What is 'Labour Market'

 

Definition: A labour market is the place where workers and employees interact with each other. In the labour market, employers compete to hire the best, and the workers compete for the best satisfying job.

Description: A labour market in an economy functions with demand and supply of labour. In this market, labour demand is the firm's demand for labour and supply is the worker's supply of labour. The supply and demand of labour in the market is influenced by changes in the bargaining power.[1]

The labor market, also known as the job market, refers to the supply of and demand for labor, for which employees provide the supply and employers provide the demand. It is a major component of any economy and is intricately linked to markets for capital, goods, and services.[2]

 

Lab Understanding the Labor Market

It's important and useful to study both the macroeconomic and the microeconomic views of the labor market. Each view can inform government and business outlooks, policies, and actions regarding employment. And the labor market plays a major role in any economy.

At the macroeconomic level, supply and demand are influenced by domestic and international market dynamics, as well as factors such as immigration, the age of the population, and education levels. Relevant measures include unemployment, productivity, participation rates, total income, and gross domestic product (GDP).

At the microeconomic level, individual firms interact with employees, hiring them, firing them, and raising or cutting wages and hours. The relationship between supply and demand influences the number of hours employees work and the compensation they receive in wages, salary, and benefits.[3]

labo Market Theories

The Neoclassical Theory of the Demand for Labor

In neoclassical economic theory, product markets determine product prices and quantities exchanged. Similarly, neoclassical economists argue that labor markets determine wage rates and employment levels. The theory is essentially a story of supply and demand, much like the one we discussed regarding product markets. A sophisticated analysis underlies this story of supply and demand. This underlying story is developed at length in this section.

We begin with the assumption that the market supply of labor is upward sloping. That is, it is assumed that as the wage rate increases, the quantity supplied of labor rises as well, other factors held constant. Furthermore, it is assumed that the labor market is perfectly competitive such that each employer takes the market wage as given and so is a wage-taker. In other words, no single employer has any power to influence the wage that is paid. In this case, the labor supply curve facing the perfectly competitive firm is completely horizontal

 

Unemployment in Algeria
The labor market in Algeria has improved in the last few decades. Compared to the 2000s, the unemployment rate declined significantly and the number of economically active people in the country increased in recent years. Nevertheless, there are still several challenges related to the high levels of labor market segmentation. Moreover, in recent times, the local economy has been hit by the coronavirus (COVID-19) crisis, political instability, and fluctuating oil prices. This negatively impacted the Algerian job market.

 

Youth and women face high unemployment

While the overall unemployment rate remained relatively low in the last years, standing at around 12.7 percent in 2021, youth unemployment reached nearly 32 percent in 2021. Young people's employment is a key challenge for Algeria. The country's population has been growing constantly in the last ten years, which is why the new generations represent significant potential for national economic development. The job situation is also critical for women. Although women are, on average, more educated than men, the female employment rate has been far lower than that of men in recent years. Among other reasons, the gap is mostly due to gender discrimination, lack of skills, and cultural legacies.

Increasing service-orientation

Nearly 60 percent of the labor force in Algeria is employed in the service sector. Most recently, services have represented one of the country’s leading sector in terms of economic contribution, with the Algerian economy becoming increasingly service-oriented. The recent development of this sector comes with the attempt to diversify an economy that has been heavily reliant on oil and gas. The hydrocarbon industry is particularly capital-intensive and only employs a small portion of the workforce. Therefore, the growing service sector offers further job opportunities for the Algerian population.

An attractive public sector

Similar to other countries in the Middle East and North Africa, the public sector in Algeria tends to be overstaffed. This is particularly true for women, who are mostly employed by the government rather than by private enterprises. This situation is typical of oil-exporting countries such as Algeria, where the state, enriched by oil revenues, is central to the country’s economy. Public sector jobs offer considerably higher wages, which usually do not adapt to current times. This, along with higher levels of job security, makes the public sector particularly attractive to job-seekers. 

 

 

 

THE ALGERIAN LABOUR MARKET: MAIN FEATURES The main features of the labour market can be identified from the labour force surveys. Two sources of information – the National Office of Statistics (ONS) and the National Fund of Social Insurance (CNAS) – shed some light on wage levels. RISE IN POPULATION AND STAGNATION IN FEMALE PARTICIPATION RATES The Algerian population was estimated at 37 million residents in 2012. In recent years there has been an upturn in the birth rate. This is due to a sudden growth in the marriage rate and a decrease in the mortality rate (see Table A2.1 in Annex 2). Studies on demographic transition in Algeria had omitted this possibility. The birth rate increased by 1.3% between 2011 and 2012. One million births are expected in 2014. If this trend continues it may put pressure on the labour market in the future. The overall activity rate was estimated at 42% in 2010, declining to 40% in 2011. The country has a potential labour force of nearly 27 million. The low rate of activity in the population is a heavy burden for the active labour force. The female participation rate, which stagnated at 14.2% between 2010 and 2011 according to labour force survey data, is a key factor in the low rate. In general, it peaks for women aged 25 to 29 and then gradually reduces up to old age[4]

Training policy in Algeria:

Training policy is the plans and strategies that seek to achieve practical goals in the labor market through training and training according to current requirements and challenges.

Training objectives:

Developing workers' capabilities

Increased experiences for workers

Keeping pace with job development

Achieving fairness in promotions

Keep up with progress

Expanding joint work

Types of accumulation:

Basic configuration:

It includes five types of formation, which are:

• Specialized training courses related to employment:

It is every initial training specified in the special basic laws related to the special corps, directed to prepare new employees to perform their duties.

• Initial training during the apprenticeship period:

It is every initial configuration specified in the basic codes of common wiring, directed to prepare new employees to perform their duties.

• Supplementary training within the framework of promotion to a higher rank:

It is every supplementary training specified in accordance with the special basic laws for the purpose of promotion to a higher rank within the framework of moving from one regiment to another.

• Initial training for appointment to senior positions:

It is an initial training specified in the special basic laws for the purpose of appointment to a high position.

• Exceptional training for the purpose of integration into a new rank:

It is a formation within the framework of the transition from the old provisions to the new provisions of the special basic laws.

Continuous training:

•          Improve the level :

This training concerns employees who are in a state of service, and the aim of its organization is to permanently and continuously improve and enrich their knowledge and basic competencies.

• Update information:

It is considered a short-term training, the aim of which is to try to adapt to a new position as a result of the development of means and technologies, such as the introduction of automated media as well as digitization in public institutions and administrations.

Employment policy in Algeria

​ The Ministry of Labour is the key player (together with the ANEM, ANSEJ and CNAC agencies). However, the Ministry of National Solidarity conducts some activities linked to the fight against poverty (working with the ANGEM and ADS agencies). Some other ministries are also involved less actively in employment policies. These include the Ministry of Agriculture, the Ministry of Industry and Handicrafts and the Ministry of Industry. The National Agency of Development of SMEs (ANDPME) and the National Agency of Investment Development (ANDI) also have a role to play. At a strategic level, Algeria has not demonstrated any innovation in its employment policies. The policies initiated in 2008 have simply been reinforced. Different types of labour laws are regularly updated but still remain confusing. About 10 years ago, a decision was made within the tripartite dialogue to draft a new labour code. This is still pending. Some adjustments were made in wage increases. The guaranteed minimum wage was revised upwards without impacting on economic sectors. The age of retirement increased slightly in 2013. Union struggles, including the ‘autonomous sections’ of trade unions, continue to challenge Algerian authorities in order to obtain national and international recognition. NATIONAL EMPLOYMENT POLICY The national employment policy25, adopted by the government in 2008, remains the only reference to the focus and strategies designed to promote employment and fight unemployment. As already noted, the principle of importing foreign labour is maintained only for foreign operators. Additional facilities were introduced to make it easier to access employment programmes in February 2011. Other new facilities were also recently granted (March 2013). These include the integration of unemployed people living in the south of Algeria. The youth and employment programme (funded by the EU) will provide further support for the employment sector and will be piloted in four departments

NATIONAL EMPLOYMENT POLICY OBJECTIVES 1. To fight unemployment using an economic approach 2. To promote skilled work in the short and medium term 3. To develop an entrepreneurial spirit 4. To adapt courses and training profiles to the needs of the labour market 5. To support productive investment to generate jobs 6. To create inter-sectoral coordination bodies 7. To modernise monitoring, control and evaluation 8. To improve and consolidate job intermediation in the labour market 9. To continue efforts to create 2 million jobs as part of the presidential programme ‘Horizon 2009’ 10. To continue to promote youth employment and improve recruitment rates after the induction period 11. To reduce the unemployment rate to less than 10% between 2009 and 2010, and to less than 9% between 2011 and 2013 To achieve its objectives, the authorities defined seven areas of intervention: 1. Providing support for the economic sector by creating jobs 2. Promoting skills training (including on-site training to facilitate integration into the world of work) 3. Promoting a policy of incentives for enterprises to encourage job creation 4. Promoting youth employment 5. Improving and modernising the management of the labour market 6. Monitoring, controlling and evaluating management mechanisms in the labour market 7. Creating and establishing inter-sectoral coordination bodies[5]

Unemployment in Algeria

The labor market in Algeria has improved in the last few decades. Compared to the 2000s, the unemployment rate declined significantly and the number of economically active people in the country increased in recent years. Nevertheless, there are still several challenges related to the high levels of labor market segmentation. Moreover, in recent times, the local economy has been hit by the coronavirus (COVID-19) crisis, political instability, and fluctuating oil prices. This negatively impacted the Algerian job market.

 

Youth and women face high unemployment

While the overall unemployment rate remained relatively low in the last years, standing at around 12.7 percent in 2021, youth unemployment reached nearly 32 percent in 2021. Young people's employment is a key challenge for Algeria. The country's population has been growing constantly in the last ten years, which is why the new generations represent significant potential for national economic development. The job situation is also critical for women. Although women are, on average, more educated than men, the female employment rate has been far lower than that of men in recent years. Among other reasons, the gap is mostly due to gender discrimination, lack of skills, and cultural legacies.

Increasing service-orientation

Nearly 60 percent of the labor force in Algeria is employed in the service sector. Most recently, services have represented one of the country’s leading sector in terms of economic contribution, with the Algerian economy becoming increasingly service-oriented. The recent development of this sector comes with the attempt to diversify an economy that has been heavily reliant on oil and gas. The hydrocarbon industry is particularly capital-intensive and only employs a small portion of the workforce. Therefore, the growing service sector offers further job opportunities for the Algerian population.

An attractive public sector

Similar to other countries in the Middle East and North Africa, the public sector in Algeria tends to be overstaffed. This is particularly true for women, who are mostly employed by the government rather than by private enterprises. This situation is typical of oil-exporting countries such as Algeria, where the state, enriched by oil revenues, is central to the country’s economy. Public sector jobs offer considerably higher wages, which usually do not adapt to current times. This, along with higher levels of job security, makes the public sector particularly attractive to job-seekers. ^[6]

 

Labor Market Monitoring Institution

Introduction to the General Labor Inspectorate:

The General Inspectorate of Labor is a body placed under the supervision of the Ministry of Labour, Employment and Social Security, which is charged, according to Executive Decree 05-05 of January 6, 2005, which includes the organization of the General Inspectorate of Labor, with conceiving the necessary measures and means to accomplish the tasks assigned to it by applicable legislation and regulation. With them.

Organized:

The General Inspectorate's services are organized to operate under Executive Decree 05-05 of January 6, 2005, which defines centralized and decentralized structures.

Two (02) central structures to coordinate the activity of decentralized structures.

Deconcentric structures organized as follows:

- Eight (08) regional labor inspectorates: Algiers, Oran, Bechar, Ouargla, Constantine, Batna, Annaba and Tiaret. Its jurisdiction includes several states.

 

- State labor inspectorates, numbering forty-eight (48), competent at the level of the entire territory of the state,

– Labor Inspectorate offices, numbering twenty-seven (27), are specialized at the level of an industrial zone or a specific administrative district. These offices are peacefully subject to the state labor inspectorate and supervised by office heads.

Labor Inspectorate tasks:

The Labor Inspectorate is responsible for the tasks assigned to it under Law 90-03 of February 6, 1990, and is charged with:

– Monitoring the application of legislative and regulatory provisions related to individual and collective labor relations, working conditions, health prevention, and worker security.

- Providing information and guidance to workers and their employees regarding their rights and duties and the most appropriate means for implementing legal, regulatory and contractual provisions and arbitration decisions.

– Assisting workers and their employees in preparing collective agreements or contracts at work.

- Conducting reconciliation in order to prevent and settle group disputes.

- Communicating and clarifying legislative and regulatory texts related to work for workers and their employees.

– Informing local groups about working conditions within the institutions under their jurisdiction.

- Informing the central labor administration of the extent of application of legislative and regulatory texts related to work and proposing the necessary measures to adapt and amend them.

     Labor inspection is carried out in any workplace in which wage laborers or professionals of both sexes work, with the exception of some categories of employees referred to in the Labor Law.

     Labor inspectors have the authority to conduct visits to workplaces related to their tasks and area of competence in order to monitor the implementation of legal and regulatory provisions.

     Labor inspectors are sworn officers bound by professional secrecy who are qualified within the framework of their duties and according to the forms stipulated in the organization to carry out the following tasks:

 

Powers of labor inspectors:

     In this capacity, they can enter at any hour of the day or night a place where people work who are protected by the legal and regulatory provisions whose implementation they must ensure.

However, if the workshop or other industrial or commercial means of production are located in a place of residential use, the labor inspector may, in the exercise of their powers, enter the production areas at any time during working hours.

- Written notes,

- making excuses,

- Reports of violations,

- Minutes of reconciliation or non-reconciliation in order to prevent and settle collective disputes at work.

     The labor inspector estimates, according to each case, the appropriateness of issuing one of the above-mentioned documents. Labor inspectors record the notes and excuses they provide in the course of exercising their job in a notebook, numbered and signed by them, which the user opens specifically for this purpose and who must submit it to them at any time upon their request.

     The labor inspector in public institutions and administrations informs the relevant peaceful authority of the violations he has observed in the application of applicable labor-related legislation and regulation, and in this regard submits all observations or recommendations that are recorded in an open notebook for this purpose.

     The labor inspector may, when needed, seek the opinions, assistance or guidance of any competent person, especially in the field of health prevention, security and occupational medicine.