This report provides a birds-eye view of the key labor market and growth challenges Tunisia faces today. The report argues that the main driver of sluggish employment performance is low-grade economic growth, a constant feature of the decade following the 2011 revolution. The study pinpoints several important stylized facts. First, fewer than one working-age individual in two actively participates in the labor market and is either employed or looking for a job. Two groups, particularly, stand out because of their low participation and employment rates: women and youth. Second, a sizable share of workers are employed informally, they do not have access to social insurance, or they operate unincorporated businesses that are not registered with the tax authorities or other formal public accounting procedures. Third, returns to education are sizable in Tunisia relative to middle- and high-income countries. In 2019, tertiary education yielded a premium of 26.1 percent relative to secondary education. In addition, returns to tertiary education are considerably higher in the public sector. They have increased over time while declining in the private sector, which raises a question about the sustainability of wage growth in the public sector.
The analysis presented in the report takes advantage of several data sources produced by the Tunisia National Institute of Statistics (INS), including public-use data files, restricted-use data files, and reports published by the INS based on microenterprise surveys and the national business register.