned in the report.
Ali Abdessalam.
Webmanagercenter.com
Published February 2, 2015.
Posted online February 16, 2015.
