TUNESS Chart of the Week (TCW), Monday April 29, 2013
There is a saying among Tunisian youth which, over the years, has been widely embraced: “there’s no opportunity for a decent job in the country, regardless of whether or not you are an educated job seeker.” Along these lines — and while this remains an anecdotal quote — it should come as no surprise that during the ousting protests against former president Ben Ali, protesters forcefully demanded, among other things, their rights to decent employment and acceptable living conditions. The aim of this note is to shed light on unemployment trends by educational attainment in Tunisia.
It is obvious from the chart (Fig. 1) that unemployment rates by educational attainment fluctuate over time, and college graduates are experiencing challenges finding a job. According to the chart, in 2010, the college graduate unemployment rate was at an alarming level of around 23%, a dramatic jump from the 4% level reported in 1994. In contrast, based on data collected from the US Census Bureau (Fig. 2), the unemployment rate among bachelor’s degree (or higher) holders in an advanced economy like the United States has followed the typical pattern observed in socio-economically stable countries, averaging about 2.8% from 1994 to 2010.
Fig 1. Tunisia Unemployment By Education
Fig 2. US Unemployment By Education
It is beyond the scope of this note to investigate the economic or demographic causes of this upward trend in graduate unemployment. However, it is important to note that a 2008 study conducted by the World Bank attributed the high unemployment rate among college graduates to educational programs in developing countries, which often prioritize obtaining a degree over equipping students with practical, market-relevant skills.
Ken Robinson, a recognized international leader in creativity, has also addressed this issue within the broader context of the global educational system. He highlights how many systems prepare generations with an inadequate set of skills, and discusses the resulting consequences for both individuals and society as a whole (the reader may wish to refer to this author’s work for ample discussion). Today, government officials (in Tunisia and many other developing countries) are facing big challenge that is centered around their ability to constantly review and update their policy and actions tools to tackle this problem of increasing unemployment among graduate youth. Encouraging and laying the ground for the implementation of new creative strategies such as Self-Employment, microcredit, public work are among the numerous actions officials are expected to take in the immediately to handle this issue.
We strongly believe that the government needs to focus primarily on stimulating a culture of entrepreneurship and start-up programs as part of the higher education system to achieve sustainably lower unemployment.
“Does Self-Employment Reduce Unemployment?” asked Audretsch et al. (2008) from the Center for Economic Policy Research. Although one might find this question trivial, requiring a straightforward answer, economists have historically advanced differing, and at times conflicting, opinions on the matter.
In this short note, we emphasize two key findings from the above paper:
1) Robust empirical results indicating that self-employment reduces unemployment.
2) The importance of designing a model for monitoring self-employment, which turns out to be a crucial factor in sustaining its positive economic impact.
We will not discuss the model in this note; instead, we report the main results of the study, which show that self-employment substantially reduces unemployment, as observed in economies such as Portugal, Ireland, and Iceland.
As shown in the table below, this relationship tends to run in both directions: a reduction in the self-employment rate is very often associated with an increase in unemployment.
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Table Source: Audretsch et al.
The spectrum of self-employment spans from home-based businesses to small firms. The establishment of small startup firms is highly encouraged and is ideally financed by venture capitalists. Michael Porter, developer of the Diamond Model (competitive advantage theory), argues that countries investing in education tend to have a skilled workforce, which displays a high level of flexibility in performing a wide range of professional tasks. The author points out that leaders of sustainable and well-managed companies typically hold dual degrees—a technical and a business degree—which allows them to effectively leverage the required skills when facing diverse challenges throughout their careers. With some effort and guidance, the educated but unemployed segments of the population (which remain a substantial competitive advantage) are great candidate to start businesses.
We believe that, given the current circumstances in the country, the government needs to place emphasis on boosting entrepreneurship programs and relevant training sessions for the skilled workforce. A series of entrepreneurship and leadership training materials targeting university degree holders is highly important to ensure the effective integration of educated youth into the professional environment. The greatest short-term impact can be achieved through the implementation of an aggressive marketing plan — for example, by broadcasting on national TV, local radio stations, and sharing through internet platforms. The frequency and reach of such programs could later be adjusted based on the state of self-employment optimum levels, as described in the comprehensive model laid out in Audretsch et al..
The reserach is conducted by Zied Driss, TUNESS Research team.
Data source: US Census Bureau, INS
Refrences:
Youth unemployment, existing policies and way forward : Evidence from Egypt and Tunisia, World Bank, Washington DC, 2008
Audretsch DB, Carree MS, Van Stel AJ, Thurik AR, DOES SELF-EMPLOYMENT REDUCE UNEMPLOYMENT?, Center for Economic Policy Research, 2008