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Private sector holds key to future employment growth in the Arab region

MD Staff

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The job-creating potential of the private sector is key to future employment growth in the Arab region, said ILO Regional Director for Arab States Ruba Jaradat at the 45rd Arab Labour Conference (ALO) in Cairo, Egypt.

“It is evident that our region, amidst protracted social and political unrest, and the continuing conflicts in some countries, is subject to ever more critical labour market and employment challenges,” said Jaradat, speaking during the conference’s opening session.

Jaradat noted that total unemployment in the Arab region remained high at 10.2 per cent in 2017 (almost double the global rate of 5.6 per cent), with more than 13 million individuals looking for a job. Youth are particularly disadvantaged with a 27.6 per cent unemployment rate among those aged 15-24, compared to a global average of 13 per cent.

Gender inequalities are also acute, with the female unemployment rate standing at 18.7 per cent, more than double the rate of males (8.2 per cent) and three times their unemployment rate globally. Vulnerable employment has also increased by 32 per cent in the Arab region between 2000 and 2017, constituting 26.5 per cent of total employment in 2017.

“High shares of public sector employment remain a problematic characteristic of the region’s labour markets, particularly amidst the recent oil price crisis. The share of employment in the public sector ranges from 14 per cent to an estimated 80 per cent, excluding expatriate workers,” Jaradat told delegates from 21 Arab states at the conference.

“Future employment growth in the region must come from unleashing the job-creating potential of the private sector. This, together with the expected growth in population over the next decade, and the expected impact of globalization, technology and other drivers of change, will indeed necessitate better, more inclusive policy development to promote structural transformation, job-rich growth and decent work for all,” she said.

On the sidelines of the conference, Jaradat met with League of Arab States Secretary-General Ahmed Aboul Gheit, Arab Labour Organization Director-General Fayez al-Muteiri, and with ministers of labour from Saudi Arabia, United Arab Emirates, Kuwait, Yemen, Iraq and the Occupied Palestinian Territory, as well as with regional worker and employer representatives from the region. She was accompanied by senior ILO specialists from the Arab States region.

This year, the annual event takes place under the auspices of Egypt’s President Abdel Fattah El-Sisi from 8-15 April. It brings together delegates from 21 member states to discuss labour issues and policy responses.

Key panel sessions in this year’s event focus on the ALO Director General’s report on “The dynamics of Arab labour markets: transitions and ways forward,” as well as on two technical reports on “The corporate social responsibility of private sector institutions” and “The role of productivity in promoting competitiveness and growth.”

Jaradat said the ILO noted, with great appreciation, the many advancements Arab countries have made in the world of work over the past year. In particular, she noted Iraq’s ratification of Convention No. 87 on Freedom of Association and Protection of the Right to Organise, and Lebanon’s imminent ratification of Convention No. 144 on Tripartite Consultation – as well as a number of important labour policy reforms across the region.

She added that the ILO Regional Office for Arab States (which covers countries in the Gulf and Levant) has also been hard at work over the past year to provide technical and advisory support to governments, workers and employers in the region.

Of the many examples she cited, Jaradat noted that through the Employment Intensive Infrastructure Programmes (EIIP) in Jordan and Lebanon, the ILO is facilitating the creation of employment opportunities for refugees and host communities. In Jordan alone, over 4,600 jobs were created. Out of all the workers employed, 13 per cent were women and 2 per cent were persons living with disabilities. The programme has seen the rehabilitation of 660 km of roads, and the maintenance of 8 km of terracing and 152 hectares of forestry areas, as well as environmental cleaning and improvement activities.

Jaradat also noted that the ILO is set to embark on projects with Syria and Yemen to fight the worst forms of child labour, including child involvement in armed conflict.

The ILO and ALO have a long history of cooperation in the Arab region, dating back over four decades, and the two agencies signed a Memorandum of Understanding in 2007.

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Economy

Record high remittances to low- and middle-income countries in 2017

MD Staff

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Remittances to low- and middle-income countries rebounded to a record level in 2017 after two consecutive years of decline, says the World Bank’s latest Migration and Development Brief.

The Bank estimates that officially recorded remittances to low- and middle-income countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. Global remittances, which include flows to high-income countries, grew 7 percent to $613 billion in 2017, from $573 billion in 2016.

The stronger than expected recovery in remittances is driven by growth in Europe, the Russian Federation, and the United States. The rebound in remittances, when valued in U.S. dollars, was helped by higher oil prices and a strengthening of the euro and ruble.

Remittance inflows improved in all regions and the top remittance recipients were India with $69 billion, followed by China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion), Nigeria ($22 billion), and Egypt ($20 billion).

Remittances are expected to continue to increase in 2018, by 4.1 percent to reach $485 billion. Global remittances are expected to grow 4.6 percent to $642 billion in 2018.

Longer-term risks to growth of remittances include stricter immigration policies in many remittance-source countries. Also, de-risking by banks and increased regulation of money transfer operators, both aimed at reducing financial crime, continue to constrain the growth of formal remittances.

The global average cost of sending $200 was 7.1 percent in the first quarter of 2018, more than twice as high as the Sustainable Development Goal target of 3 percent. Sub-Saharan Africa remains the most expensive place to send money to, where the average cost is 9.4 percent. Major barriers to reducing remittance costs are de-risking by banks and exclusive partnerships between national post office systems and money transfer operators. These factors constrain the introduction of more efficient technologies—such as internet and smartphone apps and the use of cryptocurrency and blockchain—in remittance services.

“While remittances are growing, countries, institutions, and development agencies must continue to chip away at high costs of remitting so that families receive more of the money. Eliminating exclusivity contracts to improve market competition and introducing more efficient technology are high-priority issues,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.

In a special feature, the Brief notes that transit migrants—who only stay temporarily in a transit country—are usually not able to send money home. Migration may help them escape poverty or persecution, but many also become vulnerable to exploitation by human smugglers during the transit. Host communities in the transit countries may find their own poor population competing with the new-comers for low-skill jobs.

“The World Bank Group is mobilizing financial resources and knowledge on migration to support migrants and countries with the aim of reducing poverty and sharing prosperity. Our focus is on addressing the fundamental drivers of migration and supporting the migration-related Sustainable Development Goals and the Global Compact on Migration,” said Michal Rutkowski, Senior Director of the Social Protection and Jobs Global Practice at the World Bank.

Multilateral agencies can help by providing data and technical assistance to address adverse drivers of transit migration, while development institutions can provide financing solutions to transit countries. Origin countries need to empower embassies in transit countries to assist transit migrants.

The Global Compact on Migration, prepared under the auspices of the United Nations, sets out objectives for safe, orderly and regular migration. Currently under negotiation for final adoption in December 2018, the global compact proposes three International Migration Review Forums in 2022, 2026 and 2030. The World Bank Group and KNOMAD stand ready to contribute to the implementation of the global compact.

Regional Remittance Trends

Remittances to the East Asia and Pacific region rebounded 5.8 percent to $130 billion in 2017, reversing a decline of 2.6 percent in 2016. Remittance to the Philippines grew 5.3 percent in 2017 to $32.6 billion. Flows to Indonesia are expected to grow 1.2 percent to $9 billion in 2017, reversing the previous year’s sharp decline. Stronger growth in transfers from countries in Southeast Asia helped offset lower remittance flows from other regions, particularly the Middle East and the United States. Remittances to the region are expected to grow 3.8 percent to $135 billion in 2018.

Remittances to countries in Europe and Central Asia grew a rapid 21 percent to $48 billion in 2017, after three consecutive years of decline. Main reasons for the growth are stronger growth and employment prospects in the euro area, Russia, and Kazakhstan; the appreciation of the euro and ruble against the U.S. dollar; and the low comparison base after a nearly 22 percent decline in 2015. Remittances in 2018 will moderate as the region’s growth stabilizes, with remittances expected to grow 6 percent to $51 billion.

Remittances flows into Latin America and the Caribbean grew 8.7 percent in 2017, reaching another record high of nearly $80 billion. Main factors for the growth are stronger growth in the United States and tighter enforcement of U.S. immigration rules which may have impacted remittances as migrants remitted savings in anticipation of shorter stays in the United States. Remittance growth was robust in Mexico (6.6 percent), El Salvador (9.7 percent), Colombia (15 percent), Guatemala (14.3), Honduras (12 percent), and Nicaragua (10 percent). In 2018, remittances to the region are expected to grow 4.3 percent to $83 billion, backed by improvement in the U.S. labor market and higher growth prospects for Italy and Spain.

Remittances to the Middle East and North Africa grew 9.3 percent to $53 billion in 2017, driven by strong flows to Egypt, in response to more stable exchange rate expectations. However, the growth outlook is dampened by tighter foreign-worker policies in Saudi Arabia in 2018. Cuts in subsidies, increase in various fees and the introduction of a value added tax in Saudi Arabia and the United Arab Emirates have increased the cost of living for expatriate workers. In 2018, growth in remittances to the region is expected to moderate to 4.4 percent to $56 billion.

Remittances to South Asia grew a moderate 5.8 percent to $117 billion in 2017. Remittances to many countries appear to be picking up after the slowdown in 2016. Remittances to India picked up sharply by 9.9 percent to $69 billion in 2017, reversing the previous year’s sharp decline. Flows to Pakistan and Bangladesh were both largely flat in 2017, while Sri Lanka saw a small decline (-0.9 percent). In 2018, remittances to the region will likely grow modestly by 2.5 percent to $120 billion.

Remittances to Sub-Saharan Africa accelerated 11.4 percent to $38 billion in 2017, supported by improving economic growth in advanced economies and higher oil prices benefiting regional economies. The largest remittance recipients were Nigeria ($21.9 billion), Senegal ($2.2 billion), and Ghana ($2.2 billion). The region is host to several countries where remittances are a significant share of gross domestic product, including Liberia (27 percent), The Gambia (21 percent), and Comoros (21 percent). In 2018, remittances to the region are expected to grow 7 percent to $41 billion.

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A bio-based, reuse economy can feed the world and save the planet

MD Staff

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Transforming pineapple skins into product packaging or using potato peels for fuel may sound far-fetched, but such innovations are gaining traction as it becomes clear that an economy based on cultivation and use of biomass can help tackle pollution and climate change, the United Nations agriculture agency said on Friday.

A sustainable bioeconomy, which uses biomass – organic materials, such as plants and animals and fish – as opposed to fossil resources to produce food and non-food goods “is foremost about nature and the people who take care of and produce biomass,” a senior UN Food and Agriculture Organization (FAO)  official said at the 2018 Global Bioeconomy Summit in Berlin, Germany.

This means family farmers, forest people and fishers, who are also “holders of important knowledge on how to manage natural resources in a sustainable way,” she explained.

Maria Helena Semedo, FAO Deputy Director-General for Climate and Natural Resources, stressed how the agency not only works with member States and other partners across the conventional bioeconomy sectors – agriculture, forestry and fisheries – but also relevant technologies, such as biotechnology and information technology to serve agricultural sectors.

“We must foster internationally-coordinated efforts and ensure multi-stakeholder engagement at local, national and global levels,” she said, noting that this requires measurable targets, means to fulfil them and cost-effective ways to measure progress.

With innovation playing a key role in the bio sector, she said,  all the knowledge – traditional and new – should be equally shared and supported.

Feeding the world, saving the planet

Although there is enough food being produced to feed the planet, often due to a lack of access, estimates show that some 815 million people are chronically undernourished.

“Bioeconomy can improve access to food, such as through additional income from the sale of bio-products,” said Ms. Semedo.

She also noted its potential contribution to addressing climate change, albeit with a warning against oversimplification.

“Just because a product is bio does not mean it is good for climate change, it depends on how it is produced, and in particular on much and what type of energy is used in the process,” she explained.

FAO has a longstanding and wide experience in supporting family farmers and other small-scale biomass producers and businesses.

Ms. Semedo, told the summit that with the support of Germany, FAO, together with an international working group, is currently developing sustainable bioeconomy guidelines.

Some 25 cases from around the world have already been identified to serve as successful bioeconomy examples to develop good practices.

A group of women fishers in Zanzibar are producing cosmetics from algae – opening up a whole new market with sought-after niche products; in Malaysia, a Government programme supports community-based bioeconomy; and in Colombia, a community is transforming pineapple skins into biodegradable packaging and honey into royal jelly – and these are just a few examples of a bioeconomy in action.

“Together, let’s harness the development for sustainable bioeconomy for all and leave no one behind,” concluded Ms. Semedo.

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Belarus: Strengthening Foundations for Sustainable Recovery

MD Staff

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The speed of economic recovery has accelerated in early 2018, but the foundations for solid growth need to be strengthened, says the latest World Bank Economic Update on Belarus.

The economic outlook remains challenging due to external financing needs and unaddressed domestic structural bottlenecks. Improved household consumption and investment activity, along with a gradual increase in exports, will help the economy to grow, but unlikely above three percent per annum over the medium term.

“The only way for ordinary Belarusians to have better incomes in the long run is to increase productivity, which requires structural change. While macroeconomic adjustment has brought stability, only structural change will bring solid growth to the country,” said Alex Kremer, World Bank Country Manager for Belarus. “Inflation has hit a record low in Belarus, driving the costs of domestic borrowing down. However, real wages are now again outpacing productivity, with the risks of worsening cost competitiveness and generating cost-push inflation.”

A Special Topic Note of the World Bank Economic Update follows the findings of the latest World Bank report, The Changing Wealth of Nations 2018, which measures national wealth, composed of produced, natural, and human capital, and net foreign assets. Economic development comes from a country’s wealth, especially from human capital – skills and knowledge.

“Belarus has a good composition of wealth for an upper middle-income country. The per capita level of human capital exceeds both Moldova and Ukraine. However, the accumulation of physical capital has coincided with a deterioration in the country’s net foreign asset position,” noted Kiryl Haiduk, World Bank Economist. “Belarus needs to rely less on foreign borrowing and strengthen the domestic financial system, export more, and strengthen economic institutions that improve the efficiency of available physical and human capital.”

Since the Republic of Belarus joined the World Bank in 1992, lending commitments to the country have totaled US$1.7 billion. In addition, grant financing totaling US$31 million has been provided, including to programs involving civil society partners. The active investment lending portfolio financed by the World Bank in Belarus includes eight operations totaling US$790 million.

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