Informal employment in Tunisia reached 43.9%, far higher than in most other countries in the Middle East and North Africa (MENA) region, according to a new World Bank (WB) report titled “Informality and Inclusive Growth in the Middle East and North Africa.”

Egypt and Morocco also reported high rates, 62.5% and 77.3% respectively, it emerges from this report released in June. The three countries are at the core of the report as they provide a good overview of the situation in the region.

“The state of affairs in Tunisia is different from the one in Egypt, while Morocco is somewhere in between. The three countries indeed present different charasteristics in relation to the legal and institutional frameworks, the economy as well as factors that impact informality,” the report said.

Informality, which is not inevitable, is driven by legal, regulatory and institutional challenges.

The size of the informal economy depends on a combination of several factors, including the way social protection systems are designed, the burden of legal provisions and taxation, the enforcement of laws, business registration processes, resolution of commercial disputes, access to loans, corruption and unfair competition.

In the MENA region, there are two main areas with institutional weaknesses. These are inadequate social protection systems which are characterised by little coverage and poor redistribution, in particular with regard to health and ageing.

This situation produces informality and hinders productivity growth, especially as it is coupled with factors such as minimum wage laws, complex dismissal procedures and poor enforcement of labour regulations.

To combat the informal economy in the MENA region and achieve stronger and more inclusive growth, governments need to start by establishing a social protection system which allows all citizens to access basic health services and entitles elderly people to benefit at least from minimum income.

Source: Agence Tunis Afrique Presse