Posted by Joshua on Tuesday, February 15th, 2011
What Does the Future Hold for Syrian Economists?
By Samir Aita
For Syria Comment
13 January 2011
You have published a post on the Syrian economy entitled “What does the future hold for Syria?” by George Saghir. I think it should be answered with the following comments:
Syrian and UN statistics have shown that the Syrian population growth rate has been decreasing steadily since the 1990s. Of course, we still need to wait until the next census (in 2014) to have a precise figure, but everybody agrees on the following facts:
o All estimates (official, UNDP, IMF) put the present population growth rate somewhere between 2.0 and 2.4% (in 2007), decreasing continuously since the 1980s; and UNPP estimates that it will fall to an average of 1.69% for the period 2010-2015;
o An average growth rate of population in the period 2005-2010 has been put by the UNDP at 3.6%; but this is due to the sudden rise of population in 2006-2007 as Syria experienced the arrival of around 1.5 million Iraqis, which is an exceptional phenomenon;
So making an analysis on the basis of a comparison between this 3.6% figure, as if it were the actual figure of population growth, and the 1.24% in Turkey is erroneous by any means; and talking about family planning and making other cultural assessments on false basis looks like the discourse talking about Arabs who are “underdeveloped and making a lot of children”.
Beside this major error in the reasoning, the demographic issue could be better tackled addressing the facts as they are:
o Syria is experiencing today the arrival to the labor market of the young generation born in the 1980s and 1990s. During that period, population growth rates were as high as 3.5% yearly (and this was the case of many developing countries). The major issue for policies is how to find jobs for this “wave” of youth, now and not in 20 years. The number of jobs created every year is much lower than what is necessary: only around 100,000 are created while 300,000 are needed at constant participation rate and keeping the high unemployment rate stable (in some Syrian regions this ratio of job creation to needs is much lower).
o The employment issue is aggravated today by the acceleration of rural-urban migration, especially following the drought and, more importantly, due to the lack of development policies in some regions such as the Jazira, Ghab, or East Idleb. This means that the need for job creation in urban areas is even higher, as jobs are constantly lost in rural areas.
o Many of the 1.5 million Iraqis who came to Syria in 2006-2007 (around 7% of the total population!) are now residing in the country and have de facto entered the labor force. A large number is working in the informal sector, which already accounts for 1/3 of the total working population. Syria should be proud that it is a haven to all Arabs in times of difficulty, but the government policies (and the analysis of economists) should address this issue as a fact, seeking solutions.
Unemployment and Economic Growth
Here also, the analysis presented does not address the major issue: that the unemployment rates stated in statistics, although high, still hide a significant part of the reality. In fact, the Syrian labor force (the total of those who want to work) has almost stagnated in Syria since 2000, despite the population growth and the youth wave. Not only is the participation of women in the labor force low in Syria, but it has declined significantly! This is mostly due to the acceleration of rural-urban migration. Women who lose their work in agriculture cannot even seek work in the informal suburbs where they now reside. The same phenomenon has been observed in most of the Arab Mediterranean countries, including Egypt.
Also, it is not clear how the statistics account for the Syrians actually working, with different degrees of seasonality, in Lebanon and Jordan. Their number is significant, at around 7% of the total labor force. They are probably considered as working in Syrian statistics, while they work and gain their revenues abroad. Additionally, not only is the unemployment rate the highest amongst youth, but it is even higher for the educated youth, who tend in large part to migrate abroad. Finally, official Syrian statistics clearly show that most of the new jobs are created in the informal sector.
The demographic/employment reasoning made by Saghir is thus erroneous and simplistic. This applies in particular to the analysis on the relation between the growth rate of the economy and unemployment. In fact, there is no automatic relation between the two, as many countries have relatively high growth rates, high (two digit) unemployment rates and a large informal sector. It all depends on how “socially friendly” the economic growth is, in what economic sectors it is developing, and on how this growth is distributed between the different categories of the population and the different regions of a country, etc.
All Arab Mediterranean countries (non-oil dominated), including Tunisia and Egypt, have experienced in the last decade the same characteristics: moderate economic growth around 5% in real terms, high unemployment, especially amongst youth and the educated, and most job creation in the informal sector. Growth was mostly in rent-seeking activities: real-estate, monopolies (now mostly private), etc. All these countries have considered their youth, and especially their educated youth, as a liability and not an asset. All wanted to emulate the “Dubai model” of a free trade and real-estate zone using foreign workers, forgetting that they have a population that needs jobs and for whom the growth should be directed. Look what has happened to them.
Emulate Turkey and not Egypt
Of course, one dreams of a better development scheme for Syria. But in many aspects, the way economic reforms have recently been implemented in Syria is based more on the model of Dubai and Egypt than on that of Turkey. This requires a long discussion.
But what is striking is precisely what the paper/post had chosen as the two major issues: that what is important is increasing the growth rate and reducing the population growth rate – and only these two. Does the author know that consecutive Egyptian governments have used precisely these two major issues as their only driving arguments and slogans for more than two decades? Using them to advise the Syrian authorities on what is to be done, to follow the Turkish model and not the Egyptian, means that the author of the paper/post wants – consciously or not – that Syria follows the fate of Egypt. Astonishing!
By the way, UNDP estimates the average population growth rate for Syria and Turkey for the period 2010-2015 at 1.69% and 1.1% respectively. Of course, Syria will get a lower ratio with the rise of education and standard of living. But does the author know that the areas and regions which still experience high population growth still lack many basic services, such as clean water, sewage systems, health, education, etc.? Concentrating on family planning in such deprived regions is surreal. Major services must be provided to Syria’s poorest populations before the state concentrates on family planning.
A word on subsidies
The paper/post focuses its criticism on “subsidies” and on “the culture of dependence” amongst Syrians, while stating that the people spend 50% of their revenues on food, and that the government spends US$8 billion on subsidies as a result of its “socialist strategy”. This is really too much: this figure of 8 billion is equivalent to half of the total Syrian government budget! I know that some government officials had advanced the figure of US$7 billion, but this is rhetoric, as even the IMF Article IV report puts the figure between US$1 and US$2 billion, including the cost of the recent measures to help the poorest categories of the population.
One wonders why the paper/post focuses on “subsidies” after the recent rise in oil derivative prices in Syria, and the liberalization of the market for many to agricultural and industrial inputs. That’s really strange when the consumer prices of oil derivatives are now almost the same as in neighboring countries, and while half these consumer prices in these countries consist of taxes!!!
The author of the paper/post should know that this focus on “subsidies” has been also a major rhetoric of the Egyptian government for decades (along with that of the burden of population), and that the angry crowds in Cairo are also answering it today by asking for the indexation of salaries on inflation, and for the dismantling of the private monopolies which have created lucrative “rent-seeking” businesses costing a lot to society. The optimization of financial resources is more complex than the simplistic rhetoric of the author of the paper/post, and that of some Syrian government officials who still insist on pushing Syria to follow the fate of Egypt.
Such neo-liberal types of rhetoric really don’t want to tackle the real issues of the economy and the society. A more in-depth analysis could try to answer some questions like: isn’t it a subsidy when a government licenses an energy- and water-intensive industry in the region of Damascus, while it still has to provide these resources at a high cost? Isn’t it a creation of a “rent” when the government suddenly raises the minimum capital requirement for private banks by eight fold, forcing the banks to focus on the speculative (real-estate, etc) sectors and closing the door to competition (by the way, the minimum capital requirement for a bank is much lower in Turkey than in Syria)?
What to think, also, about the other rhetoric of the “culture of dependence”? How many in Syria really depend on the government? Those in the public sector who need a second job in the day to make their living? The third of the working population in the informal sector? Or the other third working in the formal private sector, mostly without employment contracts, social security, or retirement schemes? Or maybe the unemployed who have no unemployment compensation scheme? Or the elderly (above 65) who still have to work or depend on their families, as very few of them have decent retirement schemes, and guess how the purchasing power of these retirements had evolved in the last 10 years? Or maybe the youth where unemployment is the highest? And what about public hospitals, which used to be free of charge for all and are now asked to generate a major part of their revenues from their patients?
This rhetoric on the “culture of dependence” is often used by those neo-liberals to characterize the fact that many register to get a job in the public sector. Is it “dependence” when this is the only sector with proper employment offices? Is it “dependence” when women mostly seek work in the public sector precisely because of what they can get there: a formal contract, a minimum wage, an advancement scheme, health insurance, retirement benefits, maternity leave, and a minimum level of dignity even when the salaries are low? Is it “dependence” when most of employers do not respect labor laws and regulations, and the government does not enforce them? Take a guess what the share of “self-employment” and informal employment is in the formal private sector?
What happened and is happening in Tunisia, Egypt, Algeria and elsewhere in the Arab world shows that caring about people’s incomes and living conditions can’t be treated lightly with such rhetoric.
Those interested in more serious analysis are invited to read the papers and discussions of the Syrian economists of the Syrian Economic Sciences Association (published in www.syrianeconomy.org), knowing that this association groups all schools of thoughts in economy. They are also invited to read the excellent assessment made by the National Prospective Report for Syria in 2025, especially on population and regional development, as well as the population reports of the Syrian Commission for Family Affairs.
Frankly speaking, even the discussions inside the present Syrian government (Central Bureau of Statistics, Regional Planning authority, State Planning Commission, Deputy Prime Ministry for Economic Affairs, etc.) are more linked to reality than the article you have published, despite the rhetoric of some officials and their advisers, and despite the absence of action or will.
Finally, I really don’t see what favor you are doing Syria by publishing such articles that have not been fact checked and reviewed by peers. Particularly these days, when revolutions are breaking out. I don’t know George Saghir, who is a specialist in financial derivatives (subprimes… etc) but I did notice that he is now in charge of publishing a “reliable” monthly indicator for Syria.
In this context, what does the future hold for Syrian “economists”… And for the Syrian economy?
* Samir AITA is member of the Syrian Economic Sciences Association and President of the Cercle des Economistes Arabes
 see http://syriapmi.com/index.php?p=about-george-saghir&lang=en