As of mid-2014, three and one-half years after the uprising, a spectrum of possible approaches for economic transformation had emerged in Egypt. These approaches included (1) a revamped neoliberalism under the auspices of the IFIs and Deauville Partnership, (2) a developmental state and industrial policy in the East Asian mode, (3) a more egalitarian developmental state as proposed by the United Nations Development Program (UNDP) and International Labor Organization (ILO), and (4) a citizen-led developmental state as encoded in the work of NGOs and the independent trade union movement. This paper explains how these four approaches were manifest in Egypt during the period from 2011 to 2014, evaluates how they addressed the critical questions raised by economists and activists before, during and after the uprisings, and then compares Egypt with Tunisia as of December 2014. The first-hand research consists of interviews and consultations conducted over three years (2012, 2013 and 2014) in Egypt with economists, business owners, economic journalists, ILO representatives, NGO activists and trade-union leaders. This will be complemented by interviews planned for Tunisia in March 2015. Questions addressing external dimensions of economic structure and function include regional integration and the relationship between Egypt and its Gulf partners in particular, the issue of “odious debt,” debt forgiveness and the conversion of debt to development aid, the role of foreign direct investment in meeting the development needs of the host country, and the role of the IFIs in influencing public policy and supervising programs. Questions addressing internal dimensions include, first, transparency and accountability, taxation, and the role of domestic capital in influencing public policy. Second, what elements does the national program include of indicative planning, industrial policy and balancing public and private investment, the meeting of human needs, e.g., for employment, healthcare and housing, and incorporation of the informal sector into the larger economy? Third, does the national economic program meet the demands of workers to freely organize, choose their own leaders, bargain collectively, and participate in the design and implementation of industrial policy to modernize production and raise productivity? The paper concludes with a proposal for Egypt to move toward a truly inclusive and coherent development program that systematizes the rich contributions of the fourth alternative, while also incorporating compatible elements from the Deauville partners, state-led development model, and the programs proposed by the UNDP and ILO.

Most economies in the Middle East and North Africa region suffer from high unemployment rates, particularly among the educated youth, and with substantially higher rates for women compared to men. At the same time, female labor force participation in the region is also quite low. These phenomena seem to be not just signs of inequity, but also indicators of conditions that lead to resource waste and low growth. In this sense, it is important to understand the underlying causes of these phenomena so that more lights can be shed on the factors that hamper inclusive growth in the region. The high unemployment and low participation problems have been blamed on a host of factors ranging from dysfunctional educational systems to the adverse incentives created by the distribution of resource rents, extensive public sector employment, and rigid labor regulations. However, there are also scholars who question such attributions. For example, some contend that, depending on the circumstances, embracing the free market might adversely affect parts of the labor market, particularly women’s employment conditions. The argument is that although deregulation and structural adjustment packages have led to flexible labor markets, a common consequence for women is a shift towards low-pay jobs with limited prospects for productivity growth. In this context, it is important to measure the correct effects of each factor on various types of labor in order to identify the main sources of the problem and to design appropriate policy responses. In this paper, we take advantage of the cross-country micro dataset of Global Entrepreneurship Monitor to take a step towards addressing this concern. The dataset allows us to control for some key personal characteristics and, thus, isolate them from the relationship of country policies and institutions with the pattern of labor allocation by men and women. Based on the information available in the dataset, we construct a labor allocation indicator with nine possible outcomes (e.g., homemaking, self-employment, full-time employment, etc.) for each individual. We use a statistical model to relate the labor allocation of each individual to his/her age, education, and country of residence, separately for men and women. We then calculate the marginal probability effects of the country of residence on the outcomes and regress them on country institutions and policies. For measuring labor-market related country institutions and policies, we use the subcomponents of World Bank’s datasets on Employing Workers, Doing Business, and Women, Business and the Law.

This paper presents an overview of the issues of labor market regulations in the Middle East and likelihood of comprehensive reform in the wake of the Arab Spring. The paper begins with an examination of the school to work transition for young people using data from four countries: Palestine, Tunisia, Jordan and Qatar. For Palestine, Tunisia and Jordan, the paper uses the International Labor Organization’s school to work transition data that were collected using similar methodologies across all countries in 2013. These data include young people aged 15-29 years old and asks a series of in-depth family background as well as work history questions. For Qatar, the study uses the 2014 Global Entrepreneurship Monitor data which includes a module on the school to work transition with questions modeled after the ILO data. Using various nonparametric approaches, this paper will examine how family background, demographic characteristics and educational background affect the work lives of young people. The paper will then consider the impact that potential changes in the regulatory environment may have on young people. The boom of the 1990s and early 2000s that was witnessed in several Middle Eastern countries largely bypassed the youth. Young people acquired more education than previous generations, but because their skills were not closely in tune with the needs of private sector employers (where much of the growth was occurring), education was not enough. Instead of working in the private sector, the tendency was for young people to queue for public sector jobs even though these jobs began to shrink in importance throughout the region. Today, post-Arab spring regimes will face many economic challenges. Primary amongst these challenges is the desire to quell the social discontent from the youth and others by making economic concessions while simultaneously reforming education and employment institutions that helped lead to the skill gap in the first place. This paper will examine the potential effect of a variety of specific labor market reforms and the likelihood of both their successful implementation and the success of similar efforts in ameliorating the disparities that exist in similarly rigid labor markets.