A lack of opportunity, especially for young people. Punishing debt. A broken social contract. Pandemic pressures making it all so much worse.
This economic recipe is nourishing social and political unrest throughout the world this year. South Africa experienced it earlier this month. Cuba, too. Now it’s Tunisia’s turn.
Each of these countries has its own unique set of circumstances. But in the context of the Middle East and North Africa, the stakes for Tunisia feel very high.
After all, Tunisia is the birthplace of the Arab Spring and has been lauded as its lone success story- a nation that cast off its long-serving, authoritarian president and emerged Phoenix-like from the flames of protest committed to democratic reforms, the rule of law, and an economy that would serve the people and not just corrupt elites.
But the phoenix never soared. Political deadlock and economic weakness have a symbiotic relationship. They feast on one another, and in Tunisia, both have grown stronger in the process.
More than a dozen governments have run the country since the Arab Spring, while the economy has languished.
Average annual economic growth between 2011 and 2019 was an underwhelming 1.5 percent, according to the World Bank. Investments and exports never recaptured their pre-Arab Spring strength. Corruption though remained rampant.
Then the pandemic struck.
Tunisia’s economy shrank 8.6 percent last year, and another 3 percent in the first three months of this year on an annualized basis, according to government data.
Tourism, a bedrock of the economy that brings in foreign exchange, was decimated in 2020. Manufacturing – another mainstay – was also badly hit.
Tunisian security officers hold back protesters outside the parliament building in the capital Tunis on July 26, 2021, following a move by the president to suspend the country’s parliament and dismiss the prime minister [File: Fethi Belaid/AFP]
Those pandemic disruptions propelled the official unemployment rate to 17.4 percent by the end of last year, compared with a pre-pandemic level of 14.9 percent. In the first three months of this year, it had risen to 17.8 percent according to the National Institute of Statistics.
But that number does not capture the full scope of despair and frustration sweeping the nation’s young people.
Youth unemployment was north of 42 percent in 2011, according to the World Bank. By 2019, it had come down to roughly 35 percent, but the International Monetary Fund reckons it climbed back above 36 percent by the final quarter of last year.
It was Tunisia’s youths who seeded and nurtured the Arab Spring. This year, a new generation has hit the streets to protest political ineffectiveness, corruption, and a chronic lack of opportunity.
Meanwhile, the country is now on the downslope of its third and most punishing wave of COVID-19 infections that saw its healthcare system this month collapse and more lockdowns imposed.
In a stunning example of global vaccine inequality, only about 7 percent of Tunisians are fully vaccinated, according to the latest figures by Our World in Data.
The government has tried to lessen the financial blow of lost jobs and income from COVID restrictions by scaling up existing cash transfer programmes to struggling households. That kind of fiscal support has been championed by the IMF and World Bank for blunting COVID economic damage around the world.
But that and other pandemic response measures – along with declining revenues – have worsened Tunisia’s fiscal deficit and its debt situation.
Government debt reached 88 percent of gross domestic product (GDP) by the end of 2020, compared with 72 percent the year before, the World Bank noted in April. Economic growth was expected to pick up this year, but not enough to return Tunisia’s economy to its pre-pandemic footing.
The country could definitely use an IMF bailout. But negotiations have stalled with the international lending agency for a reported $4bn loan.
IMF packages usually come with painful strings attached to achieve what the agency calls “sustainable” finances. And indeed the agency in the past has nudged Tunisia to slash its public sector wage bill, as well as fiscal support for state-owned firms and general subsidies.
But pulling that support away would inevitably lead to job losses and financial pressure on households – certainly in the short term.
That would be tough enough for the government to pull off if times were good and it enjoyed widespread support among the electorate. But times are terrible right now and the nation’s political leadership is fractured. Again.
Credit rating agencies are taking note. Earlier this month, Fitch Ratings downgraded Tunisia to a ‘B-’ with a negative outlook, citing the failure to agree to a new funding programme with the IMF.
On Monday, Fitch responded to the latest political crisis, writing in a press release: “The Tunisian president’s decision to suspend parliament and dismiss the prime minister may add further delays to an IMF programme that would alleviate the country’s large financing pressures.”
That leaves the country where it has been for a decade – fragile politically, fragile economically, and bereft of a strong government that can deliver on the economic promises of the Arab Spring.
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
