[The following report was issued by the Lebanese Center for Policy Studies on 10 May 2013.]
Youth Unemployment in Lebanon: Skilled and Jobless
Executive Summary
Lebanon suffers from a high youth unemployment rate of 24%. This rate hinders economic growth and needs to be addressed in order to create a more prosperous economy and inclusive society. Two major culprits of youth unemployment are typically the educational system that affects labor supply on the one hand, and economic policies that affect labor demand on the other. With respect to the former, although the learning outcomes of Lebanese students are, on average, relatively high, the educational system is fraught with inequalities. Youths from poorer backgrounds have a lower completion rate of primary education, less access to private schools that produce higher quality education, much lower learning outcomes, and lower rates of university enrollment than students from more advantageous socioeconomic backgrounds. These inequalities are accentuated by public education spending rates that are much lower than those of private spending.
The failures on the labor supply side account for only part of the youth unemployment rate, as Lebanon still produces more educated job seekers than the domestic labor market needs. Many of the causes of youth unemployment can therefore be sought in the demand for skills by the private sector that depends on the structure of the economy. The economy remains locked in a low productivity and low-wage equilibrium due to macroeconomic uncertainty, poor governance (broadly defined to include corruption), and a weak public infrastructure that includes the high cost of an unreliable electricity supply. The presence of migrant workers depresses wages, makes them more attractive workers compared to Lebanese nationals and results in unwillingness among employers to pay higher wages or train new employees.
To reduce youth unemployment, this policy paper recommends a two-pronged approach. First, there is a need to reorganize and expand public expenditures on education to increase access to high-quality education for all Lebanese and to improve the linkages between education and employers, especially with their training system. Second, this must be complemented with policies that increase government accountability, reduce rent-seeking opportunities, and encourage high value-added activities by firms through fiscal policies, regulatory reforms, better infrastructure, and improved migration management.
[Click here to download the full report.]