Poverty

Poverty reduction was touted as one of the major sitccesses of Ben Ali’s economic reform programme. However, a World Food Programme (WFP) report issued in the wake of the uprising concluded that the available statistics on poverty, provided by the regime, had underestimated its scale. The IFIs were reliant on figures the Tunisian government provided, which had used dubious criteria to determine what constituted a reasonable poverty line. When set at TD400 per year, only 3.8 percent of the population was counted as poor, but increasing the rate to TD585 saw the number of poor jump to 11.5 percent (Labidi and Sacco, 2011: 7). Furthermore, the WFP found significant disparities between, and within, the country’s regions, with the rural southwest being the most vulnerable. At the lower rate of poverty, the WFP estimated that poor households would be spending up to 50.4 percent of then- income on food (Labidi and Sacco, 2011: 8). Between 2000 and 2011, food prices throughout the country increased due to global demand; oil and fats quadrupled: cereals and sugars tripled; and dairy' and meat prices doubled (Murphy, 2013: 42). This situation was compounded by the government’s decision to deregulate food prices, which was implemented in an effort to get people to self-target when it came to subsidies. By maintaining sitbsidies for those foods that were a staple of the poor, the government hoped to discourage wealthier citizens from using subsidies. However, the increase in food prices saw many increasingly turn to subsidised foods, thus raising the subsidy bill, which rose from 4.1 percent of government expenditures in 2002 to 11.6 percent by 2009. The increase in food prices was part of a wider trend in Tunisia, which saw inflation rise between 2005 and 2010, as shown in Table 5.2. Tunisia outstripped the regional average for inflation in the two years prior to the uprising.

Table 5.2 Tunisia and MENA Region: Inflation in Consumer Prices (%) 2005-2010¹

'The World Bank World Development Indicators, Inflation, Consumer Prices (annual percent). Available at: http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG [Accessed June 20,2015]

Dming tliis time, Tunisians were also vulnerable to rising energy costs. Although domestic prices were regulated through a subsidy regime, the government ultimately had to introduce a price adjustment mechanism that saw domestic energy prices rise from 2008 onwards. Fuel subsidies amounted to 1.9 percent of GDP in 2009, having been negligible five years before (Murphy, 2013: 42). With the government resorting to fiscal stimulus to offset the difficulties of the global financial crisis, there was an unsurprising rise in inflation. This rise occurred even as the ability of Tunisians to pay higher prices was eroded.

Given then' focus on macroeconomic indicators, both IFIs focused on the need to manage the implications of increased subsidy bills. Although both reasserted the need to protect the poorest in society, they were equally adamant that the government ‘firmly control cunent expenditure, including sttbsidies, to make as much room as possible for public investment, which they see as most effective for supporting current and future growth’ (IMF, 2010b). As one critical observer of the process noted, the IMF was recommending cuts in food and fuel sttbsidies and a weakening of the social security net for an ostensibly middle-class population that was nonetheless ‘just hanging on to the edge, hardly able to make it from day to day’ (Pilant, 2010). With the margin for slipping into poverty so small, both IFIs became unwittingly complicit in the hollowing out of the middle class (Hanieh. 2015).

The unemployment crisis

Between 2002 and 2005 the Tunisian economy created approximately 70,000 jobs per year, which contributed to cutting one percentage point off of the national unemployment rate annually (Alexander, 2010: 85). Nevertheless, the country’s unemployment rate persistently lingered at around 13 percent between 2005 and 2010 (see Table 5.3). Both the World Bank and IMF highlighted the scale of Tunisia's unemployment problem, but their reliance on statistics the government provided led both to underestimate the scale of the problem (Murphy, 2013: 43). The World Bank (2009: 9) deemed the creation of high-skilled jobs a priority for Tunisia’s export-oriented economic model that had so far largely generated low-skilled jobs. This was despite the presence of a highly educated labour force, which lacked the necessary knowledge-intensive skills a globally competitive economy requires.

Unemployment disproportionately affected Tunisia’s youth, particularly graduates, and for those aged between 15 and 24, it averaged approximately 29 percent between2005 and2010. The public sector saw reduced opportunities for graduates as it was in the midst of an accelerating privatisation programme. Furthermore,

Table 5.3 Tunisia and MENA Region: Unemployment (%) 2005-2010¹

'The World Bank World Development Indicators, Unemployment, Total (percent of total labour force). Available at: http://data.worldbank.org/indicator/SL.UEM.TOTL.ZS [Accessed June 20, 2015]

as Chapter 4 made clear, entry into the public sector tended to be limited to those who had connections to the regime. Regional disparities further exacerbated the problem of unemployment. Whereas unemployment averaged 13 percent at the national level, it was at least twice that in Gafsa, the southwest’s capital. In Moualres, Mdhilla and Erdayf, the main towns in the Gafsa Mining Basin Aiea, unemployment in 2007 officially stood at 38.5 percent, 28.4 percent and 26.7 percent, respectively (Gobe, 2010: 5). This unemployment was largely due to the contraction of the Gafsa Phosphate Company workforce as it underwent modernisation and restructuring. What new jobs were created tended to be heavily concentrated in the coastal cities, leaving Tunisia’s rural and inland regions lagging behind in the distribution of benefits.

The reasons behind the economy’s failure to create new jobs are complicated, but there are two explanations that shed light on the issue. The first explanation lies in the higher education policies the Tunisian state adopted (Mabrouk. 2011: 628). The state had abandoned the process of selectivity, making higher education more accessible at a time when demographic growth generated larger demand - a problem expected to ease after 2012 as population growth began to decline. The higher education system was also designed to encourage two-thirds of students towards literature and the human sciences, regardless of what their future employment opportunities would be. As Murphy (2013: 44) makes clear, this gave rise to a direct correlation between higher levels of educational attainment and unemployment as Tunisia’s labour force suffered from a dearth of suitable technical, engineering and busmess-skilled labour. These deficiencies were well-known and documented in both the Arab Human Development Report (2009) and the World Bank's (2008) own MENA development report. The second explanation for Tunisia’s persistent unemployment crisis lies within the regime itself and specifically speaks to corruption.