Social dialogue in the Mediterranean region

Is there a need for a social dialogue in the Mediterranean region? The answer is a clear "yes". For the region is host to some of the most interesting developments that can be found in any part of the globe.

Though the annual rate of growth of the population of the southern shore countries has been declining steadily, it is still growing a lot in raw terms - by around six million a year in all the countries of the Middle East and North Africa taken together.

This means that these countries have a very young population, most of it in the working age bracket. These create pressure on the labour market but this demographic pattern also means that these countries have a small dependency ratio. This measures the proportion of those living on a pension as a percentage of the working population who pay their upkeep.

The pressure for jobs is enormous. It is estimated that around 100 million new jobs have to be created over the next 15 years or so in order to provide jobs for those currently seeking one, and for those who enter the labour market every year as soon as they reach working age.

The rate of economic growth of many of the Mediterranean countries has accelerated in the past couple of years. This rate of growth for the whole region currently averages five per cent. However, this growth rate has not been large enough to generate enough jobs for those who are seeking one.

What is impeding stronger rates of economic growth? First of all the region remains notoriously unstable and its overall image does not entice foreign investors. Runaway bureaucracy and corruption discourage business start-ups. Business is further impeded by the near complete absence of strong financial markets, underdeveloped banking services and other obstacles in securing finance for investment.

And, should investors take an interest in the region, would the growing pool of workers supply them with the skills they need to make their investments worth their while? The answer to this question is that, broadly speaking, the educational systems in most of the EU's Mediterranean partners need to be overhauled to begin to turn out the kind of skills required by potential investors.

The irrelevance of the present educational systems is illustrated by the fact that the higher proportions of unemployed tend to be among the more educated.

But above all these considerations there is an urgent need for peace to be established across the region and particularly for a solution to the Arab-Israeli question. For, as long as this problem persists, its negative repercussions will continue to reverberate throughout the region.

There are of course other conflicts, which obstruct co-operation just as much. Then there is the issue of the lack of democracy, which often leaves the power of governments unchecked and, for that reason, the will to reform unleashed.

If all these problems could be straightened out in the next few years it is likely that the Mediterranean's demographics can be changed from being its prime liability into being its main asset. A young population and a low dependency ratio have the potential to encourage savings and investment, which are what produce growth. But getting the fundamentals in place to kickstart this process would require nothing less than an earth-shattering revolution.

As if this were not enough, the EU's Mediterranean partners have been unable to put into effect south-south economic integration, though talk of this is not scarce. This kind of integration will help these states achieve greater economic efficiency and increased competitiveness, particularly in the EU market.

Internal migration in many of the Mediterranean states continues to swell their cities and to create problems of unemployment and housing shortages. EU stringiness on agricultural trade concessions continues to prevent them from realising their competitive advantage in this sector and the farming regions from improving their incomes.

Water shortage is another challenge and, unless the right investment takes place, the situation in the Mediterranean partner countries will worsen. About 60 per cent of the water resources in the Arab countries are shared among different states, which strengthens the potential for conflict over them. Though water resources may not instigate conflicts, they might help exasperate existing tensions to the point of war.

Last but not least, reforms impose costs on the countries concerned - at least in the short term - such as increased unemployment. The benefits can be attained in the longer run. This has also made governments more reluctant to tackle reforms because they see them as adding to their problems.

The recent increases in the world prices of petroleum products have had a positive impact on some of the key Mediterranean oil producers due to the increased revenues they have realised. However, oil revenues tend to make governments forget about their problems and to dampen their reforming zeal.

In the past instances of oil hikes (Seventies and Eighties) some of the surplus of the oil-rich countries found its way into the coffers of the non-oil economies by means of direct transfers from government to government or the transfer of workers' remittances. Migrant workers from the non-oil countries working in the booming economies of the oil rich ones send their incomes back home.

Put together, these could add up to billions. However in the present oil boom this does not appear to be happening on a similar grand scale.

So while we can rejoice that Algeria has repaid its national debt, we have to keep in mind that other Mediterranean states are not so lucky.