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Economists: World Bank unemployment figure too low

BEIRUT: A World Bank forecast for Lebanon’s unemployment rate to double in 2014 is misleading, according to local economists – but only because the current figures are already significantly higher than the report estimated.

In a recent assessment of the impact of the Syrian crisis on Lebanon, the World Bank forecast that the unemployment rate would increase by nearly twofold to reach 20 percent, putting an additional 220,000-324,000 Lebanese, primarily women and unskilled youths, out of work.

However, while the World Bank put the current unemployment rate at 11 percent, some economists argue it is significantly higher in the absence of any official data.

Economist Ghazi Wazni told The Daily Star that the unemployment rate was likely to reach 20 percent in 2014 as estimated by the World Bank but added that the percentage increase should be calculated based on a current 15 percent rate.

“The average unemployment rate in the Arab world stands at around 15 percent, and I don’t believe it is lower in Lebanon,” Wazni said.

The World Bank expects the influx of Syrian refugees to increase labor supply by between 30 and 50 percent, with the largest impact on women and youth.

“At a time when economic activity is subdued ... the overall unemployment rate and the share of informal work in total employment could both increase, each by up to 10 percentage points,” the World Bank report said.

Nassib Ghobril, head of economic research at Byblos Bank, said that long before the crisis Lebanon had a large number of low-skilled Syrian laborers, 17 percent of the total labor force, working in low-paid jobs perceived as unattractive to Lebanese, such as construction and agriculture.

However, over the past few months, some Lebanese business owners have complained of unfair competition as Syrian refugees opened a flood of unlicensed small shops and businesses in the Bekaa Valley region.

In face of limited assistance from humanitarian agencies, Lebanese authorities turned a blind eye at first, but after growing complaints, municipal authorities and Internal Security Forces began enforcing laws requiring businesses to have proper documentation.

Also, cases of some high-skilled professional Syrian refugees, such as doctors and engineers, entering the informal job market have been reported lately, but Wazni said their numbers remained very small.

Ghassan Diba, professor of economics at the Lebanese American University, told The Daily Star that regardless of whether the projected increase in the unemployment rate is exaggerated, the estimates are at best provisional in the absence of historical data.

While the recent influx of refugees has deepened Lebanon’s social woes, the government has long failed to tackle increasing unemployment among youths and the high emigration rates of skilled graduates, according to economists.

Excluding the influx of Syrian refugees, 23,000 individuals are expected to enter the labor market on average annually over the next 10 years, according to the World Bank, which highlighted that the Lebanese economy would need to create more than six times the 3,400 jobs it is currently creating each year.

Unemployment rates reach as high as 34 percent among the youth and 18 percent among women.

“To create jobs, the government needs to invest in infrastructure projects and the public sector,” Diba said.

According to the World Bank, Lebanon would require between $166 million and $242 million in resources to stabilize the social situation.

“Stabilizing the situation by implementing a comprehensive package of active labor market programs to improve livelihoods and earnings opportunities over the short term would require resources in the order of $166-242 million,” the World Bank report said.

 
A version of this article appeared in the print edition of The Daily Star on September 30, 2013, on page 5.

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