Abstract
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
Growth, Employment, and Socio-Demographic Challenges in Mauritania1
Mauritania’s growth performance in recent years has been high by regional standards and is expected to strengthen over the medium term thanks to the expansion of mining capacity. That said, the economy is still reliant on a narrow natural resource base. Mauritania could benefit from the positive growth outlook and the ongoing demographic transition, with an increasing share its population at working age, to support a structural transformation of the economy, diversifying its economy to provide opportunities for more inclusive growth and reducing its vulnerability to terms-of-trade shocks. Analysis of other countries’ experiences shows that as the economy diversifies, more attention should be given to human capital development and the reduction of labor market inefficiencies.
A. Introduction
1. Mauritania is a country rich in natural resources. With more than one million km2, Mauritania is comparable in area to Egypt but its population, at only 3.5 million, is much smaller. The country is at the intersection of the Maghreb and the Sahel region (Morocco, Algeria, Senegal, and Mali) which explains the multiethnic structure of the population. Historically, Mauritania has been agro-pastoralist but as a consequence of extended, severe drought, the desert has been expanding since the mid-1960s limiting agricultural activity to the Senegal River in the south. To the west, the country has one of the richest fishing areas in the world. Mauritania also has extensive reserves of iron ore, most of which is currently extracted by the state-owned Société Nationale des Industries Minières (SNIM). Other metals include copper and gold.
2. Mauritania achieved a relatively good growth performance in the past 15 years, but volatility remains high. GDP grew on average by [4.9] percent during 2000–13. This period has been marked by an exceptional hike in 2006 (18.9 percent) owing to the beginning of oil production, which rose to 36,000 barrels per day. Since then, however, oil production has been decreasing, to 6,000 in 2013. Growth volatility has declined compared to 1990–99—mainly because of less reliance on the primary sector—but remains high compared to peer countries.
Growth and volatility in low and middle income countries
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: WEO and staff calculations3. With more prudent macroeconomic management, greater political stability, and a more favorable international environment, Mauritania has recorded stronger and more stable growth. Despite the drought which marked the 2011–12 agricultural seasons, GDP grew at 5.3 percent on average during 2011–13, boosted mainly by higher mining production and buoyant activity in construction and services favored by large public investments aimed at filling the infrastructure gap.
4. Medium-term prospects are promising thanks to an expansion in mining production.
The momentum is likely to continue in the short to medium term as iron ore production is expected to more than double by 2019, leading to sustained growth of about 6.5 percent during 2015–19. However, a larger-than-forecasted decline in iron ore prices could lead to delays or even cancellation of some mining projects. These risks, if they materialize, could lower growth prospects. Even under the baseline scenario presented in the accompanying staff report, the authorities will continue to face the same challenges of generating more inclusive and job-creative growth. As shown by many resource-rich developing countries’ experiences, growth is a necessary but insufficient condition to lower unemployment and income inequality (IMF 2013c).
Output diversification
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: ONS and staff calculations5. Mauritania could benefit from improving human capital and labor market efficiency.
According to the global competitiveness index, Mauritania continues to lag behind factor-based economies in terms of human capital—especially education—and labor market efficiency, while the infrastructure gap has been narrowing as a result of government efforts. At the same time, the presence of a young and better-educated segment of the population provides an additional opportunity to benefit from the favorable environment and speed up reforms in order to absorb the additional labor demand, reduce the unemployment rate (especially among youth) and try to bring the informal sector into the formal economy.
6. This paper takes stock of sectoral and factor dynamics in Mauritania’s economic growth, discusses labor market dynamics, and explores the policy options that could support sustainable and more inclusive growth. The first section focuses on growth determinants, from a sectoral perspective and through factor analysis. Dynamics of the labor market and socio-demographic challenges will be addressed in sections 2 and 3, respectively. Lessons from other countries’ experiences and policy recommendations are discussed in section 3. Section 4 concludes
B. Growth Determinants in Mauritania: Sectoral and Factor Analysis
Sectoral analysis: Some output diversification but a heavy reliance on natural resources
7. Greater trade openness and liberalization of some services have helped to diversify output, but the productive base has remained reliant on the exploitation of natural resource endowments.
Since the beginning of the 1990s, Mauritania has undergone a relatively rapid trade liberalization followed by a disengagement of the state from some services (Telecom, air transport). This, in addition to rapid urbanization, has increased the share of the tertiary sector, which grew by 10 percentage points during 1998–2004.
Over the same period, the share of the primary sector, dominated by pastoral activities, declined from 38 percent in 2000 to 30 percent of GDP in (year). Difficult weather conditions, weak rural infrastructure, and low productivity owing to the extensive and dispersed nature of farms led to a weak contribution of agriculture and livestock to growth. In the second half of the 2000s and in recent years, the government has attached higher importance to the sector, offering technical and financial support to farmers and extending irrigated land, which led to yield improvement and smoothed growth volatility.
The productive base has not changed significantly. Industrial production remains dominated by raw extractive products, and processing is shallow (in the fishing industry, for example) because of infrastructure bottlenecks (transport, electricity supply and ports), limited financial access, and a weak business environment.
8. Services and construction have been the main drivers of overall growth, but are heavily dependent on performance and revenues in the extractive sector.
Domestically oriented sectors such as services and construction were the main drivers of growth. In services, particularly commerce and transport, average growth was 7.5 percent and 11.9 percent, respectively, on average during 1999-2012, contributing more than half of overall growth. Construction also played an important role, growing by [11] percent on average, though its contribution was uneven across years.
The direct contribution of the extractive sector was low until 2007. In fact, except for the 2006 hike in oil production, production was limited to iron ore and fluctuating around 11 million tons per year. The reforms of the mining code, in addition to higher international prices, attracted large foreign investments and mining production diversified to copper and gold2 and increased the contribution of the mining sector to 0.6 percent on average during 2007–13 compared to 0 percent during 2000–06. Moreover, because the metal prices were more than 10 times higher in 2012 than in 2000, the mining revenues increased substantially, reaching more than 25 percent of total revenues which allowed large public investment that contributed to bolstering non-extractive GDP growth.
Sectoral contributions
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
ONS and staff calculationsGrowth and mineral rent
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Mining revenues and public investment
(in percent of non extractive GDP)
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Factor analysis: The mirror of economic structure
9. GDP growth was mostly driven by the accumulation of factors of production—especially labor—while the total factor production (TFP) contribution was negative. The growth-accounting exercise results are symptomatic of an economy in which agriculture is still the biggest employer and which depends on growth in public sector and informal services with a minimal contribution from manufacturing.
Labor utilization was the main driver of real GDP per capita growth, reflecting the increase of both the labor force and the participation rate, while the unemployment rate remained stable. Human capital contributed positively to growth, reflecting the gradual improvement in education measured here by the average years of schooling across the population.
The 2000s recorded an acceleration of capital accumulation, fostered by important investments in the extractive sector and an acceleration of public investments mostly targeted at filling the infrastructure gap.
However, TFP contributed negatively to growth (-1.8 percent in the 2000s compared to +1.7 percent for low-income countries (LICs)). The concentration of investments in the mining sector, the high level of informality, together with the poor quality of education and/or the inability to retain talent, could explain why the accumulation of factors did not translate into productivity gains.
Growth decomposition
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: Penn database and IMF staff calculationsTFP growth in agriculture
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: USDA and IMF staff calculationsGrowth Accounting Exercise: Methodology and Data
The growth accounting exercise explains output growth by decomposing it into the contributions of capital, labor, and a residual. This residual is an estimate of the changes in total factor productivity (TFP) that reflect a wide range of factors affecting input efficiency. The residual is defined as the growth in output that occurs with unchanged levels of the factor inputs.
Following the methodology of Hall and Jones (1999), the exercise is based on a standard aggregate Cobb-Douglas production function with a constant return to scale which includes physical capital, human capital, and labor as production factors and labor-augmenting technological progress is assumed:
where Y, K, H, h, L, and A stand for output, physical capital, effective labor input, human capital per person, employment, and total factor productivity (TFP) respectively, α refers to the capital share, and (1-α) refers to the labor share.
This can be written:
Output growth is given by TFP growth, i.e., the efficiency with which inputs of production are used, plus a weighted sum of the growth rate of physical capital and human capital.
All the data have been taken from the Penn database. The poor quality of some data, especially the employment ones, leaves some uncertainty in the results.
10. At the disaggregated level, the low agricultural productivity could partly explain the aggregate productivity gap. To better understand the picture on aggregated level, we investigated the agriculture sector. Mauritania experienced relatively low TFP growth in the agriculture sector, unlike many low-income countries including some in the Sahel region. Recent efforts to extend irrigated land, and other forms of financial support have improved the attractiveness of the sector and increased its contribution to growth during 2011–13.
C. Labor Market Dynamics, Socio-Demographic Issues, and Challenges Ahead
Dynamics of the labor market
11. The unemployment rate is moderate by regional standards but is uneven across internal regions, age groups, and gender. According to the 2012 national survey on employment and the informal sector (ENRE-SI), which followed International Labor Organization (ILO) methodology, the unemployment rate is 10 percent. However, using the methodology of the EPCV 2008 survey, the unemployment rate is much higher, at 31 percent in 2012, only 1 percent lower than the 2008 level. In addition, again on the basis of the new ILO methodology, the data show a high heterogeneity of unemployment across regions, age groups, and gender.
Unemployment is a greater concern in urban areas, averaging 16.6 percent, and with many cities recording more than 20 percent.3 Rural unemployment is much lower, at 4.4 percent; but at the same time, poverty is very high in these regions reflecting the dominance of subsistence agro-pastoral activities and low-wage or unpaid jobs.4 It could also be attributed to the fact that most job seekers in the rural regions choose to migrate to urban areas searching for better opportunities.
Unemployment affects more young people: as two out of three unemployed are less than 35 years old. The unemployment rate exceeds 20 percent for the 20-29-year-old urban workforce, reaching 29 percent for the 25 29 age group. Surprisingly, better education does not guarantee easier access to a job. The unemployment rate is higher among better educated people, which could reflect skills mismatches, low quality of education, or high labor costs for small and medium-sized enterprises (SMEs). This problem is more important for women: 22.8 percent of women with a secondary education and 37.5 percent of those with tertiary education are unemployed.
Unemployment by sex and level of education
(In percent)
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Unemployment rate by region and broad age groups
(In percent)
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
12. The relatively low unemployment rate partly reflects low participation, particularly for youth and women.
The unemployment rate would have been higher if the participation rate were not so low, especially for youth and women. Only 4.4 out of 10 working-age people are active (looking actively for a job). The participation rate for people aged 15–24 years is only 25 percent (34 percent for men and 17 percent for women) which is low, given the relatively low level of years of schooling (five years). One possible explanation is the long time it takes to find a job for first job seekers (five years on average) which discourages them and push them to quit the active labor force. The other one is that a large number of these young people will be involved in family businesses and wait for their parents to be older to replace them.
Government efforts to reduce the gender gap (see Box 2) contributed to an increase in the female labor force participation rate (FLFPR) which stood at 28.8 percent in 2012- comparable to MENA countries. The FLFPR is higher in rural regions, suggesting a greater need for women to work to improve their family income, but is much lower than in other countries relying mostly on agriculture (such as countries in sub-Saharan Africa). The FLFPR increases steadily from 12.5 percent for the younger cohort (15-19 years old) to 43.7 percent for the 45-49 cohort, which may suggest that the inactivity of women is due to familial responsibilities.5
Participation and unemployment
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: RGPH, ENRE-SI and staff calculationsMajor Actions to Reduce the Gender Gap in Mauritania
In Mauritania, the situation of women has improved markedly over the past two decades, and their role in society has been reinforced. A number of measures have been taken, particularly in the political, educational and health fields. These include:
the creation in 1992 of a State Secretariat for Women;
the formulation of a national strategy for the Promotion of Women in 1995 and updated in 2002;
the adoption in 2001 of a Code of Personal Status;
the adoption by the National Assembly in 2002 of a law making compulsory education of children, including girls from six to 14 years;
the ratification by Mauritania of international conventions including the Convention of Elimination of all forms of Discrimination Against Women (CEDAW) and the Convention on the Rights of Children (CRC);
the establishment in 2006, as part of the electoral law, of a 20 percent quota for women in electoral lists, which resulted in a rate of 18 percent for women elected to the National Assembly and 16 percent for women in the Senate. At the municipal councils, the proportion of elected women was more than 30 percent, well above the quota required by the Act.
13. The informal sector is very large and a large share of the workforce is highly vulnerable.
In the absence of a developed formal private sector, the informal sector employs 86.5 percent of the total working population (more than two thirds of the working population in the nonagricultural sector). In addition to the 42.8 percent working in agriculture, informal workers are concentrated in commerce. The formal sector is dominated by public administration and public enterprises (95.7 percent) while private firms employ only 4.3 percent. While poorer and uneducated people are likely to join the informal sector, formal jobs are occupied mostly by the educated population; 28.6 percent have tertiary education and 43.1 percent have secondary education.
Women entrepreneurship accounts for more than 50 percent in the informal sector. Informal units are, in general, family SMEs employing the father (or the mother) and their son. In larger firms, the hiring process relies on relatives or personal relationships; fewer than 15 percent are recruited through a placement structure or competitive procedures.
A large share of the workforce is not protected: 38 percent are unpaid, mostly working in family businesses. Instability of jobs affects the 44 percent of workers (53 percent for women) who are involved in seasonal or temporary jobs. Therefore, the unemployment rate could vary substantially over the course of the year. More than 98 percent of workers in the informal sector have no contract, and only 4 percent of workers in the nonagricultural private sector are affiliated to the social security system. Regarding the motivations to create an informal unit, 57 percent of respondents said it was voluntary. Being independent, increasing their income, or simply familial tradition were the most common reasons invoked.
Generally, wage setting is at the discretion of the employer (60 percent of cases). Only 9 percent of informal employees have fixed wages and most of them are paid on a day to day or task basis.
Employment in formal versus informal sectors
(in percent of total employment)
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Working age population
(In percent of total population)
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: UN world population projections (revision 2012) et calculs du staffSocio-demographic issues and challenges ahead
14. Mauritania is at the opening of a window of opportunity as working-age people comprise an increasing share of its population. The fertility rate has been decreasing since the beginning of the 1980s, although it remained high compared to North African countries. But this has been compensated by lower infant mortality—the effect of substantial improvements in health services—resulting in a stabilization of population growth and age structure during 1980–2000.6 However, since the beginning of the 2000s, the share of the working age population has been increasing steadily, reaching 52 percent in 2013, according to the national population survey. This trend will be sustained in the next decades; the working-age population is expected to reach 60 percent in 2065 under the medium-fertility scenario,7 or even sooner under the low-fertility scenario.
Measures of informal employment
(in percent of total employment in non agricuture informal sector)
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
A higher working-age population and lower dependency ratio present a window of opportunity for productivity gains, higher income, and savings. Under some conditions that will be discussed in the next session, Mauritania could benefit from this demographic dividend. In line with other researches, Drummond and others (2014) found that a 1 percentage point change in the share of the working-age population increased real GDP per capita by 0.5 percentage point.8 Using their estimation, Mauritania’s GDP per capita could be 6 percent, 20 percent, and 40 percent higher in 2030, 2050, and 2080, respectively.
Projected employment growth in Mauritania 2014-20 using different employment output elasticities
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: Crivelli and others (2012), UN World population prospects (2012) revision and staff calculations15. However, a larger working-age population means additional labor supply and higher growth is needed to absorb it. The 15-64 age group will grow by 380,000 by 2020 and by about 1,000,000 in 2030 compared to its 2013 level. Under the assumption of a constant participation rate, this means that to absorb the new entrants, the economy will need to create 25,000 jobs, on average, per year during 2014–20, 3,000 more per year than in the period 2000–13. This additional demand for jobs will reach 30,000 in 2030. Should the participation rate increase—for example, owing to an increase of female participation rate in line with historical trends—the economy will need to create 200,000 jobs during 2014–20. The expected employment growth under the baseline line scenario is 2 percent but ranges between 1.4 percent and 2.4 percent per year depending on the employment-output elasticity.9 This will be not enough to absorb the new entrants, because the working-age population is expected to grow by 2.7 percent on average during the same period.
Potential demographic dividend in Mauritania
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: Drummond et al. and staff calculations16. Rural-urban migration could raise the unemployment rate by creating a geographic imbalance in the labor market. Like many countries moving away from primary-based economies, Mauritania is undergoing urbanization. The urban population, which accounts for 42 percent of the total in 2013, will increase by 2.9 percent on average during 2010–15, compared to 1.8 percent for the rural population. The population of the capital city Nouakchott grew by 4.2 percent during 2000–13, almost twice the national growth rate, and it concentrates one third of the working age population. More than 40 percent of the population of Nouadhibou—the mining and fishing city—are natives of other regions. Very high poverty in the rural areas,10 high vulnerability owing to frequent droughts, and lack of opportunity, are likely to accelerate the process of urbanization. In early stages, urbanization is desirable in many countries, reducing poverty and increasing agricultural productivity; however at some point, the absorption of workers’ flows by the urban area will be more difficult and the geographical disequilibrium in the labor market will widen.
17. The economically active population remains relatively low-skilled, and education policies results have been mixed.
Although 68 percent of the working-age population has had access to school, almost half did not complete primary education and only 7 percent of males and 3.3 percent of women have reached tertiary education.
The results of the different national development strategies of the education sector (Programmes Nationaux de Développement du Secteur de l’Education) have been mixed. Enrollment rates in primary and, to a lesser extent, in secondary schools improved since 2000. However, completion rates are still low and the transition to tertiary education remains very limited. First, this could be attributed to income constraints and the concentration of education public services in some regions. Secondly, it could suggest low expected returns from education. And finally, it could reflect a lower quality of education, that is, pupils have not acquired sufficient skills to move to the next level.11 An ONS 2007 survey points out that a girl has only a 50 percent probability of becoming literate after six years of education. Respectively 17 and 18 percent of pupils succeed in the lower secondary level certificate and the baccalaureate. This in turn reduces the efficiency of education spending.12
Gender inequalities diminished particularly for the primary level. Rural coverage has increased reducing the substantial gap between regions that prevailed in the 1990s but remains important for secondary and tertiary levels. Still, according to the EPCV 2008, significant disparities could emerge when combining all these parameters i.e. gender, income level and region. In fact, a rural girl belonging to the poorest 40 percent is three times less likely to complete primary education than an urban boy from the richest 40 percent.
A private education system is growing rapidly. It accounts for 11 percent of primary school students and more than 26 percent of secondary school students. This trend could reduce the burden of education on the budget, but as the private sector develops, there is a risk of further deterioration of the quality of public education because teachers could be attracted by higher wages in the private sector.
Technical and vocational training, which is supposed to be the alternative for those who are not able to continue or choose to quit the conventional education process, remain limited and insufficient to meet the considerable demand. Only 6 percent of the new entrants in the labor force have benefited from such training. Moreover, specialties seem to be inappropriate for the labor market’s needs. Qualitative surveys show that private firms are generally dissatisfied with the profiles they are hiring among this group.
D. Lessons from Other Countries’ Experiences and Recommendations
In the path toward a more sustainable and inclusive growth, structural reforms targeted at the demand side, such as the diversification of the economy and the promotion of the role of the private sector (see accompanying SIP on economic transformation), are essential. At the same time, more attention is needed for the supply side. This includes the most efficient utilization of existing resources and the reduction of employment vulnerability in the short term, and the development of human capital and the gradual reduction of labor market inefficiencies in the medium to long term. Although there is no one-size-fits-all approach, other countries’ experiences offer a large set of practical policies and measures, some of which are active labor market policies (ALMP). We identified three interconnected and complementary pillars that are of particular relevance for Mauritania. These are:
First pillar: Education, training, and employability
18. There is a consensus as to the impact of education on growth. The impact of education on economic growth has been acknowledged by early literature on the role of human capital and endogenous growth. Many channels have been identified notably the positive impact on labor productivity, innovation, and transmission of skills, but also, in some cases, higher income and less inequality. Hanushek and Wößmann (2007) suggest that each year of schooling boosts long-run growth by 0.58 percentage points. Lustig and Lopez-Calva (2010) argue that education has been key to reducing inequality in Brazil. Similarly, Hailu and Soares (2009) estimate that one-third of the reduction in inequality is due to the effect of education.
19. Therefore, increasing access to education has been one of the highest priorities on the development agenda in developing countries. Many, if not all, have embarked—most of the time successfully—on a vast reform agenda aimed at increasing enrollment rates, especially in primary school (education for all), while reducing gender and geographic inequalities. This effort has resulted in a large increase in the number of schools and, more generally, in education spending. With less evidence of success, conditional cash transfers were used to encourage people to send their children to school. While the Bolsa Familia in Brazil has been relatively successful, evidence from a similar program in Ghana (the Livelihood Empowerment Against Poverty) is more ambiguous because there is no way of checking that the obligations have actually been met (Gbedemah and others, 2010).
20. However, there is increasing—though still tentative—evidence that in addition to quantity, education quality matters, especially in developing countries. Substantial differences in education outcomes between countries have been highlighted. These differences were at first attributed to diminishing marginal returns to schooling. Recent research, however, argues that they could be explained by differences in the quality of education, that is, in the amount of cognitive skills acquired after some years of schooling. Recent case studies in developing countries (Ghana, Kenya, Morocco, Pakistan, South Africa, Tanzania) suggest that the returns on quality may be even larger in developing countries than in developed countries.
21. Improving the quantity and quality of education does not necessarily imply additional resources. Using a hybrid approach (parametric and nonparametric), Grigoli (2014) finds evidence of large potential gains in enrollment rates in secondary education from improving efficiency, especially in lower-income economies such as those in Africa. Where needed, a reallocation from other public expenditures could be envisaged. More generally, reallocating education expenditure to reduce student-to-teacher ratios (where these are high, for example, in rural regions) and improving the quality of institutions could help improve the efficiency of education spending.
22. At the same time, better adapting the labor supply to the demand and supporting job seekers in finding jobs is likely to improve education and training outcomes.
Education programs are to be tailored to better fit the employers’ needs and improve the employability of the educated labor force. Skills mismatch could substantially reduce education outcomes as they lead either to higher unemployment rate or underutilization of educated people. In the first case, this may encourage students - especially poor- to leave school earlier, reducing their ability to improve their condition. In the second, this will push the educated workforce to informality or to low-skills jobs, ultimately reducing their productivity. This is typical in many North African countries which experienced high unemployment rate among youth and educated workforce while at the same time, many surveys point that enterprises complain about the inadequacy of skills of job seekers. In such context, reforming the education programs may be necessary (content, pedagogy) to better fit current private sector needs and future development prospects.
Technical and vocational training could provide appropriate skills and better access to the job market for early school leavers. Many technical vocational education and training (TVET) systems fail because they focus on the needs of the formal economy. West African countries such as Benin, Togo, Senegal, and Mali are restructuring TVET systems to incorporate traditional apprenticeships, including certification mechanisms, while South Africa and Ethiopia are opening their TVET systems to meet the informal economy’s needs. Experiments in Morocco, Benin, and Cameroon underscore the need to associate social partners (employers and employees) in TVET systems for the identification of jobs and for the development of appropriate training strategies and methods.
Recommendations: Education is one of the priorities of the current government. As a matter of fact, the President announced 2015 to be the year of education. What follows are a few suggestions that could structure policy discussions:
Pursuing efforts to increase enrollment and attainment rates in primary school, with special attention to the poor and girls: in this context, conditional cash transfers could be used, together with efficient monitoring systems and adult literacy programs that are already in place could also help increase awareness of the importance of education.
Improving the quality of education at basic levels and investing in infrastructure for the secondary level (especially in the rural areas) could help increase enrollment rates beyond primary school. Participating in international assessments tests (PISA, etc.) could be useful for dynamic analysis.
Moving toward supply-driven education and TVET programs; this consists in programs with more empirical content13(see PNDSE) and a focus on promising fields with high future labor demand. The latter objective may imply to entail partnerships with stakeholders (mainly employers) in designing the programs. TVET system should focus more on the informal sector, including agriculture-related training in rural areas. Current workers could also benefit from shorter time training. Finally, public spending on TVET should be reinforced (it is currently 0.02 percent of GDP).
Reinforcing the role of Agence Nationale de Promotion de l’Emploi des Jeunes in smoothing the transition to work by supporting job seekers over a broader geographical area, and by greater coordination with the private sector. Currently, placement rates are satisfactory (61.5 percent) but vary substantially by gender (only 31 percent for women compared to 64 percent for men) and across regions (65 percent in urban regions compared to 28 percent in rural).
Regarding financing, there is room to better target public expenditures (subsidies and other social transfers), introducing gradually conditional cash transfers where public services are available, better targeting of education spending by setting geographical priorities, linking education to other development strategies with external financing, and involving the private sector in financing the reform of the TVET system.
Public Spending on Education
(2013 or latest available)
Citation: IMF Staff Country Reports 2015, 036; 10.5089/9781498354226.002.A002
Sources: National authorities and World Bank’s World Development Indicators.Second pillar: Female participation and gender equality
23. Increasing female participation could help achieve higher and more inclusive growth. Higher female participation would be an important component of the demographic dividend. Higher female participation rates are estimated to have accounted for about a third of East Asia’s high per capita growth rates in the period between 1965 and 1990 (Bloom and Williamson, 1998). More recent studies find significant macroeconomic gains from increasing FLFPR. Aguirre and others (2012) estimate that raising FLFPR to country-specific male level would increase GDP by 12 percent and 34 percent in the United Arab Emirates and in Egypt, respectively. International experience also indicates that getting women into jobs is associated with poverty reduction. It has found for example that in countries with low levels of female employment, families often under-invest in girls’ education with important externalities on children’s nutrition and education outcomes. Lastly, increasing FLFP may also increase competitiveness, and thus growth, by reducing labor costs. Using a general equilibrium model for South Mediterranean countries Tsani and others (2012) suggest that removing barriers to female participation could lead to lower real wages, higher competitiveness, and higher growth. Their simulation results show that, in Tunisia for example, a 2.5 percentage point increase of the FLFPR during 2015–30 will reduce real wages by 4.25—percentage points and increase GDP growth by 1.75 percentage point.
24. Female participation is hindered by social, legal, and economic obstacles. Unequal access to education, high fertility rates, conservative social norms, notably related to the traditional intra-household division of labor which implies that women do most household work, restrictive legislation and even a hostile environment in some countries, curtail women’s opportunities to engage in formal employment in many parts of the world. Within the MENA region, the lack of opportunities or long queuing in the public sector, the difficulty of finding private employment, and the sizable gender wage gap in both sectors lead many women to decide not to enter the workforce. The resulting low FLPF has serious consequences for the economy as a whole, because potential productivity gains and economic growth are sacrificed when a large part of the labor force is discouraged from working.
25. Even when FLFPR is high, the potential of women is often underutilized or underpaid. In some developing countries, the female participation rate is high; however, most of the time, they are confined to low-productivity jobs in agriculture, housework, or public services that have no career development prospects and are regarded as a natural extension of their traditional role in society (education, health). High poverty is often associated with high FLFP, as working is a necessity. Lastly, women are generally paid less than men, which makes them attractive for enterprises looking for unskilled, cheap labor.
26. Public policy could help overcome the social norms (see IMF SDN/13/10). Fiscal policy plays an important role in encouraging women’s participation. Bangladesh prepared a gender-responsive budget in 2005. More specifically, fiscal measures to better reconcile work and family life include (i) making child care available and affordable e.g. by providing child care subsidies for working mothers, (ii) publicly financed parental leave schemes which guarantee that women can return to their jobs,14 (iii) flexible work arrangements or part-time jobs, and (iv) increasing expenditure in rural infrastructure, for example, by making clean water more accessible and improving transportation systems, can reduce the time women spend on domestic tasks and facilitate their access to markets. Linking child and family benefits to female labor force participation could be envisaged. Other policies aimed at promoting women’s entrepreneurship include improving access to resources, especially for rural women, such as education, land, and credit.
Recommendations: As stated in previous sections, many measures have been undertaken by the government to help fill the gender gap. To complement them, we suggest the following actions:
Ensuring equal opportunities in education at all levels and in all regions (first pillar).
Gender mainstreaming in budget and public policy formulation: the ongoing Public Investment Management Support Project 2014–16 with the African Development Bank will give more detailed and technical recommendations on how to include gender considerations in public investment programs and in the planning, and monitoring and evaluation of public policies. This applies for all development policies, sectoral strategies, etc.
Adopting active labor market policies to reduce unemployment, notably but not only among highly educated women, including measures to promote both employment and entrepreneurship. The gender-neutral policies described in the first pillar remain valid, but some specific actions could be considered, such as a system of preferences—like in affirmative action policy—for public hiring programs, and vocational training.
Helping women reconcile work and family so as to facilitate labor market participation, such as providing affordable public child care and preschool; currently, fewer than 10 percent of children have access to such services in Mauritania. In addition, maternity leave, flexible work arrangements and part-time jobs should be encouraged; the labor code15 increased maternity leave to 14 weeks, eight of these for the period after the delivery, with some flexibility within the pregnancy and nursing period. Further extension of maternity leave could be envisaged, with care to not create disincentives to hiring women by increasing the costs associated with their employment. Among rural women, the fertility rate is still high, calling for redoubled efforts with information and advocacy campaigns. Investment in health and infrastructure (water, electricity, transport) and easier access to land and financing will help bring women into the economy.
Third pillar: Market segmentation: the vulnerability of informal workers and attractiveness of the public sector
27. Informality has important shortcomings, but there is a growing awareness of the importance of the informal sector in job creation in developing countries. The drawbacks of informality of firms and employment on macro and micro level have been identified in the literature, ranging from low productivity, low tax revenues, workers’ vulnerability, etc. Reducing informality is often prescribed as a remedy for developing countries to improve growth, reduce poverty, and ensure fiscal stability, among other benefits. However, more recently, analysts tend to recognize that the transition is very challenging because the role of the informal sector is particularly important in job creation. A more pragmatic approach consists in dealing with informality as a fact while at the same time trying to bring the informal sector into the mainstream (ILO, 2014).
28. In the immediate near term, actors in the informal economy must be recognized by labor laws, and minimum protection mechanisms should be put in place. Most informal workers, both self-employed and wage earners, are typically deprived of predictable work, workers’ benefits, social protection, and representation. Irregularity of work is also a source of instability. There is a significant, though not complete, overlap between working informally and being poor. The numbers of working poor are declining in countries where informality is retreating, and vice versa. Basic workers’ rights should apply to all workers. In practice however, labor laws cover only workers with a clear relationship between employer and employee, calling for an extension of labor laws or issuance of specific regulation16 for informal workers. Enforcing the law may be challenging because of limited capacities of the state (labor inspectors). Promoting the role of unions and NGOs is essential to complement the efforts of the state. To reduce the vulnerability of informal workers, some governments have designed basic social protection packages (essentially health.)17 Also, unemployment benefits and public works have often been used in Latin America and Eastern Europe to mitigate the impact of income shocks on informal workers.
29. In the short to medium term, a comprehensive approach that allows and encourages SMEs to gradually enter the formal economy must be formulated. The choice between formality and informality results, in general, from a cost-benefit calculation. Evidence from international experience shows that informality is often associated with high costs associated with operating in the formal sector, including labor market rigidities, high taxes, and complex administrative procedures, coupled with scant benefits from formality—or lack of information about these benefits. Informality could also be associated with lack of credibility of public institutions. Enhancing governance and the transparency of the public sector will increase confidence and reduce the reluctance of firms and workers to move to formality.
30. In many countries, large informal sectors coexist with a large and very attractive public sector. A bloated public sector, which provides greater job security and higher wages than private sector employment at comparatively similar productivity and skills levels, tends to distort labor market outcomes. Leigh and Flores (2012) find that in the Southern African Customs Union, the hiring process and wage policy in the public sector have typically inflated wage expectations and placed a premium on graduates in liberal arts and social sciences over skills in demand in the private sector, influencing education choices and contributing to a skills mismatch in the labor market and higher youth unemployment because of the limited absorption capacity of the public sector. This also hampers the development of a formal private sector because the majority of the educated workforce will be much more willing to work in the public sector, lowering entrepreneurship.
Recommendations: Although many efforts have been undertaken in the first two pillars, much more needs to be done in the third, in particular:
Setting minimum social protection packages for informal workers.
Adapting the labor code by extending its coverage to informal workers while taking into account their great diversity (employees, self-employed workers, contributing family workers, etc.) and the peculiarities of the activities they undertake (agriculture, domestic work, craft industry, street vendors, etc.). At the same time, to ensure the application of the law, there is merit to reviewing the relative weight of coercive actions against policies that favor incentives and supporting measures, and to reinforcing the role of trade unions and associations.
Promoting a greater awareness of the benefits and protection that come with formalization: according to ENRE-SI, only 18 percent of informal entrepreneurs know the CNSS but only 14 percent are against being affiliated; the others have either neutral or favorable views. There may be also room to gradually increase the maximum monthly earnings for contribution purposes, which is 70,000 ouguiya at present.
Reducing regulatory and non-regulatory barriers to formalization (such as excessively high minimum wages), while protecting workers’ rights. Although they are supposed to ensure minimum earnings for the worker, high minimum wages can be an incentive to informality (for example, hiring with no employment contract) and add to the worker’s vulnerability.
Reducing the gap between public and private sector wages by applying a productivity-oriented public wage policy while gradually aligning wages with the private sector levels; this will allow increasing productivity in the public sector and will control the wage bill.
E. Conclusion
31. In recent years, Mauritania’s growth performance has been mostly driven, directly and indirectly, by the extractive sector. But the overall growth masks a two-speed economy with low productivity gains. The labor force is largely underutilized as reflected in the high youth unemployment rate and the low female participation rate. Moreover, a large share of the workforce is highly vulnerable because informality dominates in the economy.
32. Over the medium term, Mauritania is expected to be one of the best performers in the region, thanks to a substantial improvement in its mining production; however, pressures on the labor market are likely to increase at the same time, as a result of a higher share of the population at working age and the rural-urban migration.
33. To better benefit from the demographic dividend, Mauritania needs more focus on human capital development, in particular by improving education, quantitatively and qualitatively. In addition, Mauritania needs also more focus on inclusion, in particular by promoting a more active role for women in the economy and increasing protection of informal workers. A more comprehensive approach is however needed to reduce informality gradually over the medium term.
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Prepared by Tarak Jardak.
And, on a smaller scale, gypsum, uranium, quartz, and phosphate.
Urban unemployment reached 22.6 percent in D. Nouadhibou, 49.3 percent in Tagant and 26.4 percent in Inchiri.
These are mostly people working on family business.
The fertility rate was declining but is still high compared to North African countries (see discussion on socio-demographic issues).
The stabilization of the age structure could be also explained by emigration of the labor force to neighboring and Gulf countries.
For more details, see United Nations, World Population Prospects, 2012 Revision. Data for 2013 have been adjusted to be in line with Mauritania’s 2013 population census.
The results vary from 0 to 1.1 percentage points depending on the region. The demographic dividend is found to be higher for low-income countries and increasing when education improves.
We used sectoral employment-output elasticities for different groups of countries which are drawn from Crivelli and others (2012).
According to the ONS, poverty rate was 59 percent in rural areas in 2008 compared to 21 percent in urban ones.
Mauritania ranked 135 out 144 countries in terms of education quality in the World Economic Forum’s Global Competitiveness Report 2014–15. The PNDSE 201120 points out that among other factors, the automatic transition between primary and secondary level has lowered the overall qualifications of the students.
According to the PNDSE, the efficiency rate is 70 percent for the lower secondary school and 88 percent for the upper one.
For example, by promoting dual vocational education and training that combines workplace experience and training with school-based (vocational) education, usually within a particular occupation or sector of work.
This is the case in Brazil, where maternity benefits policies include 120 days of paid leave at 100 percent of their salary, which is paid by the employer but reimbursed by Brazil’s Social Security Institute. An additional 60 days allowance that can be provided by employers is tax-deductible.
Act No. N° 2004-015 to establish a Labour Code (Loi N° 2004-015 du 6 juillet 2004 portant Code du travail), dated July 6, 2004.
This is the case for domestic and casual workers.
In addition to “classical” tax-funded health systems, several countries in Africa, such as Ghana, have launched national health insurance programs with a view to providing universal access to comprehensive benefit packages.
