‘Labor welfare’ between supply and demand

Are labor issues on the demand or supply side? And do labor market regulations have workers’ “welfare” at heart?

As far as problem solving is concerned, one has to dig deep and “get to the bottom of it”. The eternal dilemma of tackling how labor market regulations impact the labor market structure, performance and outcome has always been in identifying its essence. Inarguably, labor market issues are numerous and, depending on how you look at it, they could arise from both the demand and the supply sides; the supply side being education, training… etc. and the demand side presented in the employment sector.

The papers presented in this workshop  (Labor Market Institutions and Labor Market Performance and Outcomes) particularly focus on the demand side; specifically on the impact of labor market regulations, such as formality, gender employment and social security, on labor market outcomes. The closing session concluded with policy perspectives; engaging a panel chaired by Dr.Ahmed Galal in a discussion of different policy implications that have been brought up by earlier speakers. The panel involved Dr. Ragui Assaad (Humphrey School of Public Affairs), University of Minnesota), Dr. Mustapha Nabli (Former governor, Central Bank of Tunisia) and finally Dr. Nader Kabbani (Director of Research and Policy,Silatech).

Dr. Assaad goes first with concluding remarks on how challenging it can be to identify the real impacts of labor market regulations on the market structure and performance. He argues that clean identification is very hard to come by, as he explains when interviewed, due to the various distortions that could affect the making of regulations (such as economic crises or growth spurts), which makes it harder for economists to identify the real drivers and impacts on the market.

Congruently, he draws attention to other factors that can influence the impact the market in addition to regulations, such as social norms, job security, structure of the economy and informality on the firm level, firm exit rate… etc. What to do? Dr. Assaad suggests that governments need to adopt regulatory approaches that protect “workers” rather than “jobs”, and effectively adjust training systems to training needs in the market. He also encourages more research work that studies active labor market policies.

Watch video interview with Dr. Ragui Assaad


On the other hand, Dr. Nader Kabbani puts on a “policy informer’s hat”; addressing the challenges of informing policy with research, and the role of knowledge intermediaries. Dr. Kabbani argues that research has thus far only been able to “stop bad policies” rather than informing new ones. With more open data initiatives, such as the ERF’s Labor Market Surveys, he claims that “researchers now have a lot more data to play with and take more policy-relevant questions into considerations”. Finally, regarding knowledge intermediaries, Dr. Kabbani defines it as defining policy needs, translating and integrating research into policy.

Last but not least, Dr. Mustapha Nabli finishes the day off from a policy maker’s perspective. He believes that the availability of data should not be the only driver for research, but rather there is a need to identify channels of communication with policy makers in order to address real challenges. In an interview with Dr. Nabli, he highlights two important labor market issues that have been raised in the presented papers; gender employment and the mismatch between the expectations of university graduates against the reality of labor markets. He argues that MENA labor markets still show relatively low participation of women and that the overall environment is not favorable for the employment of women. Also the demand side of the labor market does not provide the kind of employment opportunities that university graduates are expecting or looking for.

Finally he argues whether labor market regulations can build on opportunities to innovate new ways to deal with today’s issues. He believes that in light of the political events in the region over the past few years, we are moving towards an environment that is more “open” politically.

Watch video interview with Dr. Mustapha Nabli


Read more about this workshop: “Labor Market Institutions and Labor Market Performance and Outcomes

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