Structural Adjustment and Employment in the Middle East and North Africa

Since the 1980s, the majority of countries in the MENA region facing severe exchange shortages have had to adopt policies directed towards stabilization and structural adjustment of their economies. Employment expansion and the structure and function of labor markets in these economies has been closely tied to the nature of the adjustment programs pursued. The paper provides a country classification of the economies of the MENA region on the basis of size, economic structure and resource endowment to expose the timing of and interlinkages between growth cycles. Current unemployment problems are shown to be clearly related to the slowdown of the rate of investment and growth caused by serious internal and external imbalances in the post oil boom era, with Egypt taken as an example of the problems adjustment programs face in addressing adverse external shocks and labor market behavior since the late 1980s. Turkey and Morocco, with the longest regional experience of adjustment, are also examined in some detail, and the implications of their experience for employment expansion are explored, with lessons drawn for other countries of the region.