Unemployment in Lebanon is in excess of 10 percent, with youth unemployment close to 25 percent. This is despite the low labor force participation rate of educated Lebanese women (only 20 percent compared to 35 percent for the Arab region), and the high rate of emigration — some say nearly half of every cohort goes abroad to find employment.
Addressing this issue requires a better understanding of the forces underlying labor supply, especially education, as well as how the economy works and its impact on labor demand.
Education is good on average
In international comparisons of student learning — such as the Third International Mathematics and Science Study undertaken in 2007 — Lebanon comes at the top in the Arab region, making the Lebanese employable across the world.
Lebanon has one of the highest skilled emigration rates in the world (measured in terms of those that have university education) and the highest rate among the Arab states.
For the university graduates who stay behind, the unemployment rate has been increasing over time and now tops 11 percent, double the rate of Lebanese without a university degree pointing to an over-supply of educated Lebanese.
Much of education spending in Lebanon (80 percent) is private with public spending the lowest in the Arab world. Only one in four pupils are in public primary schools, one in 10 do not complete primary education and one in four do not complete secondary education.
An economy of constraints
Most of the jobs created in the Lebanese economy are in low value-added sectors such as wholesale and retail trade, repair and maintenance, transport and storage, food and hospitality services. Therefore employers have little concern about lack of skills and are unwilling to pay high wages. According to business environment and investment climate surveys, the prime concerns of employers relate to political instability, macroeconomic uncertainty, poor governance, cost of financing and weak public infrastructure.
These structural deficiencies in the economy have resulted in creating no more than 3,400 jobs annually in the last decade compared to almost 19,000 new job seekers coming into the labor market every year in the foreseeable future. This abundant labor supply alone is sufficient to depress wages, letting aside the presence of migrant workers, many of whom are undocumented and low skilled and prepared to work for low wages. How does all this come together?
Based on opinion surveys among executives, the World Economic Forum’s “Global Competitiveness Index 2012” ranks Lebanon last (that is, best) compared to all other Arab states in terms of “inadequately educated labor force.”
What can be done?
Tackling the lack of job opportunities for well-educated workers, which is leading to a high rate of emigration among the skilled labor force, is necessary to secure a progressive future for Lebanon. Geopolitical uncertainties, the high level of public debt that is bound to saddle the economy for many years to come and managing immigration are critical issues. But for political and logistical reasons, addressing them is a Herculean task.
On the other hand, governance and public infrastructure (such as electricity and transport) can be improved in the more immediate term to create a competitive and transparent business environment. This would add more high value-added activities to the economy and increase demand for a more skilled labor force.
It is also vital for the government to dedicate more resources to public education in order to meet the needs of less affluent Lebanese, who face unequal opportunities due to inadequate access to a proper education. Whether this would reduce unemployment quickly is yet to be seen, as the size of the existing excess labor supply and the “reserve army” of educated but non-working Lebanese women are disheartening. However, it will create a more inclusive future society. And an inclusive society is in many respects preferable to faster economic growth.