Policy Briefs

The Impact of COVID-19 on Middle Eastern and North African Labor Markets: Employment Recovering, but Income Losses Persisting

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No.

PB 73

Publisher

ERF

Date

February, 2022

Topic

I. Health, Education, and Welfare

J. Labor and Demographic Economics

Abstract
Author(s)

In a nutshell

Pandemic cases and deaths were higher in Jordan and Tunisia in 2021 than in Egypt and Morocco, but closure measures continued to be more stringent than the world average in Morocco.
GDP growth in quarter two of 2021, in comparison to a year earlier, was the highest in Tunisia and Morocco, the two countries that experienced the highest contractions in Spring 2020. However, except for Egypt, economies remained depressed compared to pre-pandemic.
Macroeconomic, business support, and social protection policies introduced in 2020 were extended in the four countries. However, some countries, such as Tunisia, were constrained by a narrowing fiscal space.
Aggregate labor market indicators, such as labor force participation, employment and unemployment rates generally recovered from February to June 2021, except in Morocco where the progress made earlier was reversed.
With the exception of Morocco, transitions from pre-pandemic labor market states also showed some improvements in 2021. In June 2021, fewer previously employed people were unemployed or out of the labor force compared to February 2021. Moreover, more previously unemployed people and those out of the labor force transitioned to employment.
Private wage workers, especially those hired informally, faced substantially more challenges related to layoffs/suspensions and wage reductions in Egypt, Jordan and Tunisia than in Morocco. However, the prevalence of these challenges decreased in these three countries from February to June, while it increased in Morocco.
Although a substantial proportion of farmers continued to see a decrease in input use relative to the same season in 2019, an increasing proportion in Morocco and Tunisia had improved expectations for a better harvest in June 2021 compared to February 2021.
A higher proportion of enterprises were open with normal hours in June compared to February 2021 in all four countries, but a higher share also reported substantially reduced revenues in Jordan and Morocco, and moderately reduced earnings in Egypt and Tunisia.
Household income levels remain depressed, with just under half to two thirds of households in all four countries reporting income losses in June 2021 compared to pre-pandemic levels. In fact, the share reporting income losses increased from February to June 2021.
Household income losses continued to be highest for the households that were poorest pre-pandemic, confirming the adverse effects of the pandemic on poverty and inequality.
The share of households receiving government assistance declined in all countries except Egypt, from February to June 2021. Targeting of assistance to the poorest improved in Morocco but worsened in Egypt.
Assistance continues to be only weakly targeted to groups whose labor market status makes them most vulnerable to the disruptions brought about by the pandemic.