Algeria

report 2009

Outside the system but, safe from the crisis?

The weakest aspect of Algeria’s economy is its heavy dependence on the production and export of hydrocarbons. Although this sector is highly developed, the financial sector has lagged far behind and become disconnected from global finance. Paradoxically, this backwardness prevented the banking system from becoming enmeshed in the international financial crisis. Even so, the crisis will infect the country through imports of goods and services.

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The COVID-19 health crisis added to the multidimensional crises in the Arab region and their manifestation in conflicts, wars, economic and social inequalities, and the increasing number of refugees and migrants. It could lead to severe repercussions at the economic, social, and political levels. According to an ESCWA preliminary estimate, the region will lose at least USD42 billion in 2020 due to the Corona pandemic. ESCWA also considered that the global spread of the virus and the growing impact of low oil prices could aggravate income losses. Unemployment is expected to increase by 1.2 percentage points, meaning the loss of around 1.7 million jobs. The Arab region registers some of the highest rates of inequality around the world, and informal employment accounts for 50% of jobs. It also lacks universal social protection systems and is thus unable to protect workers and ensure their dignity during work stoppages.

“Informal labor is not a marginal issue in Arab countries. It is a core component of modern Arab economies and the distribution of work therein and is doomed to expand under current policies,” explained Samir Aita, lead researcher of the Arab NGO Network on Development (ANND) at the launch of the 2017 edition of the Arab Watch on Economic and Social Rights, last May 8 in Beirut.

The report, launched publicly at the American University, concludes that the “highest percentages of lack of formality are in countries with the least strict laws and bureaucracies, and vice versa. This goes against the stereotype that says that informality is a result of strict laws and bureaucracies.” It also concludes that “informal labor in Arab countries is mostly waged labor, except in rare cases, which contradicts another idea that says that informal labor is a choice, as young people entering the job market have no choice but to find any type of livelihood, no matter how fragile or temporary.”