Unemployment Crisis in Tunisia - Assignment Example

Unemployment Crisis in Tunisia .Introduction Tunisia is a North African Muslim country. The country is officially known as the Tunisian Republic. The country has close economic ties with the European Union as well as the Arab World. The country has friendly ties with France with are primarily based on economic cooperation, industrial modernization and privatization plans. It is a country blessed with many natural resources and by 2009 it was regarded as the fastest growing economy of Africa. Aims and Objectives Although the country was regarded as the most promising economy in the yester years, yet it faces many severe problems related to its economy. One of them is the increasing unemployment. In this report the factors behind this problem and their possible remedies will be looked upon. Tunisia : An Economical Background After years and years of heavy losses, Tunisia is now in the phase of economic and financial stability. Practical planning related to economy, finances and the budget of the country has started to show its early fruits. Although this development is moderate, yet it is continuous. The county depended hugely on its oil reserves, phosphates, automotive parts production and tourism. The dissimilar economy of this country is pivoted on tourism, agriculture, mining and minerals, production and export to the European Union. The economic reforms launched in the latter half of the 1980s were aimed at making the economy of Tunisia sound and stable. Did those reforms turn out to be good? This is the question whose answer is searched by many and it has been asked by the Tunisian people as well, especially the youth. The youth of this Arab Republic is highly capable and educated. The youngsters are keen to play their part in the development of their country. They had been under severe pressure and stress due to the unavailability of proper jobs and are forced to live a life below their educational standards. (Stone. McCraw. 2007) Stiff Economic Policies The Tunisian government used to control the economy very firmly and had several policies aimed at tightening its control over the economic affairs of the country. This was not appreciated by the international business community. Ultimately the new government has to make certain reforms to ensure that the economy of the country becomes investor friendly, thus paving a way to privatization. The government now has a simplified tax system, which has enabled the local and foreign investors to shift their investments to Tunisia. Agriculture is one of the major contributors to the exports and GDP, with nearly 20% of its workforce engaged with it directly or indirectly. The GDP contribution is 11% while overall export contribution of agriculture sector is 10%. (EPub. 2007) Economic Challenges and Reforms Tunisia faces a collection of economic challenges. The experiment of socialist economic reforms failed miserably in the 1960s. The country then focused on increasing its exports and raising its foreign reserves. The country was on its way to a steady growth but the corruption process initiated under the president ship of Zine el Abidine Ben Ali thwarted economic performance and unemployment started to rise, especially among the fresh graduates who became very pessimistic about their futures. This led to dismissal of his government in January 2011, and the country was thrown into sudden descent. The new government faced immediate challenges regarding the economic and financial crisis. It faced the challenge of encouraging and boosting up the confidence of foreign and domestic investors, bring the budget and the current account deficit under regulation, improve the financial system of the country, lower the rising unemployment and reduce the financial dissimilarity between the various regions within the country. The IMF in its report indicated that Tunisia could stabilize its economy within next four or five years, provided that the economic policies and reforms planned by the authorities are run smoothly and they bear good fruits. Tunisia has initiated many structural reforms related to its economy in the last twenty years. These reforms were primarily aimed at improving the business atmosphere and making the economy more competitive. But the corruption, dishonesty, exploitation of rights, manipulation, bribery, frauds, etc. harmed the country’s growth. The young generation became insecure and uncertain about their future. The unrest in the society led to the vast scale protest against the government of President Ben Ali, who was blamed to be the responsible personality. He was ultimately thrown off his seat and the country was liberated from years of dictatorship and autocracy. Reasons of Unemployment The country was governed by a single man, a dictator, an autocrat, President Zine el Abidine Ben Ali. He was the in charge of one party state where he has been a categorical leader administrating for several decades. He was a ruler who seizes whatever he wishes for and never considers the desire of the people he governs. Ben Ali and his associates were extremely corrupt that people never thought of investing in the state and this idea was so abhorrent that the business man and women living in the state never thought so because investing in Tunisia was like investing in a black hole. People investing in the state never had the idea what they will receive back in return of the money they invested. People often went through the loss rather than earning profit. This corruption has advanced so much that it has resulted in high level of unemployment in the people, especially the youngsters. Non manual jobs have increased up to a level of48% in Tunisian women and approximately 23% in man. Youngsters who gained knowledge from the universities cannot practice their skills and earn money. They are so desperate for obtaining opportunities that they are left with no other choice but only to leave Tunisia and go to other places such as Libya. But this is not the solution of the problems; all the youngsters cannot leave their homeland and their families in search of jobs in other countries. Officially the unemployment is19% but it is supposed to be much higher. (Stone. McCraw. 2007) Revolts and rebellion arose when a young graduate named Mohammad Bouaziz attempted suicide. He was a highly educated man but to feed his stomach he had no other alternative but to sell the vegetables and fruits from a street cart to survive. The police man when found him selling illegally, he could not stand it and he drenched himself in petrol and lit himself alight. Though this man was so educated but then he could not survive and he committed suicide, no one could understand the desperation and guilt that built in him that he committed suicide. The youth of Tunisia protested several times in an attempt to proclaim their demand and their need, to show their desperation, they protested against the corruption prevailing in the government which was badly affecting their society. No group or organization was the part of this protest rather it was the appraisal by the people to voice their beliefs. In the North African countries violent acts are not observed or extremely rare where public opposition is not tolerated but people there are always on the verge of protesting against the high level of unemployment prevailing in the country. These protests has shown the face of actual Tunisia’s circumstances which the government tried hard to hide from the world, people here face high level of unemployment, poverty in the country side and lack of opportunities for high level education and a seething resentment against the government of Zine el-Abidine Ben Ali. This man has been the President since 1987. The president made fake promises to his people that he will eradicate unemployment from the state and he further condemns the outlaws and warns the people that strict and firm action may be taken for the violent act against him. The question here arises that are these protests social or economic protest which are against the government prevailing in the government or are these politically aggravated. Is the state responsible for creating labor for the people and providing high level of education to the youngsters which will further increase the needed labor force? The education level in the country has improved greatly among the job seekers, but even the government fails to guarantee the people job opportunities and creation of jobs, to give labor to the new youngsters coming up from the universities. Tunisia is therefore numbered at the last among the Arab states in giving jobs to its people and this high level of unemployment has increased up to 14% both in men and women and 30% in people at age range of 15- 29. The people are left with no other choice when they fail to find any job even with high qualifications but to migrate from Tunisia to other countries may it be legally or illegally. Some people opt for launching their own business in the informal sector but for this they need financial assistance from their families. This has resulted in increase percentage of suicidal attacks among the youngster. Many made their attempts to draw attention of the officials. They set themselves on fire in public as the incident of Mohammad Bouaziz discussed earlier. These incidents are not exceptional but they tell the story of their desperation and show a deep sense of despondence among the youth and a dignified life are dwindling. There are several reasons for the lack of job opportunities for educated youth. Firstly the country suffers from excessive specialization and over-dependence from one market that is the European Union. Tunisia supply with demand does not match with it. Secondly, men and women educated from high levels do not get job opportunities since the growth strategy of is based on the low skill sectors, these sectors require cheap labor. Industries established in Tunisia are textile and cloth manufacturing and tourism which gives its labors less or medium income. Thirdly, the labor requirement for highly educated pupil has not met up with the increased level of education. The job seekers have rose up to a level from 20% of the labor force in 2000 to more than 55% in 2009. In addition to it, the corruption in the country has increased up to a level that the protection to its investors especially the local investors has diminished. The institutes with little investments and funding opportunities and absence of transparency and rule of law, all these factors has gathered up in restraining the job creation in the market. Furthermore, the eligibility criteria are so strict which further limit the people who can gain profit from the market. Tunisia’s economy growth boosted fairly during the global crises, but the challenge which the government has to face is to increase the job creation and eradicate unemployment from the country, says the IMF economist. (EPub. 2007) IMF says that the annual health check of Tunisia is expected to grow to 3.8 percent in 2010 but since the global crises took in 2009 then it slowed down to 3 percent. Unemployment has increased after decreased up to 12.4 percent in 2007 and 13.3 percent still is relatively high especially among the educated youth. The monetary revival stills remains on delicate foothold, although its tourism, workers’ payments and direct foreign investments have increased in the recent months after the removal of President Ben Ali. Recommendations The careful macro economic management can be very helpful for Tunisia. The country still has a lot of scope to coupe with the external threats, especially on the financial grounds. But it all depends upon the watchful and vigilant policies of the new government so that it could counter the possible increase in poverty and unemployment. The government should aim to develop an export endorsement strategy so that all the medium and long term based objectives of increasing employment and promoting economic growth could be achieved. The Tunisian government has signed a special trade agreement with the West African Economic and Monetary Union to promote its plans and strategies and is trying its level best to sign free trade agreements with the Central Economic and Monetary Community. These steps are very much needed to ensure that the rising unemployment and other financial threats are countered on the right time in order to sustain economic growth. Trade agreements with the European Union could be a boost to all these steps taken by the Tunisian Government, as Europe is one of the biggest buyers of Tunisian products and European people are regular tourists of the country. A number of reforms and improvements have been recognized by the authorities to ensure improvements in the labor market policy, educational and health systems, and public services. If the government pays enough attention to these reforms and suggestions as identified by the concerned authorities, the people, especially the youth, could be benefitted on a very large scale. (Raḍwan, Jamal, Ghos.1991) The government needs to keep an eagle eye on its expenditures. If macro economic environment is kept stable by the new government, then employment opportunities could be promoted and it will ensure a positive growth of the country. This could only be achieved if reforms are introduced in the social security system of Tunisia. A control on the subsidies offered in the food and oil sector would ensure that these measures bear fruit on time and with optimal effectiveness. Reforms should be introduced in order to make the business environment friendlier. Taxation system should be organized and efficient. It is observed thorough various studies and comparisons that the tax burden is higher in Tunisia than other emerging international markets. The government should reduce taxes and give incentives to the investors so that foreign investment is attracted to the country. Growth in the industrial sector would automatically ensure that the country’s unemployment is reduced and the economic growth boosts. The role and responsibilities of the banks should be increased in the economic growth of the country. Tunisian banks should be promoted internationally so that it could be transformed into a growing financial hub of the region. (EPub. 2007) Conclusion Incentives must be introduced by the government to promote its education sector, and the technical industries as they are directly linked with the employment opportunities of the country. The government should provide the students and other professionals with enough opportunities to develop technical skills and bring technological innovations in the country. The return on capital in education sector is being neglected at the individual and collective level although it has a significant importance in the Tunisian social model. A strategic vision should be developed by the government to ensure rapid growth in the economic sector of the country. And this must be done immediately. This will provide the youngsters and the fresh graduates and professionals with brighter job opportunities and will ensure them a better and brighter future. The people of Tunisia, especially the youth, have very high hopes associated with the new elected government. The people believe that their country is blessed with many natural resources, and is those resources are utilized in a systematic manner then Tunisia can develop and move forward much more quickly. They believe that the new government will not repeat the mistakes and unjust policies which were adopted by the government of Ben Ali. Works Cited EPub. Tunisia: Selected Issues. 2007. Raḍwan Muḥammad, Samir. Jamal, Vali. Kumar Ghos, Ajit. Tunisia: rural labour and structural transformation. 1991. Stone, Jack. McCraw, Joe. Unemployment: The Shocking Truth of Its Causes, Its Outrageous Consequences and what can be done about it. 2007. Tunisia. U.S department of State, Diplomacy in action. February 22, 2012. White, Gregory. A comparative political economy of Tunisia and Morocco: on the outside of Europe looking in. 2001.   Read More