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INVESTMENT IN EDUCATION,EMPLOYMENT AND ECONOMICPERFORMANCE IN SYRIA

THE EUROPEAN TRAINING FOUNDATION IS THEEUROPEAN UNION’S CENTRE OF EXPERTISESUPPORTING VOCATIONAL EDUCATION AND TRAININGREFORM IN THIRD COUNTRIES IN THE CONTEXT OFTHE EU EXTERNAL RELATIONS PROGRAMMES

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INVESTMENT IN EDUCATION,EMPLOYMENT AND ECONOMICPERFORMANCE IN SYRIA

Henrik Huitfeldt (ETF), Jean-Pierre Jallade and Nader Kabbani (consultants)

European Training Foundation

2005

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CONTENTS

EXECUTIVE SUMMARY 5

1. INTRODUCTION 11

2. HUMAN CAPITAL AND GROWTH IN SYRIA 13

2.1 Some disappointing evidence 13

2.2 Returns to education 15

3. THE EMPLOYMENT CHALLENGE IN SYRIA 19

3.1 Labour supply pressures 19

3.2 The changing structure of labour demand 23

4. THE RELATIONSHIP BETWEEN EDUCATION AND EMPLOYMENT: UNRESOLVED

ISSUES 31

4.1 School leavers, unemployment and the transition from education to work 31

4.2 VET diplomas and employment 33

4.3 Hiring practices in the public and the private sectors 35

4.4 THe public sector employment model 36

5. THE QUALITY AND RELEVANCE OF EDUCATION AND TRAINING 37

5.1 Preparatory education 38

5.2 Secondary education 38

5.3 Intermediate institutes 39

5.4 University education 40

5.5 Training during the transition from school to work 41

5.6 Continuing education and training 42

6. POLICY PROPOSALS FOR IMPROVING THE EFFECTIVENESS OF THE HUMAN

RESOURCE SECTOR 45

ACRONYMS 49

REFERENCES 51

3

EXECUTIVE SUMMARY

To support the preparation of Syria’s newfive-year plan (2006–10), the StatePlanning Commission of Syria has askedthe ETF to provide technical assistance ona study about the link between investmentin education and growth in employmentand economic performance. The purposeof the study is to analyse weaknesses andproblems that restrict employment and limitthe growth potential of human resources.The ultimate objective is to identify areasrequiring policy action and to presentrecommendations that can lead to betterlabour force utilisation and greatereconomic growth.

HUMAN CAPITAL ANDGROWTH IN SYRIA

Over the past 30 years, economic growthin Syria has been based mostly on grosscapital investment and labour force growth.Low, sometimes negative growth rates incapital and labour productivity have beenrecorded. Total factor productivity, whichmeasures economic growth that cannot beaccounted for by increases in the stocks ofcapital and labour, actually declined duringthe 1980s and 1990s (IMF, 2003).

In Syria, as in other Middle East and NorthAfrican countries, fast-expanding school anduniversity enrolments have resulted in asignificant expansion of the stock andquality of human capital, but economicgrowth has been disappointing and labourproductivity growth has been weak or inmany cases negative. Policies havefavoured the development of a large publicsector, while the formal private sector hasbeen subjected to tight regulations that havehindered its development. When adequatejob opportunities in the private sector areinsufficient to accommodate the stock of

educated labour, new graduates andschool-leavers tend to opt forlow-productivity public sector jobs andemployment opportunities abroad, or find orcreate their own jobs in the informal sector.

The Syrian economy is also characterisedby poor use of educated labour. In 2003,75% of the total active population with ahigher education degree (university plusintermediate institute) was employed in thepublic sector, which is characterised byoverstaffing and low labour productivity.Only 20% of higher education degreeholders were employed in the private formalsector. As a result of inefficient allocation ofeducated workers in the labour market,progress made in improving the educationand training systems has not resulted indecisive labour productivity gains.

A growth model based on gross capitalinvestment and labour force growth is nolonger tenable in the long run. The newgrowth model should seek to achievesignificant labour productivity gains throughmore efficient use of labour. Given theconstraints that will prevent thedevelopment of employment in the publicsector, a proactive employment strategyaimed at supporting the creation of skilledjobs in the private sector, where wages aremore in line with labour productivity, is thekey to a more efficient use of labour.

In order to gain a better understanding ofeducational outcomes in Syria, this studyprovides estimates of the private returns toeducation in the country. The rates ofreturn for an additional year of schoolingare generally low, but increase with theindividual’s level of educational attainment.Returns to higher education are slightlyhigher in the private sector, both for menand women. Rates of return are essentially

5

zero for male graduates of intermediateinstitutes working in the private sector,indicating low levels of productivity. Untilrecently, graduates of intermediateinstitutes were guaranteed jobs in thepublic sector where government-set payscales dictate wages. As a result, over80% of intermediate institute graduateswork in the public sector. As of 2001,however, government jobs are no longerguaranteed and male graduates will nowhave to search for jobs that may not matchthe training they have received.

LABOUR SUPPLY PRESSURES

Syria is currently experiencing substantiallabour supply pressures from severalsources. Firstly, demographic pressureshave led to a large influx of young peopleinto the workforce. High population growthrates during the 1970s and 1980scontributed to high labour force growthrates, of between 5% and 6%, during the1990s. While the absolute number of jobsthat needs to be created will continue toincrease, the labour force growth rate hasbegun to decline as the demographic wavemoves into mid-career; this rate isexpected to continue its steady fall,reaching less than 3% by 2025.

Secondly, female labour force participationis increasing, from low initial levels. Ifcurrent trends continue, raising femaleparticipation rates will annually contributearound 0.6 to 0.8 percentage points toprojected labour force growth rates overthe next 20 years. Thirdly, politicaldevelopments in neighbouring Lebanonhave resulted in the return of manyexpatriate workers. If the situation does notnormalise, the return of Syrian expatriateworkers will place additional and immediatepressures on the local labour market.

THE CHANGING STRUCTUREOF LABOUR DEMAND

The Syrian government has played adominant role in the economy for decades,both in terms of employment and spendingand in terms of regulating the privatesector. In 2002, around 24% of the civilian

labour force worked in the public sector,both in government agencies and in publicsector enterprises. The Syrian governmentis slowly moving away from a model thatrelies heavily on the public sector toemploy Syrian workers. If the governmentfollows through on this paradigm shift, it willbe left up to the private sector to generatethe jobs needed by the economy.

The formal private sector has not been ableto absorb the increasing numbers of schoolleavers, and many have been forced to findjobs in the informal sector. The informalsector employs around one-third of totalworkers and mainly consists of small firmsthat range from simple repair shops totechnologically sophisticated manufacturingenterprises that are small enough to escapegovernment scrutiny. Firms in the informalsector are potentially the engine ofemployment growth in Syria anddisincentives should be removed toencourage them to enter the formaleconomy.

Workers in Syria are covered under severallabour laws that tend to deal separatelywith public sector and private sectorworkers. Many labour laws arecircumvented or ignored, especially by theprivate informal sector. Dismissals are rare,however, and most workers are not firedonce they have been hired by a firm. TheSyrian government, realising that thecurrent labour law is contributing to anadverse investment climate, is workingtowards reforming the law and significantlyreducing the restrictions and proceduresinvolved in dismissals.

THE RELATIONSHIPBETWEEN EDUCATION ANDEMPLOYMENT: UNRESOLVEDISSUES

Unemployment in Syria is very much alabour market insertion problem, mainlyconcerning young people. Young workersaged 15–24 represent almost 80% of theunemployed population. Unemploymentrates are higher for women than for menacross all levels of education, indicatinghigher turnover and/or longer waiting timesfor young female jobseekers.

6

INVESTMENT IN EDUCATION, EMPLOYMENT AND ECONOMIC PERFORMANCEIN SYRIA

In the absence of a public social safety net,most workers with little education have noother option than to accept low-paying jobsin the informal sector. At the other end ofthe spectrum, some educated youngpeople prefer to wait for jobs in the formaland public sectors which offer better wagesand more generous non-wage benefits.Wait times for public sector jobs tend todecrease with educational attainment. As aconsequence, higher levels of educationalattainment are sought, not necessarilybecause of higher wages, but because ofincreased chances of obtainingemployment, especially in the publicsector.

A permanent and growing surplus ofunemployed, mostly young school-leavershas triggered an artificial and unhealthystiffening of hiring practices in both thepublic and private sectors. In the publicsector, graduates and school leavers arequeuing for jobs in ministries and publiccompanies, and recruitment decisions arebeing based on diplomas and gradesobtained and not on a match between theapplicant’s qualifications and therequirements of the job in question. In theprivate sector, companies are beingencouraged to exaggerate theirqualification requirements and setartificially high barriers that have little to dowith the quality of education received, norwith expected labour productivity.

At the macroeconomic level, the publicsector employment model maintained inSyria is a major cause of low labourproductivity. The negative effects of thismodel are not always taken intoconsideration by employment and labourmarket policies. First, low wages and wagerigidities in the public sector preventadequate compensation of qualifiedpersonnel and have a negative effect onperformance and morale. Second, shorteffective working times enable publicsector workers to seek a second job in theprivate sector. The negative consequencesof multiple job holdings on the functioningof the labour market are immense and notwell documented. Third, the situation doesnot encourage ministries and publiccompanies to adopt efficient humanresources management practices. And

fourth, although salaries are low, the largenumber of public sector employeescontributes to high labour costs, a situationthat is not tenable in the medium and longterm in the wake of dwindling oil revenues.

QUALITY AND RELEVANCE OFEDUCATION AND TRAINING

A sound and rational public debate aboutthe quality of education and training hasnot yet taken place in Syria. It is indeeddifficult to appraise the quality of educationwhen the labour market is dominated by alarge surplus of labour and rigidities of allkinds. However, the Ministries of Educationand Higher Education acknowledge aserious quality problem and are initiatingand implementing some programmes andinitiatives aimed at improving the qualityand relevance of Syrian education.

In 2003, Syria participated for the first timein an international study measuring studentachievement, the Trends in Mathematicsand Science Study (TIMSS). The resultssuggest that Syrian students’ scores inboth mathematics and science are low byinternational standards. A five-year project(2005–10) aimed at improving the quality ofbasic education has been designed by theMinistry of Education. It focuses on teachertraining, the development of new curriculaaccording to international standards andthe introduction of information technologyin schools.

Children are allocated to either general ortechnical education according to thegrades obtained on their preparatoryschool final examination. The policy of theMinistry of Education has been to decreasethe share of preparatory school completersenrolling in the VET route in an attempt toimprove quality and relevance. Still,secondary VET education is characterisedby low enrolment and high dropout rates.The EC/MEDA programme Modernisationof the technical and vocational educationand training system, is one initiativeadopted by Syrian authorities to improvethe quality and relevance of VET in twosectors, the ready-made garment industryand maintenance in the electrical andmechanical engineering industry. Another

7

EXECUTIVE SUMMARY

initiative has been to adopt the dualsystem. Generalising the dual systemwould help increase the quality andrelevance of VET to labour market needs.

In sharp contrast with secondary technicalschools, intermediate institutes enjoy ahigh degree of credibility and prestigeamong students. However, mostintermediate institute graduates seeksalaried jobs in the public sector. Gearinggraduates to private employment, smalland medium-sized enterprises (SMEs) andself-employment will be the majorchallenge facing intermediate institutes inthe coming years. Efforts are under way toinvolve the private sector in curriculumdevelopment, to increase practical trainingand to upgrade the training of teachers.Some intermediate institutes were recentlygiven the right to charge student fees andkeep this revenue in their own budget.

About 245,000 students are enrolled in thefour public universities, and about 4,000students go to study abroad every year.Poor quality and bureaucratic managementare the two causes for concern inuniversities. A new law promotingadministrative and financial autonomy ofuniversities is about to be approved. Stepsare also being taken to establish a qualityassurance and accreditation agency.

All these initiatives show that theeducational authorities are trying toovercome the perceived deficiencies of theeducation and training sector. But theeffectiveness of these initiatives will belimited in the existing labour marketconditions. Unless labour market reformsand employment promotion policies arevigorously pursued and significant progressin these areas is achieved, theeffectiveness of additional investments inhigher education and training will beseverely impaired.

POLICY PROPOSALS FORIMPROVING THEEFFECTIVENESS OF THEHUMAN RESOURCE SECTOR

A proactive employment policy should begiven prominence in Syria’s next five-year

plan. Within this overall framework, thefollowing policy proposals are aimed ataddressing some of the issues most criticalto maximising the social efficiency ofinvestment in education and training.

1. Reforming human resources policies in

the public sector: Ministries and publiccompanies should be encouraged toadopt redundancy and attrition policiesaimed at reducing overstaffing andimproving labour force utilisationthrough longer effective working time.These policies should be coupled withexplicit salary premiums to retain keyqualified personnel. The guidingprinciple should be ‘fewer but betterused, better paid, and more motivatedpublic sector employees’.

2. Promoting employment in the private

sector: It is expected that the privatesector will play a primary role inabsorbing new labour market entrantsover the next few years. Policies shouldtherefore be adopted that support thedevelopment and growth of the privatesector. The government should considerremoving the remaining barriers to entryand to phasing out both implicit andexplicit subsidies to public sectorenterprises. Private sector companiesshould face clear and reasonableregistration requirements. The corporatetax system should be simplified and taxrates reduced. These steps mightactually increase tax revenues byencouraging higher rates of compliance.The government should follow throughon proposals to reform the country’slabour laws, including worker dismissallaws. At the same time, appropriateworker safety nets need to bedeveloped.

3. Facilitating job creation in small

companies: Small companies requiringlimited investment capital but with agood potential for job creation andemployment growth should be givenprominence in a pro-active employmentpolicy stressing job creation. Thesecompanies should benefit fromsimplified registration procedures, alimitation of ‘visits’ or ‘authorisations’ ofany kind delivered by public authoritiesother than tax and social securityauthorities, and an increased possibility

8


of receiving start-up loans. Smallcompanies in the informal sector are anespecially promising source ofemployment growth. This is becausethey deliberately remain smaller thantheir true potential in order to escapegovernment notice.

4. Developing appropriate tools to assess

quality in education: In Syria, studentperformance is exclusively assessed bymeans of nationwide examinations.These end-of-cycle examinations arenot sufficient to monitor student learningperformance, identify weak spots in theteaching/learning process or serve as abasis for appropriate pedagogicalchange. Syria needs to developappropriate tools to monitor andimprove the quality and effectiveness ofits education system at both theindividual and institutional levels. Thiscould take place through theestablishment of a national testingservice to enable periodic assessmentof student learning performance duringpreparatory education and institutionalevaluation of a sample of secondaryschools.

5. Improving the relevance of vocational

education and training for the private

sector: The relevance of vocationaleducation and training could bestrengthened by stronger involvement ofprivate employers in policymaking at thenational level, by the establishment oflocal private industry councils that wouldhelp to advise and direct VET

programmes, and by direct involvementof employers in the governance andmonitoring of educational institutions.Private sector input into thedevelopment of curricula will help toimprove the standing of VET schoolgraduates in the eyes of the privatesector. In addition, labour marketinformation systems that can help theSyrian government, local government,VET school administrators and privateindustry councils to identify occupationswith capacity to absorb VET graduatesshould be established.

6. Support the development of continuing

vocational education and training:

Continuing education and adult trainingand retraining facilities in Syria arescarce and heavily fragmented. This isa direct consequence of a labour marketin which unemployment affects mostlyyoung people and job security for adultsprevails over efficient human resourcemanagement. An increased importanceof the private sector for employmentcoupled with retrenchment in the publicsector will lead to higher labour mobility.It is proposed that a system beestablished to fund, promote, anddevelop continuing education andtraining opportunities for young peopleand adults (i) seeking jobs in the privatesector, (ii) setting up their ownindependent businesses, and(iii) wanting to retrain for job changeafter layoff.

9

EXECUTIVE SUMMARY

1. INTRODUCTION

Human resources development policies areexpected to play a prominent role in Syria’snext five-year plan (2006–10). In order tosupport the preparation of the plan, theState Planning Commission of Syria askedthe ETF to provide technical assistance ona study about the link between investmentin education and growth in employmentand economic performance.

The labour market situation in Syria ischaracterised by a rapidly growing labourforce co-existing with sluggish labourdemand and deeply embedded rigidities thatprevent the allocation and utilisation of labourin the best possible way. As a result, humanresources are not used fully and efficientlyand economic growth is less than it could be.The purpose of this study is to examine thefunctioning of the labour market in Syria andits implications for education and training andto analyse the weaknesses and problemsthat restrict employment creation and limit theeffective use of the full potential of availablehuman resources. The ultimate objective is toidentify areas requiring policy action and topresent recommendations that can lead tobetter labour force utilisation and greatereconomic growth.

The different sections of this report weredrafted and edited by a project team thatconsisted of Henrik Huitfeldt, of the ETF,and consultants Jean-Pierre Jallade andNader Kabbani. Assistance in the collectionof statistics and other information has beenprovided by the Observatory Unit of theSyrian State Planning Commission.Valuable support and comments were alsoreceived from different departments at theSyrian State Planning Commission, theCentral Bureau of Statistics, the Ministry ofSocial Affairs and Labour, the Ministry ofEducation, the Ministry of HigherEducation, the Ministry of Industry and theChamber of Commerce.

The report is organised as follows.

� Section 2 examines the relationshipsbetween human capital and economicgrowth in the Syrian context.

� Section 3 assesses the magnitude ofthe employment challenge in Syria andshows that it cannot be tackled unlessemployment growth becomes a centralfocus of the country’s developmentstrategy.

11

1

� Section 4 describes the negativeconsequences of present labour marketconditions on the use of educatedlabour.

� Section 5 discusses the employabilityof graduates and the quality ofeducation.

� Finally, Section 6 makes suggestionsfor the delineating of a comprehensiveemployment and education policy tosupport the transition process towards adevelopment model giving moreconsideration to efficient and productivelabour force utilisation.

12


2. HUMAN CAPITAL AND

GROWTH IN SYRIA

2.1 SOME DISAPPOINTINGEVIDENCE

Over the past 30 years, economic growthin Syria has been based mostly on grosscapital investment and labour force growth.Low, sometimes negative, growth rates incapital and labour productivity have beenrecorded. Total factor productivity, whichmeasures the economic growth that cannotbe accounted for by increases in the stocksof capital and labour, actually declinedduring the 1980s and 1990s (IMF, 2003).

In a way, total factor productivity can beseen as an approximation of the efficiencyof labour, or human capital. Due to thelimitations of the data, one may havereservations regarding the quantitativeestimates of changes in total factorproductivity. However, there is no doubtthat the evidence reveals seriousdeficiencies in the process of growth inSyria.

Two major factors influence the impact ofhuman capital on growth: (i) the quality ofthe education and training systems and the

resulting quality of human capital, and(ii) the allocation of human capital into thelabour market. A major function of thelabour market is to allocate humanresources to their best uses. The level ofefficiency in the use and allocation ofhuman resources vary depending uponhow well the labour market is functioning,and this has significant effects onemployment and economic growth. Thefunctioning of the labour market alsoimpacts on employment and economicgrowth by affecting the efficiency of thehuman capital accumulation processthrough the relative opportunities andincentives for skilled and non-skilledworkers. As a result, issues related to thefunctioning of the labour market are of theutmost importance in determining bothemployment and economic growth.

Recent evidence from Middle East andNorth African countries suggests that therelationship between investment ineducation and economic growth in theregion has been weak (Pritchett, 1999;Makdisi et al., 2003). In these countries,rapidly increasing school and university

13

2

enrolments have resulted in a significantexpansion of the stock and quality ofhuman capital; economic growth has beendisappointing, however, and labourproductivity growth has been weak or inmany cases negative. In other words, theeconomy-wide payoff of investments ineducation has been limited, largelybecause these economies have not beenable to make effective use of the newlyentering cohorts of educated workers. Afunctioning labour market and effectiveemployment creation mechanisms arecrucial to the success of any policy aimedat fostering economic growth throughincreased investment in education.

For the most part, Syria conforms to thehuman capital and economic growth modeldescribed above for Mediterraneanpartners. In the past, public policies havefavoured the development of a large publicsector, while the formal private sector hasbeen subjected to tight regulations thathave hindered its development. Whenadequate-paying job opportunities in theprivate sector are insufficient toaccommodate the stock of educatedlabour, new graduates and school leaverswill tend to give preference tolow-productivity public sector jobs andemployment opportunities abroad, or willfind or create their own jobs in the informalsector. In 2003, over half those employedin the private sector were primarilyengaged in informal activities (Figure 1).

The Syrian economy is thus characterisedby poor use of educated labour. In 2003,75% of the total active population with apost-secondary education (university plusintermediate institute) degree wasemployed in the public sector, which ischaracterised by overstaffing and lowlabour productivity. Only 20% of highereducation degree holders were employedin the private formal sector. By comparison,only 20% of the active population with asecondary school degree or less wasemployed in the public sector.

As a result of the inefficient allocation ofeducated workers in the labour market,progress made in increasing the quality ofhuman resources through improvement ofthe education and training systems has notresulted in decisive labour productivitygains. A very rough measure of labourproductivity is the change in output perworker over time. Output per worker fell byclose to 15% between 1981 and 1990 andthen rose back to almost 1981 levelsbetween 1990 and 2000 (see Figure 2).In recent years, the output per worker hasbeen declining: in 2002, the figure was lessthan it was 20 years before.

The inefficient use of educated labour is,therefore, a crucial issue for the currentSyrian growth model. Under the presentcircumstances, the economy is unable tofully capture the social benefits of furtherinvestments in education. In the coming

14


100%

80%

60%

40%

20%

0%Illiterate Literate Primary Prepara. General

second.Interm.institute

University Total

Public Private formal Private informal

Figure 1: Economically active population (15–64), by education and sector (2003)

Source: Syrian Central Bureau of Statistics, 2004a

years, the employment prospects forschool leavers and graduates are expectedto worsen for various reasons. Firstly,dwindling oil reserves will put downwardpressure on the country’s high grossinvestment ratio. Secondly, retrenchmentand rationalisation policies in theoverstaffed public sector mean that thissector will no longer be able to provide asmany jobs as in the past to school leaversand graduates.

A growth model based on gross capitalinvestment and labour force growth is nolonger tenable in the long run. The newgrowth model should seek to achievesignificant labour productivity gains throughmore efficient use of labour. Given theconstraints that will prevent thedevelopment of employment in the publicsector, a pro-active employment strategyaimed at supporting the creation of skilledjobs in the private sector, where wages aremore in line with labour productivity, is thekey to a more efficient use of labour.

2.2 RETURNS TO EDUCATION

Weak, even negative growth rates in labourproductivity over the past two decadesindicate that the economy as a whole didnot benefit from the high levels ofinvestment in education and training thattook place throughout the mid-1980s. Adifferent but no less important issue is thatof the returns to education for individuals.

Have higher levels of educationalattainment paid off for Syrian workers? Ifthe answer is no, serious concerns areraised about the quality of educationprovided, not simply the functioning of thelabour market.

Internationally, higher educationalattainment is associated with positivelabour market outcomes for individuals,including higher wages and better jobopportunities. The individual (private)returns to an additional year of schooling,in terms of higher wages, have beenestimated at 8–15% (Card, 1999;Psacharopoulos and Patrinos, 2002;Pritchett, 1999). In a number of MEDAcountries, returns to education have beenestimated at between 5% and 15%,depending on the country and level ofschooling (World Bank, 2004). Whilefemales tend to earn lower wages thanmales, the differences tend to diminish witheducational attainment. As a result, privatereturns to education tend to be higher forfemales than for males.

In most developing regions, private returnsto education also tend to be higher forprimary education than for secondary anduniversity education (Krueger and Lindahl,2001). By contrast, in MEDA countries,returns to education appear to increasewith the level of schooling (Psacharopoulosand Patrinos, 2002; World Bank, 2004).One explanation is that public employmentplays a more important role in these

15

2. HUMAN CAPITAL AND GROWTH IN SYRIA

120

110

100

90

80

1981 1984 1987 1990 1993 1996 1999 2002

Figure 2: GDP per person employed, indexed (1980=100)

Source: ILO, 2002

countries than in any other developingregion (World Bank, 2004; Boudarbat,2004). Higher returns to education for highschool and university graduates may reflectgovernment pay scales rather thanimproved productivity (Pritchett, 1999;Glewwe, 2002).

Low social returns to education, asdiscussed above, are perfectly compatiblewith high private returns which can fueldemand for educational services. Thereare a number of possible explanations forthis phenomenon. Pritchett (1999)suggests that governments provide highwages and benefits to graduates withoutthese workers necessarily contributing tohigher productivity. Murphy andSalehi-Isfahani (2003) suggest that thenon-transparent labour markets of theregion value easily measurable credentialsacquired through rote memorization andformal schooling over more productive (butless quantifiable), softer skills such ascreativity and teamwork.

In Syria, age earnings profiles are fairly flat.Wages increase with age by, on average,2% per year for all levels of educationalattainment. Wages also increase with

educational attainment, but not by verymuch. Monthly wages of secondary schoolgraduates are only 15% higher than thoseof illiterate workers in the 25–29 age group,rising to 38% higher in the 60–64 agegroup1. Monthly wages of universitygraduates are only 40% higher than thoseof illiterate workers in the 25–29 age group,rising to 80% higher in the 60–64 agegroup (see Figure 3).

For a better understanding of educationaloutcomes, this study estimates the privatereturns to education in Syria using mergedmicrodata from the 2001 and 2002 labourforce surveys. The two nationallyrepresentative surveys have sample sizesof 14,411 and 18,257 householdsrespectively and primarily include data onthe demographic and employmentcharacteristics of household members2.

The rate of return to an additional year ofschooling tends to increase with the levelof educational attainment in both the publicand private sectors (see Figure 4). Averagerates of return to schooling compare wagesat various levels of educational attainmentto the wages of illiterate workers, who areassumed to have zero year of education.

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12,000

10,000

8,000

6,000

4,000

2,000

0

Illiterate Primary Preparatory Secondary Inter. inst. University

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

Monthly wage

Figure 3: Age-earnings profiles by level of education (2002)


1 This appropriately ignores the outlier of the 55–59 age group for whom monthly wages are 58% higher amongsecondary school completers compared to illiterate workers.

2 This study estimates returns to education using the standard Mincer human capital earnings function with loghourly wages as the dependent variable, controlling for potential experience and potential experiencesquared. The earnings function also controls for selection bias using Heckman’s two-step procedure.

Average rates of return range from lessthan 1% per year for males with a primaryeducation working in the public sector tonearly 6% per year for female graduates ofan intermediate institute or university in thepublic sector. Rates of return for femalesare higher than for males, which isconsistent with international evidence. Thelarge differences in returns to educationbetween females in the private and publicsectors are due to larger differencesbetween the wage rates of illiterate andliterate female workers in the public sectorthan in the private sector.

Rates of return to education can also bepresented in terms of marginal rates, whichestimate the rates of return for going fromone level of schooling to the next (forexample, the additional returns to a highschool graduate of completing college).Marginal rates of return for primary educationare between 0–4%, while marginal rates ofreturn for secondary education are around4%; both of these rates are low byinternational standards implying that labourproductivity is possibly low compared to othercountries. The highest rates of return are foradditional years of schooling beyondsecondary education (see Figure 5).

17

2. HUMAN CAPITAL AND GROWTH IN SYRIA

6%

5%

4%

3%

2%

1%

0%Male/Public Male/Private Female/Public Female/Private

Primary Preparatory Secondary Inter. inst. University

Figure 4: Average rates of return to schooling by sector and gender

Source: Authors’ calculations using data from the 2001 and 2002 labour force surveys

12%

10%

8%

6%

4%

2%

0%Male/Public Male/Private Female/Public Female/Private

Primary Preparatory Secondary Inter. inst. University

Figure 5: Marginal rates of return to schooling by sector and gender


Small differences are found between themarginal returns to education for the publicand the private sectors. Returns toeducation appear to be slightly higher inthe private sector for males and higher inthe public sector for females. This analysisis based on ‘reported’ wages and not on‘real’ wages, however. For men working inthe public sector, in particular, the reportedprivate benefits of additional schoolingunderestimate the real benefits due tounreported earnings from non-wagebenefits in the public sector and secondjobs in the private sector.

One concern is that rates of return toschooling are essentially zero for malegraduates of intermediate institutes in the

private sector, suggesting low levels ofproductivity for this group. Rates of returnfor females are higher, possibly becauseuntil recently only females received trainingin textiles manufacturing, which is asought-after skill in the private sector. Untilrecently graduates of intermediateinstitutes were guaranteed jobs in thepublic sector where government-set payscales dictate wages. As a result, over80% of intermediate institute graduateswork in the public sector. As of 2001,however, government jobs have no longerbeen guaranteed and male graduates willnow have to search for jobs that do notnecessarily match the training they havereceived.

18


3. THE EMPLOYMENT

CHALLENGE IN SYRIA

3.1 LABOUR SUPPLYPRESSURES

Syria is currently experiencing substantiallabour supply pressures from severalsources. Firstly, demographic pressureshave led to a large influx of young peopleinto the workforce. Secondly, female labourforce participation has been increasing,from low initial levels. Thirdly, politicaldevelopments in neighbouring Lebanonhave resulted in the return of manyexpatriate workers from that country. Inaddition, the emerging role of the privatesector, trade agreements, andtechnological trends have reduced demandfor labour with traditional skills andincreased demand for skilled workers inspecific technical occupations. Thesepressures have led to an excess supply ofworkers with skills that are not in highdemand in the labour market.

Demographic pressures

Like most other Mediterranean partners,Syria is undergoing major demographicchanges. Since the early 20th century,

Syria’s health and sanitation services haveimproved steadily; this has resulted insubstantial increases in life expectancy anddeclines in infant mortality. Life expectancyat birth increased from 46 in 1950–55 to 72in 2000–05. Infant mortality rates declinedfrom 14% in 1950–55 to around 2.2% by2000–05. At the same time, fertility ratesremained constant, at over seven childrenper woman, until the early 1980s. Between1985 and 2000 fertility rates dropped byover 50%, falling to 3.3 children per womanby 2000 (see Figure 6).

The timing of changes to infant mortalityrates and fertility patterns led to highpopulation growth rates of around 3.5%during the 1970s and 1980s. Populationgrowth rates eventually declined to under3% during the 1990s and are expected tofall to under 2.5% after 2005 (UNPD,2004).

These demographic patterns haveimportant implications for labour supplypressures in Syria. A wave of young peoplebegan moving through the population in themid-1980s, with the proportion of the

19

3

population under 14 years old increasingsteadily during that period (see Figure 7).This wave moved through the 15–29 agegroup during the 1990s and early 2000s,and has now begun moving intomid-career.

High population growth rates during the1970s and 1980s contributed to high labourforce growth rates, of between 5% and 6%,during the 1990s. The labour force willcontinue to expand by 250,000–300,000workers per year over the next 20 years(see Figure 8). However, while theabsolute number of jobs that need to be

created will continue to increase, the rateof labour force growth will, and has begunto, decline as the demographic wavemoves into mid-career. In fact, labour forcegrowth rates are expected to fall to under3% by 2025.

If suitable jobs are generated for the newworkers entering the labour market, thedependency ratio will fall from over onedependent per working-age adult in 1990to under 0.5 dependents per working-ageadult by 2025 as the demographic wave ofworkers moves into mid-career (UNPD,2004). This means that each working-age

20


0

0.04

0.08

0.12

0.16

1950-55 1955-60 1960-65 1965-70 1970-75 1975-80 1980-85 1985-90 1990-95 1995-00 2000-05

Infa

ntm

ort

alit

yra

te

1

0

2

3

4

5

6

7

8

Tota

lfe

rtilityra

te

Infant mortality rate Total fertility rate

Figure 6: The demographic origins of current labour supply pressures

Source: UNPD, 2004

0%

10%

20%

30%

40%

50%

60%

1970 1980 1990 2000 2010 2020 2030 2040 2050

0-14/pop 15-29/pop 30-64/pop 65+/pop

Projections

Figure 7: Demographic trends – Age groups as a proportion of the population

Source: UNPD, 2004; Kabbani and Tzannatos, 2005

adult will have fewer dependents (thoseyounger than 15 or older than 64 years ofage) to care for, allowing for higher rates ofsavings and faster economic growth. Inorder to take advantage of thisdemographic ‘window of opportunity’,however, the Syrian economy must find away to absorb the incoming cohorts overthe coming decade.

Achieving this may not be easy. Thecurrent demographic pressures havecontributed to high unemployment rates

among young workers in Syria. Theunemployment rate stood at 28% among15–19 year-olds and 25% among 20–24year-olds in 2002 (see Figure 9). Theseunemployment rates were around fourtimes higher than those found in the 24–39age group, which in turn featured far higherunemployment rates than the 1% foundamong 40–64 year-olds. These figuressuggest that few workers are unemployedas a result of mid-career job transitions andthat most unemployment is concentratedamong young labour market entrants.

21

3. THE EMPLOYMENT CHALLENGE IN SYRIA

0

50

100

150

200

250

300

1970 1980 1990 2000 2010 2020

Work

ers

(000s)

0%

1%

2%

3%

4%

5%

6%

Labour force growth Labour force growth rate

Figure 8: Projections of labour force growth through 2025

Source: Kabbani and Tzannatos, 2005, using UNPD, 2004, and ILO, 2002

0%

10%

20%

30%

40%

50%

All 15-19 20-24 25-39 40-64

All

Male

Female

Figure 9: Unemployment rates by age group (2002)


Female labour force participation trends

Like other countries in the Mediterraneanregion, Syria has some of the lowestfemale labour force participation rates inthe world, estimated at 23% in 2002.Female participation rates have beenincreasing across all age groups (seeFigure 10), however, with the largestincreases occurring among youngerwomen. By comparison, labour forceparticipation rates for males only increasedsignificantly among the 15–24 age group.This may reflect declining secondaryschool enrolment rates, especially formales, between the mid-1980s and early2000s (discussed below).

Around 15% of the labour force growth ofthe 1990s can be attributed to higherfemale labour force participation rates(Kabbani and Tzannatos, 2005). If currenttrends continue, rising female participationrates will contribute around0.6–0.8 percentage points annually toprojected labour force growth rates overthe coming 20 years. Thus, while higherfemale labour force participation rates havecontributed to current labour supplypressures, they play a smaller role thandemographic pressures.

Even though rising female labour forceparticipation rates exert relatively minorpressures on the labour market as a whole,female workers tend to work in specific

industries and occupations and higherparticipation rates have a more noticeableeffect in these segments of the labourmarket. Unemployment rates amongfemales were nearly three times higherthan among males in 2002, with significantdifferences maintained across age groups(see Figure 9). There are several possiblecontributing factors to these differences,including increases in labour forceparticipation rates.

Return migration pressures

International migration plays an importantrole in relieving labour supply pressures inthe Syrian economy. Data on internationalmigration are extremely sketchy, butgeneral patterns can be discerned.Neighbouring Lebanon is a majordestination for Syrian workers, especiallythose who are less educated – anestimated 80% of Syrian workers inLebanon have six years of schooling orless (Syria Report, 2005). Most Syrianworkers in Lebanon are seasonal and workonly a few months of the year. Anestimated 45% of Syrian workers inLebanon work in the construction sector(Syria Report, 2005). Other sectors includehotels and restaurants, and agriculture.Most Syrian workers in Lebanon do nothave work permits.

In early 2005, estimates of the number ofSyrians working in Lebanon during a given

22


0%

20%

40%

60%

80%

100%

15-24 15-2425-34 25-3435-44 35-4445-54 45-5455-64 55-64

Females Males

1983 2002

Figure 10: Labour force participation rates by gender and age group (1983 and 2002)

Source: ILO, 2004

year ranged from 350,000 to 1 million, withconsensus estimates at around 500,000.Nonetheless, this represents a substantialdecline, possibly of around 40% since thepeak years of Lebanon’s post-warreconstruction boom during the mid-1990s.

The number of Syrian workers in Lebanonfell even further after the politicaldevelopments surrounding theassassination of former Prime MinisterRafik Hariri, in February 2005. If thesituation does not normalise, returningSyrian expatriate workers will placeadditional and immediate pressures on thelocal labour market. Rather than trying tomitigate this increase in the supply oflow-skilled workers, the Syrian governmenthas made it more costly for thosecontinuing to work in Lebanon. InSeptember 2005, the governmentincreased the boarder-crossing fee forSyrians from 200 Syrian pounds (SYP) toSYP 800 (€14), a substantial sum forlow-wage workers.

Oil-rich gulf countries represent a majordestination for educated and skilled Syrianworkers, followed by Europe and NorthAmerica. Latin American countries are alsopopular attracting workers with relativelylow skills. Specific numbers are difficult tocome by, however.

An estimated 4,000 Syrian students travelabroad each year to continue theireducation. A fair proportion (estimated atone half) remain abroad to work. Theseexpatriate workers relieve some of thelabour supply pressures on Syria andprovide the Syrian economy with valuablehard currency through remittances.However, these workers also represent alost opportunity to fully utilise and benefitfrom the human capital resources of thecountry. Many would return to work if betterjob opportunities and a more supportivebusiness environment were to exist.

3.2 THE CHANGINGSTRUCTURE OF LABOURDEMAND

The stagnation of public sector

employment

The Syrian government has played adominant role in the country’s economy fordecades, in terms of employment andspending, and regulating the private sector.Around 24% of the civilian labour forceworked in the public sector in 2002, both ingovernment agencies and in public sectorenterprises. Nearly 75% of public sectorworkers were in government administrationand the provision of public goods andservices in 2002. Close to 10% were inmanufacturing, with 7% in construction,and 4% in transportation (Syrian CentralBureau of Statistics, 2003a).

The Syrian government is slowly movingaway from a model that relies heavily onthe public sector accommodating andemploying Syrian workers. This movebegan in the early 1990s, when thegovernment ceased its requirement of amandatory five years of public service foryoung university graduates. More recently,the government has removed employmentguarantees for graduates of specificintermediate institutes. There are strongindications that the government isconsidering limiting the expansion ofemployment in the public sector, closingsome loss-making public enterprises andcorporatising others. There will still be jobopportunities available in the public sectordue to natural attrition and turnover, but thepublic sector is not expected to play amajor role in cushioning the impact of thehigh labour supply growth rates.

To obtain employment in the public sector,an individual must first register with agovernment employment office and obtaina number indicating his or her place in line.This system ostensibly helps thegovernment allocate scarce public sectorjobs. In reality, however, personalconnections are often used. An officialletter from the administrator of a particularpublic agency or enterprise is all that isneeded to secure a job. Thus, while somepeople wait two years or longer for a job in

23


the public sector, others obtainemployment almost immediately afterregistering with the employment office. Thissituation has important implications for theefficiency of the labour market matchingprocess. Those with contacts in specificagencies are often not those with the bestqualifications for the job.

For higher-skilled positions, applicantsmust take an entrance exam in addition toregistering with the employment office. Jobapplicants are then ranked based on theirperformance. The exam system has beencriticised for not testing the skills,knowledge and abilities required for theparticular posts being advertised, however.This too has adverse implications forlabour matching efficiency.

The employment potential of the private

sector

If the government follows through on itsplanned paradigm shift away from a publicsector-led employment model, it will be leftup to the private sector to generate thejobs needed to absorb the incomingcohorts of new workers. Indeed, the Syriangovernment openly argues this point andhas recently enacted a number of laws andregulations providing incentives aimed atmaking it easier for private sectorcompanies to enter and expand in themarket.

There is surely potential for strongemployment growth in the private sector. In2002, nearly 40% of workers in the privatesector were involved in agriculture, huntingor mining. Nearly 20% were involved intrade, hotels and restaurants, and around15% were involved in construction. Only15% were employed in manufacturing andless than 4% were employed in services(see Figure 11).

A cursory examination of employmenttrends suggests that there is much roomfor expansion of manufacturing andservices. In recent years, capital investedin private sector projects has primarilygone to the food and chemical sectors,which includes cleaning supplies anddetergents. Projects involving moreexport-oriented industries, such as textilesand engineering (including appliances),have received less investment capital (seeFigure 12). This focus on a few industries,primarily in the consumer goods sectors,was partly the result of limits set by thegovernment. Until recently, around 140industries were closed off to private sectorinvestment. Examples include industrieswith traditional state-run monopolies –electricity, oil, water – but also industriesthat are traditionally run by privatecompanies – television production,tobacco, banking, and secondary anduniversity education.

24


0%

10%

20%

30%

40%

50%

Agriculture,mining

Trade, hotels,restaurants

Construction Manufactur. Transport. Services Investments,real estate

Total private Formal Informal

Figure 11: Employment in the private sector by economic activity (2002)


In 2000, the Syrian government changedits policies and allowed the private sectorto enter most industries. As a result, privatebanks, schools, and universities havereceived licences and have begunoperating. Other licences have beengranted or are under consideration by theMinistry of Industry, including automobileand television production. Severalindustries still remain closed to the privatesector, however – these include bottledwater, oil, tobacco, wall-to-wall and woolcarpets, ginning and pressing cotton, andspinning cotton thread. Allowing the privatesector to enter these industries will helpSyria become more competitive in theglobal economy, especially in the textilesector.

Growth of the informal sector

Based on the 2003 Labour Force Survey,35% of the civilian workforce is found in theformal private sector and 37% of theworkforce in the informal sector. However,estimates of the size of the two sectorsdiffer widely across the 2001, 2002 and2003 surveys, suggesting that the surveyinstruments have adopted definitions of‘formal’ and ‘informal’ that have resulted ininconsistent responses and this has madeit difficult to judge the true size of theinformal sector. Still, data from the 2002Labour Force Survey suggests somedifferences in the composition of economicactivities performed in the formal and

informal sectors. Workers in the formalsector are more likely to be engaged inmanufacturing and trade. Workers in theinformal sector are more likely to be inconstruction and transportation (seeFigure 11).

In practice, the distinction between the twosectors is often blurred. Companies thatare licensed through the Ministry ofIndustry are considered part of the formalsector. These include large privatecompanies. Most self-employed streetvendors are not registered and are thuspart of the informal economy. Thedistinction becomes difficult with respect tothe many small-trade shop and lightmanufacturing firms, some of which chooseto register and others not, the latter simplyto avoid bureaucratic hassles and payingtaxes. This is not unusual; even largecompanies try to avoid registering some oftheir workers in order to save money onpayroll taxes. In some newly developingsectors, especially those facilitated by theexpansion of information technologies,firms are not able to register even if theywant to because laws have not yet beendeveloped. Such firms include thoseinvolved in career services, testpreparations, and some educational andfinancial services.

In the industrial sector, laws are fullydeveloped and unregistered firms remain inthe informal economy by choice.

25


0

500

1,000

1,500

2,000

2,500

Food Chemical Textiles Engineering

2000

2001

2002

2003

Figure 12: Capital invested in private sector projects by main sector

Source: Syrian Central Bureau of Statistics, statistical abstracts 2001–04

Unregistered small firms in the industrialsector range from simple shops totechnologically sophisticated manufacturingenterprises that are small enough to escapegovernment notice. Indeed, firms in theinformal sector try to remain small so as notto attract government attention. If suchcompanies were given the opportunity togrow, many would expand their businessesand hire more workers. The informal sectoris thus a potentially important engine ofemployment growth. The Syrian governmentshould remove obstacles and developincentives to entice these firms to join theformal economy.

One way to achieve this is to make it easierfor firms to obtain a commercial licence –not always a simple task in Syria. Industrialcompanies are able to register under oneof two laws. Law 47 covers ‘crafts’ firmswith fewer than nine employees, whileLaw 21 governs most medium-sized andlarge companies. Registrations underLaw 21 are submitted to the Ministry ofIndustry and must be reviewed andapproved by a registration committee ofrepresentatives from several ministries. Inorder to obtain a licence, companiesregistering under Law 21 must commit toadding value of at least 40% to their finalproducts. Other conditions may also beadded by the registration committee.

To encourage private sector investment,the government introduced InvestmentLaw 10 in 1991, which provides taxincentives for large projects that registerunder Law 21 (around 10% of the projectsseeking exemptions under Law 10 arenon-industrial projects and must obtain alicence under laws other than Law 21).Investment Law 10 has been modifiedseveral times, most recently in 2000. Thenew changes provide additional incentivesfor firms that locate in less-industrializedregions of the country, firms in exportindustries, and firms that hire largenumbers of workers. Companies applyingfor exemptions under Law 10 must meetadditional requirements (such as makinglarge capital deposits) and must submit aproposal (complete with feasibility study) tothe Prime Minister’s Office. The approvedproposal then goes to the Ministry ofIndustry for final action.

While registration is simple under Law 47,it can be complicated under Laws 21and 10 – and additional obstacles occurafter registration. Once a company islicensed, it must maintain its registrationand complete annual tax forms andinterviews with the Ministry of Finance. Theprocedures involved can take several dayseach year, a significant burden on a smallcompany. Registration also invites visits byrepresentatives from the local municipality,police and other groups seeking paymentsfor various fees. In addition, arbitrarycorporate tax assessments by taxcollectors lead firms to take steps to evadetheir full tax burden. Most of theseproblems can be avoided by not registeringwith the government. As a result, theinformal sector in Syria is large andpossibly growing.

The potential of small firms to contribute toemployment growth in Syria is easy to see.In 2004, of the private sector firmsregistered with the Ministry of Industry, thelargest proportion was registered underLaw 47, followed by those registered underLaw 21 (see Figure 13). In terms ofemployment, the number of workers infirms registered under Law 47 represented60% of the total registered workforce in theformal private sector. To the extent thatfirms in the informal sector most closelyresemble small firms registered underLaw 47, it then becomes clear that thegovernment needs to create a healthybusiness environment to allow small firmsto flourish and grow and to encourageunregistered firms to join the formal sector.

The wage structure in Syria

Wages in Syria are low, ranging from anaverage of SYP 4,500 (€75) per month fora worker with little or no education toaround SYP 8,000 (€130) per month forworkers with university degrees. Manyworkers must therefore rely on additionalsources of income to make ends meet,such as having a second job.

Wages in the private sector are notregulated by salary scales as they are inthe public sector, and thus exhibit morevariation. For lower education levels,wages in the public sector tend to be

26


higher or on a par with wages in the privatesector. After preparatory school, however,wages in the private sector tend to behigher, reaching a 30% difference amonguniversity graduates. In 2001, 5% offull-time public sector workers with auniversity degree earned SYP 10,000(€160) or more per month in their main job.

By contrast, 22% of full-time private sectorworkers with a university degree earnedSYP 10,000 or more per month in the sameyear. Differences were smaller insubsequent years, after the governmentraised public sector wages.

Syria has several different minimum wagelevels. The government sets uniqueminimum wage levels for every type ofoccupation and geographical location. Thissystem reflects the strong central-planningtendencies of the government. The basicstandard minimum wage for unskilledworkers was raised to SYP 3,500 (€60) permonth in the private sector and SYP 3,810in the public sector in 2004. In fact, thevalue of the minimum wage nearly doubledbetween 1999 and 2004 for private sectoremployees in urban areas and increasedby more than 80% for public sectoremployees and private sector employees inrural areas (see Table 1).

Table 1: Minimum wage levels,

1989–2005 (SYP)

YearsPrivate sector Public

sectorUrban Rural

1989–90 1,100 1,190 1,300

1991–94 1,375 1,490 1,625

1995–99 1,790 1,940 2,115

2000–01 2,237 2,425 2,645

2002–03 2,684 3,175

2004–05 3,500 3,810

Source: Ministry of Social Affairs and Labour,

personal communication

Prior to 2000, the minimum wage was setso low that it was effectively non-binding.The most recent increase to SYP 3,500was potentially binding for between 12%and 23% of the private sector work force(see Table 2). There is evidence that manyemployers in the private sector do followgovernment-set minimum wage scales. In2001, over 11% of full-time private sectoremployees earned less than SYP 2,700per month. When the minimum wage wasincreased to SYP 2,684 per month in 2002,only 5.8% of full-time private sectorworkers earned less than this amount.

27


0%

20%

40%

60%

80%

Under Law 47 Under Law 21 Under Law 10

Number of firms Investment capital Number of workers

Figure 13: Share of total firms, investment capital and workers, by law (2004)

Source: Ministry of Industry, internal memorandum

Compliance may have increased in 2003,but wage data were not collected in thatyear’s survey.

Table 1 only presents information on theminimum wage levels for unskilled workers.However, the Syrian government also setsdifferent levels for different occupationsand geographical locations. Thus, theentire wage distribution may be influencedby an increase in the minimum wage.

Table 2: Monthly wage distribution of

full-time private sector employees (%)

2001 2002

Less than SYP 1,700 2.6 1.6

SYP 1,800–2,200 4.8 2.2

SYP 2,300–2,600 3.8 1.8

SYP 2,700–3,400 12.2 6.4

SYP 3,500–3,900 5.6 4.4

SYP 4,000–4,400 17.7 11.5

SYP 4,500 and above 53.3 72.1


and 2003a

The current minimum wage level ofSYP 3,500 per month for full-time workersin the private sector translates into around€2 per worker per day. For families with atleast one non-working person, this is lowerthan the international poverty threshold.

Poverty is therefore a real problem in Syria.Indeed, a recent report by the UnitedNations Development Programme (UNDP)suggests that the poverty rate in Syria,based on the standard US$2 per day, was10.4% in 2003/04. Using a set ofexpenditure poverty lines instead of theUS$2 poverty threshold, the reportestimated the poverty rate at 11.4% in2003/04 (UNDP, 2005).

Labour market regulations

Workers in Syria are covered under severallabour laws that tend to deal separatelywith public sector and private sectoremployees. Many labour laws arecircumvented or ignored, especially in theprivate informal sector. For example, onereason for not registering a company withthe government is to avoid paying socialsecurity fees. This is not to say thatworkers in the informal sector do notreceive these benefits; many transactionsdo take place outside thegovernment-controlled system.

Labour dismissal in Syria can be acumbersome process. Officially, acommittee for dismissal affairs withrepresentatives from the Ministry of Labourand Social Affairs and the municipalgovernorate and trade union of the citywhere the job is held, must be formed todecide on dismissals (Syrian CentralBureau of Statistics, 2003a).

28


2,000

0

4,000

6,000

8,000

10,000

Illiterate Literate Primary Preparatory Voc.secondary

Gen.secondary

Interm.institute

University

Public Private

Figure 14: Monthly wages (SYP) by educational attainment and sector (2001/02)

Source: Authors’ calculations based on merged 2001/02 labour force survey data

In practice, as a way of avoiding thebureaucracy involved, many private sectoremployers offer severance pay to laid-offworkers and/or require job applicants tosign resignation letters before they signtheir employment contracts. Employeescan still choose to take their case to adismissal committee, however, anddismissals are therefore rare. Indeed, thelow proportion of workers with priorexperience among the unemployedsuggests that most workers are not laid offonce hired by a firm.

This system may have had someunexpected outcomes. While, ostensibly,private sector firms require employees tosign undated resignation letters at the startof their employment in order to facilitate thedismissal process, in reality many firms usethese resignation letters in case of workerinjury on the job to suggest that the workerwas not employed by the firm at the time ofinjury. Thus, while injured workers in Syriaare entitled to benefits, many in fact do notreceive them.

The Syrian government, realising that thecurrent labour law is not working asintended and is contributing to an adverseinvestment climate, is in the process ofreforming the law and significantly reducingthe restrictions and procedures involved indismissals.

Policies for combating unemployment

The Syrian government has identifiedemployment issues as a national priorityand has initiated an intensive labourmarket data collection effort, includingannual labour force surveys. In addition,the Syrian government has been reforminglaws and regulations to make it easier forthe private sector to invest and expand itsactivities in the country. If successful, theselaws will help increase labour demand andreduce unemployment.

The Syrian government has established anAgency for Combating Unemployment(ACU) with the goal of spending US$1,000million for job creation activities between2002 and 2007. The main activity of theACU is the provision of small loans(between US$2,000 and US$60,000) toSMEs, selected on the basis of feasibilitystudies, and micro-enterprise loans (lessthan US$2,000) for low-income families.The ACU also has a public works andhousing programme to create temporaryand permanent employment whileimproving infrastructure and livingstandards. Finally, the ACU providesfunding for the training of unemployedworkers. After their training, workers arematched with employers in the privatesector or apply for a loan through the ACU.

29


4. THE RELATIONSHIP

BETWEEN EDUCATION AND

EMPLOYMENT:

UNRESOLVED ISSUES

Education and training can be consideredeither as a consumption good financed outof public funds, or as an investmentproviding economic and social returns atboth the individual and social levels. Inrecent years, investments have been madein Syria to improve the capacity of theeducation and training system, but there isincreasing evidence that the returns to thisinvestment have been disappointing due toadverse labour market conditions.

4.1 SCHOOL LEAVERS,UNEMPLOYMENT AND THETRANSITION FROMEDUCATION TO WORK

Unemployment in Syria is very much alabour market insertion problem, mainlyconcerning young people. In 2002, youngworkers aged 15–24 represented almost80% of the unemployed population (seeFigure 15). The situation is similar formales and females. However, relativelymore females between the ages of 25 and

39 are unemployed compared to males,probably because the former are morelikely to leave and re-enter the labour forcefor family reasons.

Unemployment rates in Syria do notdecrease among workers with higher levelsof educational attainment except at theuniversity level for males and at theuniversity and intermediate institute levelsfor females (see Figure 16). In the absenceof a public social safety net, most workerswithout education or with only basiceducation have no other option than toaccept low-paying jobs in the privatesector. At the other end of the spectrum,some educated youth prefer to wait for jobsin the formal and public sectors that offerbetter wages and more generousnon-wage benefits.

The relatively low unemployment rates ofboth male and female university graduatesare encouraging, but they should beassessed with caution – there is muchevidence that many are underemployed in

31

4

jobs that do not require university skills,and many Syrian graduates emigrate tofind jobs abroad that are not available inSyria. High unemployment rates for peoplewith vocational secondary education,especially women, should be a matter ofmuch concern and are a problem thatillustrates the inefficient use of educatedlabour prevalent in the Syrian labourmarket.

Women experience higher unemploymentrates than men across all levels ofeducation (see Figure 16). This indicates ahigher turnover and/or longer wait times foryoung female jobseekers, with the

exception of those with intermediateinstitute qualifications. To a large extent,women graduate from these institutes inthe health and education professionswhere the transition from education to jobsin the public sector is more straightforward.

An analysis of unemployment rates by yearafter graduation shows that they decreaserapidly with age, especially for universitygraduates. The unemployment ratedecreases to 20% within three years ofgraduation for university graduates, sixyears for intermediate institutes, and tenyears for those in secondary education(see Figure 17).

32


0%

10%

20%

30%

40%

50%

15-19 20-24 25-29 30-39 40-64

Al l Male Female

Figure 15: The share of unemployed people by age (2002)


0%

10%

20%

30%

40%

50%

Illiterate Primary Preparatory Vocationalsecondary

Generalsecondary

Interm.

institute

University

Male Female

Figure 16: Unemployment rate by education level and gender (2002)


Many unemployed workers are queuing forpublic sector jobs, and queuing timesdecrease with the level of education. In thispublic sector model, hiring decisions areoften based on rankings in the labourmarket queue, and one’s place in thequeue depends on one’s level ofeducation. As a result, higher levels ofeducational attainment are sought, notnecessarily because of higher wages butbecause of higher chances of obtainingemployment and shorter wait times,especially for public sector jobs.

4.2 VET DIPLOMAS ANDEMPLOYMENT

The rationale for developing a strongtechnical/vocational (VET) route withinsecondary education is that VET diplomaholders are more employable than generaleducation diploma holders. This is true forSyria, but represents only part of the story.The share of employed persons withvocational secondary education among theworking-age population is higher than theshare for those with lower levels ofeducational attainment, especially females,and is indeed also higher than the share forgeneral secondary completers. However,general secondary school completers aremore likely to remain in school andcontinue on to higher levels of education.Employment levels among vocational

secondary completers are, in turn, muchlower than those found among intermediateinstitutes and university graduates,especially for females (see Figures 18and 19).

Another cause for concern is the limitedpresence of vocational secondary schooldiploma holders on the Syrian labourmarket. According to the 2002 LabourForce Survey there were only 81,000 suchindividuals (1.7% of the total labour force)as compared to 290,000 generalsecondary diploma holders (6% of thelabour force). These figures are not in linewith the high share of preparatory schoolleavers enrolled in VET secondary schools.They reflect the low internal efficiency ofVET secondary schools which arecharacterised by rising enrolments, buthigh dropout and low graduation rates.

Another reason for this discrepancy mightbe that a large proportion of secondaryVET diploma holders continue their studiesin intermediate institutes, either becausetheir diplomas are not recognised asrelevant by employers or to increase theirchances of getting better jobs.

In any case, these figures cast some doubton the actual visibility and credibility ofsecondary VET diplomas which do notseem to be considered as significant entrypoints into the Syrian labour market.

33

4. THE RELATIONSHIP BETWEEN EDUCATION AND EMPLOYMENT:UNRESOLVED ISSUES

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1 10 11 122 3 4 5 6 7 8 9

Years after graduation

Un

em

plo

ym

ent

rate

PrimarySecondaryIntermediateHigher

Figure 17: Unemployment rate by year after graduation


Note: The figure shows the average unemployment rate for individuals at different years after graduation. To

calculate this, expected ages of graduation of 15 years for primary education graduates, 18 years for secondary

education, 20 years for intermediate institutes, and 23 years for university graduates are used.

In recent years, the Ministry of Educationhas made significant efforts to increase thequality and relevance of secondarytechnical education. This has included:

� decreasing the proportion of studentsentering VET from 70% of preparatoryschool leavers to 40% over the past fiveyears, to reduce overcrowding in VETschools and increase quality. In Syria,as in almost every country, the VETroute is regarded as a second-classchoice for preparatory school leaverswho did not get high enough grades toenter general secondary education. Theabove-mentioned change in the ratio ofgeneral education to VET was achieved

by decreasing the grade level requiredto enter general secondary education;

� increasing in-company training bypromoting VET schools with dualsystem arrangements;

� introducing new high-skills trainingcourses in computing and electronics,which have received considerableinterest from preparatory schoolcompleters.

These efforts could go a long way towardsincreasing the employability of VETdiploma holders in a context of employmentgrowth and strong demand for skilledlabour, but they will yield only mixed resultsin a context of reducing unemployment and

34


100%

80%

60%

40%

20%

0%Illiterate Literate Primary Preparatory Vocational

secondaryGeneral

secondaryInterm.institute

University

Employed/population Unemployed/pop Student/pop

Figure 18: Employment status by education, males aged 15–64 (2002)


100%

80%

60%

40%

20%

0%Illiterate Literate Primary Preparatory Vocational

secondaryGeneral

secondaryInterm.institute

University

Employed/population Unemployed/pop Student/pop

Figure 19: Employment status by education, females aged 15–64 (2002)


underemployment. The danger is that VETdiplomas will not be judged by employersin terms of their intrinsic value and will notbe given the significant employabilitypremium expected by the publicauthorities, as compared with generalsecondary education diplomas.

4.3 HIRING PRACTICES IN THEPUBLIC AND THE PRIVATESECTORS

A permanent and growing surplus ofunemployed, mostly young, school-leavershas triggered an artificial and unhealthystiffening of hiring practices in both thepublic and private sectors. In the publicsector, graduates and school leavers arequeuing for jobs in ministries and publiccompanies, and recruitment decisions arebased on diplomas and grades obtainedand not on a match between applicants’qualifications and the requirements of thejob in question.

In the private sector, companies areencouraged to exaggerate their qualificationrequirements and set artificially highbarriers, such as that ‘no one can enterwithout completing their [terminal]secondary school baccalaureate exam’, thathave little to do with the quality of educationreceived or with actual job content orexpected labour productivity. In a context ofa surplus of educated labour, universitygraduates tend to displace baccalaureate

holders even for seasonal jobs, thusencouraging students to seek higher-leveldiplomas to increase their chances ofobtaining a job.

The labour queue situation is perfectlyunderstood by students and their families,triggering an endless race for moreeducation credentials. What hassometimes been called the ‘diplomadisease’ syndrome is setting in.

To sum up, the lack of jobs in the formalsector to accommodate all school leavershas several unfortunate consequences forthe education and training system.

� The content, quality and relevance ofdiplomas are disregarded by employerswho use diplomas (together with grades)as screening devices to rank applicants.

� Initial education diplomas are the onlymode of skill acquisition. All other formsof training and competence acquisitionare disregarded by employers andsociety as a whole.

� The size of the queues for scarce jobsamong school leavers and graduatesencourages recourse to family andsocial connections to advance in thelabour queue and get access to jobs.

All these factors prevent the recognition of‘true’ competences and qualifications forthe allocation of educated personnel in thelabour market, thus contributing to the loweffectiveness of investment in education.

35

4. THE RELATIONSHIP BETWEEN EDUCATION AND EMPLOYMENT:UNRESOLVED ISSUES

Illiterate Literate Primary Preparatory Vocationalsecondary

Generalsecondary

Interm.institute

University

60%

50%

40%

30%

20%

10%

0%

Share of population Share of employed Share of unemployed

Figure 20: Share of total employed and unemployed populations by education (2002)


4.4 THE PUBLIC SECTOREMPLOYMENT MODEL

Preference for public sector employment isprevalent throughout the Syrian society. Itwas strengthened by the earlier practice ofmandatory recruitment, in which universitygraduates from specified institutions hadan automatic right to employment in thepublic sector (specific ministries), whetheror not there were vacancies fitting theapplicants’ qualifications.

In the Syrian public sector, workers arecategorised into five categories setcentrally by government regulations.Recruitment policies establish a rigid linkbetween these categories and the requiredlevels of educational attainment ofapplicants. The wage structure does notrelate to job content, but to educationalqualifications. This practice cannotguarantee job performance.

Overstaffing is sometimes estimated at30% to 50% of the labour force (ISMF,2005). Rigidities of all kinds prevent theefficient use of staff. Short effective workingtime in public sector jobs is commonpractice, thus enabling many public sectorworkers to hold a formal or informal secondjob in the private sector; this is aphenomenon that is not well representedby official statistics. Public sectoremployees often take a second job tosupplement low public salaries and socialacceptance of this phenomenon is high.

Wages are not high but non-wage benefitsattached to public sector jobs aresubstantial. Some are official (job security,better health and retirement benefits);others such as short effective working timeand the possibility of holding a second job,are not, but are nonetheless important. Theoverall wage structure is compressed andwage differences among people withdifferent levels of educational attainmentare narrow.

The negative effects of this public sectoremployment model are not always fully

taken into consideration by employmentand labour market policies. Firstly, lowwages and wage rigidities in the publicsector prevent adequate compensation ofkey qualified personnel and have anegative effect on performance andmorale.

Secondly, public sector workers areencouraged to seek adequate financialrewards through a second job in the privatesector. The negative consequences ofmultiple job holdings on the functioning ofthe labour market at the macro level areimmense (and not well documented). Thispractice casts serious doubts on actual asopposed to reported employment statisticsin the private sector, as many people donot report their second job and it provides astrong incentive to create jobs in theinformal sector of the economy.

Thirdly, the situation does not encourageministries and public companies to adoptefficient human resources managementpractices. Fourth, although salaries arelow, the large number of public sectoremployees contributes to high labour costs,a situation that is not tenable in the mediumand long term, especially in the wake ofdwindling oil revenues. Finally, at themacroeconomic level, this public sectoremployment model is a major cause of lowlabour productivity, reflected in low wages.

The present human resources modelprevailing in the public sector andconsisting of job security,underemployment cum inefficient use ofstaff, short effective working time and lowwages rigidly linked to educationalcredentials is no longer a workableproposition for accommodating the growingnumbers of school leavers in Syria, letalone tackling high official unemploymentand hidden underemployment. In a contextcharacterised by retrenchment andrationalisation in the public sector toimprove labour productivity, the traditionalcareer pattern of school leavers andgraduates seeking a job in the public sectoras a first option, will no longer be valid.

36


5. THE QUALITY AND

RELEVANCE OF EDUCATION

AND TRAINING

Strong criticisms of the quality of Syrianeducation and training can be heardeverywhere. In the private sector,denigrating the quality of universitygraduates, even those holding degrees indisciplines with a tradition of quality suchas engineering, is commonplace. Thesecriticisms are sometimes expressed insuch sweeping terms that one wonderswhy so many Syrian graduates emigrate soeasily and do so well abroad. VET isassessed with the same severity, with theexception of the dual system. Companiescomplain that they have to do all thetraining themselves.

In the public sector, applicants arecategorised according to their educationalqualifications. The absence of a positivework environment or performanceincentives, coupled with low pay, preventsa rational assessment of the performanceof graduates and school leavers. Criticstend to confuse the intrinsic quality of

education with the unfavourable workenvironment in which people are working.

The criticisms mentioned above are tooill-thought-out to be used for educationpolicy purposes. They simply show that asound and rational public debate about thequality of education and training has yet totake place in Syria. It is indeed difficult toappraise the quality of education when thelabour market is dominated by a largesurplus of labour and rigidities of all kinds,and where what is important is not whatyou know but whom you know.

Despite the unfavourable labour marketconditions described above, the Ministriesof Education and Higher Educationacknowledge a serious quality problem andare ready to initiate and implementprogrammes and initiatives aimed atimproving the quality and relevance ofSyrian education. Some of these are brieflyreviewed below.

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5

5.1 PREPARATORYEDUCATION

In 2003, Syria participated for the first timein an international study measuring studentachievements. A sample of about 5,000eighth-grade students aged about 14,enrolled in 130 Syrian schools, was testedin the context of the Trends in InternationalMathematics and Science Study (TIMSS)conducted under the auspices of theInternational Association for the Evaluationof Educational Achievement. The results,reported separately from other countries,showed that the scores of Syrian studentsin both mathematics and science were lowby international standards, confirming thepoor quality of preparatory education inthese subjects (TIMSS, 2003a and 2003b).

A five-year project (2005–10) aimed atimproving the quality of basic educationhas been designed by the Ministry ofEducation. It includes three components:(i) improving teacher quality by upgradingand extending the duration of training fromtwo years post-baccalaureate to four yearsin university colleges of education;(ii) developing new curricula according tointernational standards; and (iii) introducinginformation technology in schools.

The main thrust of the project seemssound, but the Ministry of Education faces

difficulties in formulating it in appropriateterms. Also, the cost implications are quitesignificant, given the large number ofpreparatory teachers (over 205,000 in2003) that will receive longer universitytraining. These teachers will claim a shiftfrom Category 2 to Category 1 of the publicservice, with corresponding pay increases.Expenditure on preparatory education willincrease accordingly.

5.2 SECONDARY EDUCATION

Children are allocated to either general ortechnical secondary education according totheir grades on the final examination ofpreparatory school. As mentioned above,the policy of the Ministry of Education inrecent years has been to decrease theshare of preparatory completers enrollingin the VET route in an attempt to improvequality and relevance. The Syriangovernment’s previous strategy ofincreasing enrolments in VET schools hascontributed to very high dropout ratesamong secondary institutions anddecreasing net enrolment rates, from ahigh of 59% for males and 42% for femalesin 1985 to around 40% for both groups in2000 (see Figure 21). The low internalefficiency of secondary education is welldocumented in the National Human

Development Report 2005 (UNPD, 2005).

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70%

60%

50%

40%

30%

20%

10%

0%1970 1975 1980 1985 1990 1995 2000

Female Male

Figure 21: Net enrolment in secondary education by gender (1970–2000)

Source: World Development Indicators, 2003

The EC/MEDA programme Modernisationof the technical and vocational educationand training system3 is the main initiativeadopted so far by the Syrian authorities toimprove the quality and relevance of VETin two sectors, the ready-made garmentindustry and the maintenance in electricaland mechanical engineering industry. Thetotal cost of this programme will be €25million, with an EU contribution of €21million. Implementation is scheduled tobegin in September 2005.

This programme will consist of three mainactivities.

Activity 1 (€14.8 million):

� upgrade 16 selected VET institutions4 inthe two sectors mentioned abovethrough curriculum development,provision of equipment, teacher training,enlarging the practical trainingcomponent, improved management ofVET institutions, and provision ofvocational guidance and informationservices;

� help companies to express and satisfytheir skill needs;

� support chambers of commerce inhuman resources management andtraining.


� support the Syrian government inadopting an overall approach to VETdevelopment culminating in the creationof a National Institute for VETDevelopment.


� develop a labour market strategy andbuild capacity in the Ministry of SocialAffairs and Labour;

� upgrade the capacity of the publicemployment services.

Generalising dual VET systems is anotheroption to increase the quality of trainingand the relevance of that training to labourmarket needs. But the possibilities forextending dual VET are constrained by twolimiting factors, namely (i) the availability oftraining places in companies within therelevant sectors, and (ii) the willingness ofstudents to take jobs upon graduationinstead of seeking additional trainingthrough intermediate institutes. Neither ofthese issues can easily be resolved on alarge scale5. The outlook for generalisingthe dual system is heavily dependent onthe growth prospects of companies in therelevant industries and the supply ofappropriately-paid jobs needed todiscourage students to seek additionaltraining.

5.3 INTERMEDIATEINSTITUTES

In sharp contrast with secondary technicalschools, intermediate institutes enjoy ahigh degree of credibility and prestigeamong students. Considered as the apexof the VET route, they are crediblebecause they are selective; in 2004, about97,000 baccalaureate holders out of a poolof 134,000 applicants gained admission tointermediate institutes. The selectionprocess is organised by the Ministry ofHigher Education. The possibility of somegraduates entering university, usually in thesecond year, is another positive featurelikely to remove the ‘dead end’ perceptionof these institutes, even though a verysmall minority of such graduates (3%) areallowed to do so.

At first glance, intermediate institutes arealso highly visible on the Syrian labourmarket. Despite high dropout rates, therewere more intermediate institute diplomaholders (330,000) than university graduates(300,000) in the labour force in 2002.

39

5. THE QUALITY AND RELEVANCE OF EDUCATION AND TRAINING

3 EC programme Modernisation of the technical and vocational education and training system in the ArabRepublic of Syria, feasibility report, January 2004

4 Two intermediary institutes under the Ministry of Higher Education, three intermediary institutes under theMinistry of Education, eight vocational secondary schools under the Ministry of Education, and threevocational training centres under the Ministry of Industry

5 In one of the schools visited, enrolment was constrained by the lack of trainee places available in the textilesector and the refusal of education authorities to let students seek admission to intermediary institutes upongraduation. As a result, the school facilities were underused.

This may be due to the fact that universitygraduates, especially in the key fields ofmedicine and engineering, show a higherpropensity to work abroad thanintermediate institute graduates. Statisticsalso show that 81% of intermediate institutegraduates are employed in the publicsector. Obviously, it is perfectly natural thatgraduates in health professions andteacher training will take public sector jobs.

These figures illustrate the very highpropensity of intermediate institutegraduates to seek salaried jobs in thepublic sector and their strong reluctance toseek jobs in the private sector or asindependent workers. Although eachinstitute has individual student files, notracer studies are presently available todocument graduate career patterns.However, this ‘traditional’ employmentpattern shows that institutes are ill adaptedto the new labour market conditionsoutlined above. Our analysis in Section 2above indicated that wages for maleintermediate institute graduates working inthe private sector were not significantlydifferent to wages for male secondaryschool completers, suggesting a near-zeroreturn to completing their intermediateinstitute training. Wages for femaleintermediate institute graduates weresubstantially higher than for secondaryschool completers; this suggests that thetraining received by males is not valued inthe private sector, but that the trainingreceived by females (who specialise indifferent technical areas, such as textilemanufacturing) is. Gearing students,especially males, towards privateemployment, SMEs and self-employmentwill be the major labour market challengefaced by intermediate institutes in thecoming years6.

Curriculum development is securedthrough specialist committees that includerepresentatives of the relevant institutesand of the private sector. Thesecommittees meet regularly and draftproposals for change. Efforts are underwayto identify key specialties, to increasepractical training, and to upgrade thetraining of teachers. Some intermediate

institutes were recently given the right tocharge significant student fees and keepthis revenue in their own budget, whichgives them a limited degree of financialautonomy. The fragmented institutionalaffiliation of institutes is another weak point:the Ministry of Higher Education isresponsible for only 34 institutes out of atotal of 121. Most of those not under theMinistry of Higher Education are in thefields of teacher training, agriculture andhealthcare. There is a Higher Council forIntermediate Institutes, but its mandate isunclear and there is no framework forcooperation with social partners.

5.4 UNIVERSITY EDUCATION

About 245,000 students are enrolled in thefour public universities. Furthermore, about4,000 students go to study abroad everyyear. The number of Syrian students livingabroad is around 20,000, but nobodyknows how many of them return to Syria.Poor quality and bureaucratic managementare the two most common causes forconcern. The former is often attributed tothe high proportion (about 60%) of theteaching staff who obtained their universitydegrees in the countries of the formerSoviet bloc. The latter is illustrated by thecumbersome procurement procedures that,together with a fear of making decisions atall levels of the administrative machinery,prevent universities from spending all oftheir investment budgets.

A new law promoting the administrativeand financial autonomy of universities isabout to be approved. Merit pay, in theform of premiums added to salaries, will begranted to professors for specific tasks.University budgets will be transmitteddirectly from the Ministry of Finance to theuniversities which will be authorised tokeep whatever additional revenue they canraise. Steps are also being taken toestablish a quality assurance andaccreditation agency.

The four priorities for university educationare admissions policies, quality, relevanceand governance. To implement these

40


6 The support given to five intermediate institutes by the forthcoming MEDA project is a first step in the rightdirection.

priorities, a series of project areas havebeen identified for which the Ministry ofHigher Education is seeking foreignassistance (Ministry of Higher Education,2004). The identification of anEU programme for upgrading the highereducation system in the Syrian ArabRepublic has recently been initiated.

All these initiatives to improve the educationand training system show that educationauthorities are trying hard to overcome theperceived deficiencies of the sector. But theeffectiveness of these initiatives will belimited under the existing labour marketconditions. Unless labour market reformsand employment promotion policies arevigorously pursued and significant progressin these areas is achieved, the effectivenessof additional investment in education andtraining will be severely impaired. Worse,the impression that quality in education is acostly and elusive objective will fuel publicscepticism towards education.

5.5 TRAINING DURING THETRANSITION FROM SCHOOLTO WORK

In Syria, as in many other countries, thequality of formal education (that is,education provided in schools and otherMinistry of Education establishments) iscriticised on the grounds that it is ‘tootheoretical’ and/or that ‘school leavers donot know how to do things’. To address thisproblem, many countries have set upprogrammes aimed at providing practicaltraining opportunities to school-leaversduring their transition from school to work.

In Syria, it is customary for school leaversto register with the employment offices ofthe Ministry of Social Affairs and Labour inthe hopes of obtaining a public sector job.This transition period may last severalyears, however, depending on the level ofeducational attainment of each individual.To the extent that public sector hiringpractices are based on formal educationdiplomas, school leavers are notencouraged to enrol in practical trainingprogrammes to improve their chance ofgetting jobs. In the private sector, relianceon family or social connections to get jobs

supersedes practical training as the normalroute to improving school leavers’employability. Furthermore, employmentoffices are not equipped to give jobseekersreliable information about job opportunitiesin the private sector. Opportunities for jobsin the public sector will decrease in thefuture as a result of the new public sectorpolicies adopted by the government andschool leavers should be encouraged toseek employment in the private sectorthrough practical training.

Unfortunately, practical training provisionduring the transition from school to work isvery limited in Syria. In 2003, the Agencyfor Combating Unemployment (ACU)began implementing two programmes inthis area (ACU, 2003b).

� The Training for secured employmentprogramme is designed to help youngpeople registered in employment officesto find jobs in medium-sized and largeprivate sector companies. The role ofthe ACU is to select (in cooperation withthe Ministry of Education) and trainyoung people and arrange for them tobe recruited by (mostly industrial)companies. The ACU thus acts as aninterface between jobseekers andvacancies.

� The Beneficiary Training programme isdesigned to provide short courses to thebeneficiaries of ACU loans to help themin creating their own businesses.

� A third training programme, aimed attraining 30,000 VET school-leavers incomputing skills over three years, willbe launched in 2005 by ACU incooperation with the Ministry ofEducation and the Syrian ComputerSociety.

A detailed assessment of the effectivenessof ACU training programmes during thetransition from school to work is beyond thescope of this report. In general, managingprogrammes of this kind involves a largenumber of pitfalls even in countries withbetter functioning labour markets thanSyria and the beneficiaries of theseprogrammes are still few. Practical trainingprovision aimed at private sector jobsduring the transition from school to workcould be expanded.

41


5.6 CONTINUING EDUCATIONAND TRAINING

Continuing education and adult trainingand retraining facilities in Syria are scarceand heavily fragmented. This is a directconsequence of a labour market in whichunemployment affects mostly young peopleand job security for adults prevails overefficient human resource management. Forpeople holding jobs protected by status(those in the public sector), or jobsobtained through family or socialacquaintances (those in the private sector),changing jobs for the purposes of careerdevelopment is not usually done andeducation/training opportunities designedto help this process are simply redundant.In a labour market dominated by initialeducation credentials and job tenure, thereis scant justification for developingcontinuing education and training facilitiesopen to all and leading to alternative formsof skill acquisition.

As the Syrian workforce steadily becomesolder over the coming two decades and asthe share of workers in public sector jobsdeclines, however, there is a real possibilitythat the share of adults among theunemployed will start to rise. As aconsequence, the demand for continuingeducation and adult training services mayalso start to rise. The Syrian governmentwould do well to prepare for this possibility.

In the public sector, it is customary forministries to run their own training facilitiesand to impart mostly technical training forlower-level administrative staff. The trainingneeds of public sector companies are metby the network of vocational trainingcentres managed by the Ministry ofIndustry and the Ministry of Construction.The training courses offered in thesecentres are short (a maximum of ninemonths) and do not lead to formal trainingqualifications. None of these facilities areopen to people seeking jobs in or workingin the private sector or to unemployedadults or people seeking to upgrade theirskills or wanting to change jobs.

These institutional arrangements do notseem very effective. Indeed, they arefraught with serious deficiencies.

� In the public sector, the multiplicity ofministerial responsibilities that existprevents the development of coherentand effective training policies. Trainingfacilities are being underused,economies of scale are impossible tocreate and overlapping services arecommonplace.

� The Ministry of Labour, which is incharge of the network of employmentoffices, has no training facilities of itsown or affiliated training networks. Inthe context of a development strategystressing private sector employment,the Ministry of Labour is not equipped toplay its normal role of ‘facilitator’ oflabour mobility in a well-functioninglabour market, addressing theemployment needs of the private sector.

� Continuing education and training forjobs in the private sector hardly exists.Companies wanting to introduce newtechnologies do not have facilities towhich they can send their workers forshort-term training and retraining.Worse, such companies are highlycritical of public facilities. The largerones tend to develop their ownon-the-job training programmes, whilethe smaller firms carefully weigh thebenefits of adopting new technologiesagainst the costs of training.

� Education and training forself-employment is limited to theincipient Beneficiary Trainingprogramme run by the ACU.

� In the absence of continuing educationand training, VET provision is limited tothree-year course programmes taught inschools and leading to traditionalcredentials (Ministry of Education andMinistry of Higher Education diplomas)which are the only way of assessingyoung people’s competences and skills.Alternative, shorter VET courses, moresuited to specific private sector needsand leading to alternative modes ofacquiring qualifications recognised bythe labour market should be developed.

The present institutional arrangementsregarding the provision of continuingeducation and training are not suitable tosupport a new development modelstressing progress in productivity achievedthrough labour mobility and efficient use of

42


labour. New continuing education andtraining policies should be designed toease the transition from an administrativeoverly regulated labour market to a moreefficient labour market oriented towardspromoting effective use of humanresources in both the public and privatesectors. These policies should be designedaccording to the following principles.

� Continuing education and trainingopportunities should be widely opened

to young people and adults whetherthey are working in the public or privatesector.

� These opportunities should be primarilydesigned to meet the needs of SMEsand the self employed.

� These opportunities should promotenew modes of skill acquisition leading toalternative vocational qualifications andcertifications complementing traditionaldiplomas.

43


6. POLICY PROPOSALS FOR

IMPROVING THE

EFFECTIVENESS OF THE

HUMAN RESOURCE SECTOR

A proactive employment policy should begiven prominence in the next five-year plan(2006–10). Within this overall framework,the following policy proposals are aimed ataddressing some of the most critical issuesto maximise the social efficiency ofinvestment in education and training.

The first three proposals are aimed atimproving the labour market situation inSyria by (i) rationalising the public sector,and (ii) directing investment towardsemployment creation in the private sector.Employment policies leading to the creationof skilled, productive jobs in the privatesector should be the overriding objective ofthe economic strategy of the country.

The last three proposals are designed toadapt the education and training system tothis new proactive employment policy. Theguiding principle in formulating educationpolicy proposals should be to improve qualityand relevance to private sector employment.

All these proposals include a heavycomponent of institutional development.

They are in line with the new developmentparadigm of Syria whereby increasingcapacity is seen as a less urgent problemthan addressing the organisational andadministrative deficiencies that impairbetter labour force utilisation and greatereconomic growth.

Proposal 1: Reforming human

resources policies in the public sector

Mandatory recruitment by ministries ofgraduates from some higher educationinstitutes was recently abolished. This is astep in the right direction but ministries andpublic companies should now be encouragedto adopt redundancy and attrition policiesaimed at reducing overstaffing and improvinglabour force utilisation through longereffective working times.

These policies should be coupled withexplicit salary premiums to retain keyqualified personnel7. The guiding principleshould be ‘fewer but better used, betterpaid, and more motivated public sectoremployees’.

45

6

7 Financial incentives are currently being proposed to motivate university personnel taking over certain tasks.

During the first year of the five-year planeach ministry and public sector companyshould be requested to prepare a humanresource development plan aimed atimproving staff performance andaddressing organisational deficienciessuch as overstaffing, short effectiveworking hours, and salary structures thatare inadequate to motivate staff and retainhighly qualified personnel. The ISMFdiagnosis report regarding the Ministry ofFinance, the State Planning Commission,and the Ministry of Economy and Tradesets out ‘what needs to be done to performbetter, faster, at lower costs, with greaterresponsiveness and efficiency’ (ISMF,2005). This approach should be adopted inall ministries and public sector companies.

Financial incentives and disincentives(rewards and penalties linked to annualbudgets) could be created to promote theimplementation of these plans by ministriesduring the 2007–10 period.

Benefits: This proposal is expected to:

i. improve labour utilisation in the publicsector;

ii. pave the way for modernising publicadministration in Syria;

iii. release capacity to be directed towardsthe private sector; and

iv. reduce long-running publicadministration costs.

Proposal 2: Promoting employment in

the private sector

It is expected that the private sector willplay a primary role in absorbing newworkers over the next few years. As such,policies need to be adopted that supportthe development and growth of the privatesector. In recent years, the Syriangovernment has done much to create ahealthier business environment: privatebanks have been allowed to open, officialexchange rates have been brought in linewith international rates, barriers to entryhave been removed for most industries,single-window (one-stop) centres are beingconsidered, and national labour laws areundergoing needed reform. Still, there ismore that can be done.

The government should strongly considerremoving the remaining barriers to entry,especially for the bottled water, carpet,wool and cotton industries. Furthermore,the government should phase out bothimplicit and explicit subsidies to publicsector enterprises to ensure that theprivate sector can compete on an equalfooting.

Companies registering under Law 21 andthose applying for exemptions underLaw 10 should be given clear andreasonable requirements for registration.Licensing bodies should refrain fromplacing additional conditions on applicantsduring the licensing process, except in veryspecial circumstances, such as projectswith an environmental impact. Also, thecorporate tax system should be simplifiedand made more transparent and lessarbitrary. Such reforms may actuallyincrease tax revenues by encouraginggreater compliance.

The government should follow through onproposals to reform the country’s labourlaws. The ability of private sector firms tolayoff workers should be reviewed with theaim of broadening the number of workerswith permanent contracts. At the sametime, appropriate safety nets such asunemployment insurance systems, need tobe developed.

Benefits: These proposals will:

i. contribute to a healthier businessenvironment; and

ii. induce private sector firms to open orexpand their business activities in thecountry.

This in turn would help create more andbetter jobs.

Proposal 3: Facilitating job creation in

small companies

Small companies requiring limitedinvestment capital but with a good potentialfor job creation and employment growthshould be given prominence in a proactiveemployment policy stressing job creation.According to the data of the Ministry of

46


Industry, companies with fewer than nineworkers, presently registering underLaw 47, have the lowest investment costper job created and represent 60% of totalemployment in the formal private sector(see Figure 13, p. 27). These companiesshould benefit from simplified registrationprocedures and the possibility of receivingstart up loans.

Achieving full deregulation of theregistration process required for thesecompanies is a prerequisite. Registrationshould be a simple, once-every-five-yearobligation, aimed at giving each smallcompany a social security and tax number.It should not be associated with ‘visits’ or‘authorisations’ of any kind delivered byany public authorities other than tax andsocial security authorities.

Small companies in the informal sector arean especially promising source ofemployment growth. This is because theydeliberately remain smaller than their truepotential size in order to escapegovernment notice. Small companies in theinformal sector should be encouraged toregister by improving the businessenvironment (i.e. adopting the policyrecommendations above) and by makingsmall start-up loans available. Building onthe experience gained by the ACU inrunning a programme of micro-credits foryoung jobseekers, banks and otherfinancial institutions should be encouragedto open ‘small business windows’ for smallcompanies.

Benefits: This proposal would contribute tojob creation by:

i. stimulating the creation of low-cost jobsin small companies; and

ii. encouraging informal companies toregister in the formal sector andeliminating their hesitancy to grow.

Proposal 4: Developing appropriate

tools to assess quality in education

In Syria, student performance is assessedexclusively by means of nationwideexaminations (i) at the end of the ninth yearof preparatory school, (ii) at the end of thesecondary school streams, general andtechnical (baccalaureate), and (iii) upon

finishing the two-year course programmesoffered at the intermediate institutes and byuniversity diplomas. Reassessing theeffectiveness of the present scale ofexaminations was beyond the scope of thisreport, but these end-of-cycle examinationsare not sufficient to monitor studentlearning performance, identify weak spotsin the teaching/learning process, or informproposals for appropriate pedagogicalchange.

Syria needs to develop appropriate tools tomonitor and improve the quality andeffectiveness of its education system, atboth the individual and institutional levels.

The quality of preparatory education iscrucial to furthering learning experiencethough life. In terms of learningachievements Syrian students do not farewell internationally. In the perspective ofpreparatory education as a foundation forlearning, a national testing service shouldbe developed in basic subjects to enableperiodic assessment of student learningperformance during preparatory education.The proposal would support the objectiveof the Ministry of Education of developingnew curricula in accordance withinternational standards.

Learning takes place at school.International research shows that thequality of schools is heavily dependent onseveral variables of an institutional nature(such as school leadership, teamworkamong teachers and a positive learningatmosphere) that can be assessed onlythrough in situ institutional evaluation.Institutional evaluation of a sample ofsecondary schools should be carried out atregular intervals.

Benefits: These proposals would contributeto improving the quality of education by:

i. nourishing a more objective publicdebate over the quality of Syrianeducation;

ii. helping Syrian educators to identifydeficiencies in the teaching/learningprocess and target these deficienciesfor additional investment; and

iii. improving school management andidentifying key factors thatimprove/impair learning within schools.

47

6. POLICY PROPOSALS FOR IMPROVING THE EFFECTIVENESS OF THE HUMANRESOURCE SECTOR

Proposal 5: Improving the relevance of

vocational education and training to the

private sector

The full benefits of further investment in thequality and relevance of the Syrianeducation system, especially VET, will notmaterialise unless there is adequatedemand for skilled labour. This report hasshown that the prestige, visibility andcredibility of the VET route (as opposed tothe general education route) are still weakin the eyes of private sector employers.Strengthening and improving this VETroute – intermediate institute diplomas,technical secondary education diplomasand continuing training provision inselected sectors where one can foresee ademand for skilled labour – should be theguiding principle of VET policy in Syria.

To be more beneficial to the private sector(both in perception and in reality)vocational education in Syria needs to(i) create stronger links with the privatesector and (ii) ensure that students arebeing trained in relevant occupations.

The first objective can be accomplishedthrough stronger involvement of privateemployers in policy-making at the nationallevel, the creation of local private industrycouncils that would help to advise anddirect the programmes, and directinvolvement of employers in thegovernance and monitoring of educationalinstitutions, for example in school boards.Syria’s limited experience with dual VETsystems suggests that graduates of suchprogrammes are well received by the firmsthat train and hire them. Strengtheningprivate sector input into the development ofcurricula will help to improve the standingof VET school graduates in the eyes of theprivate sector.

The second objective would be achievedby establishing a labour market informationsystem that could help the Syriangovernment, local governments, VETschool administrators and private industrycouncils to identify occupations with thecapacity to absorb VET graduates. Labourdemand must be assessed at the locallevel to ensure its relevance to the locallabour market.

Benefits: This proposal would:

i. strengthen the credibility of VET throughincreased collaboration betweengovernment authorities, privateemployers and training providers; and

ii. ensure that VET students obtain trainingin occupations in which they are likely tofind jobs upon graduation.

Proposal 6: Support the development of

continuing vocational education and

training

A more active role in employment on thepart of the private sector, coupled withretrenchment in the public sector will leadto increased labour mobility. Continuingeducation and training is an appropriateaccompanying measure to facilitate andsupport the mobility of labour.

In addition, the demographic wavediscussed in this report is quickly movinginto mid-career, placing burdens on thelabour market in terms of meeting theneeds of mid-career workers. Theproportion of mid-career workers amongthe unemployed might begin to rise in thevery near future. The Syrian governmentshould anticipate this potentialdevelopment and begin to prepare policiesand programmes that cater to the needs ofthe adult unemployed, including providingretraining programmes.

It is proposed that a system be establishedto fund, promote and develop continuingeducation and training opportunities foryoung people and adults (i) seeking jobs inthe private sector, (ii) setting up their ownindependent businesses, and (iii) wantingto retrain for job change after layoff.

Benefits: This proposal is expected to:

i. diversify VET provision by supplyingshort courses designed to meet privatesector needs;

ii. facilitate labour mobility; andiii. initiate the development of a continuing

training industry in Syria.

48


ACRONYMS

ACU Agency for Combating Unemployment

EC European Community

ETF European Training Foundation

GDP Gross domestic product

ILO International Labour Organisation

IMF International Monetary Fund

ISMF Institutional and Sector Modernisation Facility

SME Small and medium-sized enterprise

SPC State Planning Commission

SYP Syrian pound

TIMSS Trends in International Mathematics and Science Study

UNDP United Nations Development Programme

UNPD United Nations Population Division

VET Vocational education and training

49

REFERENCES

Agency for Combating Unemployment, Annual Report 2003, Damascus, Syria, 2003a.

Agency for Combating Unemployment, The Unemployment Mapping in Syria Study

Project: Preliminary Findings of the Unemployment Mapping Study, Damascus, Syria,2003b.

Boudarbat, B., ‘Employment Sector Choice in a Developing Labour Market’, working paper,Department of Economics, University of British Columbia, Canada, 2004.

Card, D., ‘The Causal Effect of Education on Earnings’, Handbook of Labour Economics,Vol. 3A, ed. Orley Ashenfelter and David Card, Amsterdam, 1999.

El-Laithy, H. and Abu-Ismail, K., UNDP, Poverty in Syria: 1996–2004: Diagnosis and

Pro-Poor Development Considerations, United Nations Development Programme, June2005.

Glewwe, P., ‘Schools and Skills in Developing Countries: Education Policies andSocioeconomic Outcomes’, Journal of Economic Literature, Vol. 40(2), 2002,pp. 436–482.

ILO, Key Indicators of the Labour Market: 2001–02, Geneva, Switzerland, 2002.

ILO, LABORSTA database, Geneva, Switzerland, 2004.

IMF, Syrian Arab Republic – Selected Issues and Statistical Appendix, Washington, USA,2003.

ISMF, Institutional Modernisation Intermediate Report, ISMF Working Document Series,February 2005, Damascus, Syria, 2005.

Kabbani, N. and Tzannatos, Z., ‘Syria Country Profile: Chapter on Labour and HumanResource Development’, presented at the Syria Country Profile workshop in Damascus,31 August 2005, organized by the Economic Research Forum for the Arab Countries,Iran and Turkey, Cairo, Egypt, 2005.

Krueger, A. and Lindahl, M., ‘Education for Growth: Why and For Whom?’, Journal of

Economic Literature, Vol. 39(4): 1101–1136, 2001.

Makdisi, S., Fattah, Z. and Limam, I., ‘Determinants of Growth in the MENA Countries’,Arab Planning Institute Working Paper 0301, Kuwait, 2003.

Ministry of Higher Education, Towards a Reform Strategy for the Syrian Higher Education

System (2003–06), Damascus, Syria, 2004.

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Murphy, R. and Salehi-Isfahani, D., ‘Labour Market Flexibility and Investment in HumanCapital’, Virginia Tech Working Paper, 2003.

Pritchett, L., ‘Has Education Had a Growth Payoff in the MENA Region?’, Middle East andNorth Africa Working Paper Series No 18, World Bank, Washington, DC, December1999.

Psacharopoulos, G. and Patrinos, H.A., ‘Returns to Investment in Education: A FurtherUpdate’, World Bank Policy Research Paper 2881, World Bank, Washington, DC,September 2002.

‘Report: Annual Transfers from Syrian Labour in Lebanon at USD 1.5–2 bn’, 2 April 2005,The Middle East Information and Communication Agency, Paris, France, 2005.

Syrian Central Bureau of Statistics, Unpublished Tabulations of Results from the 2003Labour Force Survey, Damascus, Syria, 2004a.

Syrian Central Bureau of Statistics, Statistical Abstract 2004, Damascus, Syria, 2004b.

Syrian Central Bureau of Statistics, Results of the 2002 Labour Force Survey, Damascus,Syria, 2003a.


Syrian Central Bureau of Statistics, Results of the 2001 Labour Force Survey, Damascus,Syria, 2002a.


Syrian Central Bureau of Statistics, Statistical Abstract 2001, Damascus, Syria, 2001.

‘The Pieces of the Puzzle’, an interview with Abdullah Dardari, Minister of State forPlanning Affairs, Syria Today, October–November 2004.

TIMSS, International Mathematics Report, 2003a. http://timss.bc.edu

TIMSS, International Science Report, 2003b. http://timss.bc.edu

UNPD, National Human Development Report 2005, United Nations Population Division,2005.

UNPD, World Population Prospects: The 2004 Revision, United Nations PopulationDivision, 2004.

World Bank, MENA Development Report: Unlocking the Employment Potential in the

Middle East and North Africa, World Bank, Washington, DC, 2004.

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