Chapter 1

largest share of total employment (24 percent). Other sub- increased decentralization in the collective bargaining
sectors that created jobs faster than the average were process should help keep wages and prices in line with intertourism
and machinery, with particularly high job growth national trends (see Rama 1995).
rates, but they accounted for a small share of total employ- Because of its size and importance in the economy, the
ment. Employment in government administration grew public sector's wage and employment policies play a critical
faster than the average at 3 percent a year, and its share in role in Tunisia's labor market and merit closer review. An
total employment remained at about 18 percent. INS Survey shows that wages for permanent workers in PEs
Average wages declined by 0.1 percent per year in real are higher (and the disparity has grown since 1985) than in
terms over the past decade, with the sharpest declines in either the domestic or offshore private enterprises, particu-
1986-87. Since 1988 real average wages have started to climb larly for unskilled and skilled workers (table 3.7). Part of the
back, and by 1993, reached the same level in real terms as in reason for lower wages in the offshore sector may be
1983. Minimum wages eroded considerably since the early because it employs a high share of women at low salaries.
1980s and are now relatively low in Tunisia: the minimum There may also be some data and sampling problems with
wage for manufacturing (SMIG) is around 6 TD per day and the INS survey.
for agriculture (SMAG) is about 4.6 TD. Recent analysis also Legislation concerning layoffs for economic reasons
indicates that the minimum wage does not represent a major may be the most important government-induced distortion
labor market distortion, having only a modest and temporary in the Tunisian labor market. The Government has strong
effect on average wages (Azam 1995). administrative capabilities to enforce labor regulations in
Every three years, Tunisia uses sectoral collective bar- Tunisia. Difficulties in laying off stem from the need to
gaining agreements (convention collective) to determine submit a request to the Inspection du Travail which has
wages and benefits for some forty-six different sectors. The one month to review the request. If no solution is found,
most recent three year (1993-96) wage agreement increases the employer needs to obtain the consent of a tripartite
wages by 6 percent a year and is binding for all firms with body (Commission du contr6le des licenciements) before
four workers or more, regardless of whether these workers any retrenchment takes place. In practice, this turns out to
are permanent or temporary and regardless of whether they be difficult. In 1994 for example, 505 firms wanted to
are unionized or not. Experience in other countries shows retrench a total of 60,390 workers (which corresponds to
that wage moderation is generally best achieved through an average job destruction of 3-4 percent compared to
either decentralized (firm-level) or centralized (nationwide) 10-11 percent in Germany or the United States). Out of
wage negotiations, rather than the sectoral approach used the total, 346 respected the legal procedures, 151
in Tunisia. The Government, the unions, and the employer retrenched unilaterally (and are subject to sanctions), and
associations recognize the importance of maintaining inter- 8 firms reached an agreement with their workers. Of the
national competitiveness, in part by ensuring that wage 346 requests, the tripartite commission was able to reach
agreements do not put undue pressure on inflation and do an agreement for only 182. In the end, less than 26 percent
not raise unit labor costs significantly above Tunisia's main of the workers included in the requests for retrenchment
competitors. Continued liberalization of product markets were actually laid off (Rama 1995). The Government is
(through trade and price liberalization) along with some currently reviewing labor legislation and is preparing a
strategic study for the Ninth Plan on labor legislation, the
TAKBE 3.7 relationship between productivity and wages, and labor
Wage dlferentlals costs. The preliminary analysis prepared for this report
(permanent workers, I 99) raises several issues for further study: (1) enterprise flexi-
Higher
evel
Unsidlled
worker
Skiled
workor
bility to adjust the size of the labor force to a changing
commercial environment, (2) the impact of public sector
Publksects 1.16 1.60 1.73 wage and employment policies on the private sector, (3)
Offshoe private 1.00 0197 0.78 the possibility of introducing greater flexibility into the sec-
Average wage 1.00 1.00 1.00 toral collective bargaining process, (4) improving the mca-
Source: Haicm 1995. surement of unemployment through annual labor surveys
36 TuNisis's GLOBAL INTEGRATON AND SUSTAINABLE DEvOPMENT. SIRATEGIC CHOICES FOR THE 21ST CENrs