Anyone living in the Middle East and North Africa (MENA) region will be aware of what having to deal with the public sector can mean in terms of bureaucracy and inefficiency. Attempts at digitising services have made a huge difference, but the core problem of an oversized public sector still exists.

A recent study by economists Ragui Assaad from the University of Minnesota in the US and Ghada Barsoum from the American University in Cairo published on the IZA World of Labour website says that there is now an opportunity to restructure the MENA region’s public sectors, however.

According to the study, the MENA region has some of the largest public sectors in the world. In Egypt, public-sector jobs provided 25 per cent of jobs in 2000. In Jordan, the figure was higher at 40 per cent. In comparison, in Indonesia the average share of public-sector jobs in total employment was eight per cent, and it was 15 per cent in Turkey.

In the Gulf countries that share surpasses 80 per cent in Qatar and Kuwait.

The figures are the fruit of a legacy that dates back to when “authoritarian regimes provided public-sector jobs and access to subsidised services and commodities in return for political quiescence,” the writers of the report say.

This has translated into “overstaffing and poor incentives for good performance.” In addition, it has come at the expense of “budgetary sustainability and administrative efficiency”. It has led to a distorted job market where higher total compensation in the public sector has encouraged new entrants to the job market to wait for years for public-sector jobs rather than seek private-sector jobs, thus remaining unemployed.

The growth of the public sector has meant bigger state wage bills, which in turn have affected budgetary sustainability leading to calls for downsizing, say the authors. They point out that in Egypt’s public sector hiring began to slow down in the 1970s.

Coupled with such budgetary pressures, MENA governments have not been able to absorb the increasing number of entrants lining up for government jobs.

The region’s “youth bulge” has meant countries have succeeded in reducing infant mortality, but mothers still have a high fertility rate. There has been an increase in the number of people with upper-secondary education and above, a group typically eligible for public-sector jobs, the study says.

“This increased educational attainment has led to a rapidly growing pool of candidates for public-sector jobs.”

According to the study, since the 1980s the MENA region has achieved near universal enrolment in primary education, an average enrolment of over 70 per cent in secondary education, and close to 30 per cent in tertiary education for both men and women.

Budgetary pressures together with the inability of governments to absorb the increasing number of applicants have slowed down public-sector hiring in most MENA economies. That decline has been “most pronounced in Egypt”, where the public-sector share of employment fell to 21 per cent in 2017.

The reductions in the relative size of the public sector in most MENA countries have resulted in a slowdown in hiring new workers rather than through large-scale dismissals of existing workers, the study shows.

This has led to the substantial aging of the workforce in some countries. In Egypt, the proportion of workers in the public sector above the age of 45 increased from 40 per cent in 2000 to 53 per cent in 2014.

According to the authors, there is now an opportunity for MENA governments to capitalise on. “The imminent retirement of large numbers of workers, possibly aided by some early retirement schemes, provides an opportunity for a major restructuring of hiring processes in a more meritocratic direction,” they say, adding that capitalising on the attractive nature of public-sector jobs could mean “substantially upgrading the quality of recruits”.

It is an “opportunity to institute civil-service reforms that more directly tie compensation to performance as a way to upgrade the quality of public services,” they add.

Women must be kept in mind when tackling reforms, the report stresses. They make up a large part of the public-sector workforce in the MENA region, the study says, thanks to increased access to secondary and tertiary education.

The study shows that in Egypt the share of women in the state workforce increased from 25 per cent in 2001 to over 31 per cent in 2017. “These increases were considerably higher than the growth in the share of women in overall employment during the same period, indicating that women have been disproportionately seeking public-sector jobs,” it says.

This, the authors say, is because women prefer public-sector over private-sector employment because “the public sector provides workplaces that are more hospitable to women.”

The MENA region has some of the largest public sectors in the world

The relatively short working hours, job security and stability, as well as social and health benefits provided by the public sector, are attractive to women, it says. The writers say that data tracking women’s employment before and after marriage show that women in private wage employment typically leave such employment after marriage, whereas public-sector employment is hardly affected by marriage.

Moreover, in the public sector women are mostly paid equally to men, whereas in the private sector the authors say they can be paid half.

The slowdown in public-sector hiring has thus meant that “women’s overall employment opportunities have been adversely affected.” When women find fewer jobs in the public sector, they choose unemployment, the study says.

“Because women are more dependent on public employment, the decline in public-sector hiring affects them disproportionately. There is therefore a need to facilitate greater access for women in the private sector through reforms in social services, such as public transportation and childcare, and other state-supported programmes that make it possible for women to continue working in the private sector after marriage,” it adds.

*A version of this article appears in print in the 5 September, 2019 edition of Al-Ahram Weekly  Untangling the public sector