Tackling job creation in North Lebanon through investment in value chains

North Lebanon’s beauty has been tarnished for several decades by an environment of conflict and violence, which has contributed to high levels of poverty and marginalization. More recently, the region’s challenges have been aggravated by a large influx of Syrian refugees —around 1.5 million refugees with a population of just 4.5 million people—, fleeing war in their country and seeking livelihoods in a place where good jobs are scarce for its own citizens.

Creating more and better job opportunities in such contexts could seem complex. But even in its fragility, Lebanon still has a chance to spur job creation and put the region back on the path to prosperity.

Here are three ways to understanding North Lebanon’s jobs challenges and opportunities, based on our recent World Bank report ‘Jobs for North Lebanon: Value Chains, Labor Markets, Skills and Investment Climate in Tripoli and the North of Lebanon’.
 

The context

Only one in five adults in North Lebanon earns a formal wage.  One reason for this is that the region has the lowest labor force participation rate in the country, with female participation at just 20%. But the crux of the problem lies on the demand side: the private sector has failed to create enough good jobs. The underlying reasons are manifold, including, of course, national and regional instability, but also regulatory burdens, a weak trade and transport environment, and infrastructure bottlenecks, most notably in electricity.

 
To pinpoint the areas that could be responsive to both short- and long-term interventions,
the World Bank study utilized a three-pronged approach to identify and assess the gaps that need to be overcome to respond effectively to job opportunities, foster productivity, and increase earnings. It includes an assessment of the supply of labor and skills in North Lebanon, an assessment of the investment climate in the region, and a value chain analysis (VCA) of sectors with high potential for job creation.

Value chains offer a great way in

Value chains provide significant potential to deliver jobs across the skills spectrum. The report analyzes two sectors — agriculture and recycling industries — and estimates that both sectors have the potential to increase the permanent jobs in these sectors significantly. For example, the value chain analysis of the waste management and recycling sector found that, with the introduction of a comprehensive regional program of recycling, the value chain has the potential for a tenfold growth: from just 500 jobs today to close to 5,000 by 2025.
 
Similarly, the potato sector is one of the largest agricultural activities in the North with around 9,000 jobs across the value chain, including 1,800 permanent and about 7,200 seasonal jobs. Upgrading this value chain through the development of limited processing activities could generate more than 2,000 new permanent jobs and at least 6,000 seasonal jobs. Keeping in mind that the assessment of potatoes is intended to be illustrative of the wider agribusiness sector in the North, these findings suggest that upgrading the competitiveness across agribusiness sector could potentially create anywhere from 10,000 to 20,000 permanent jobs in North Lebanon, and several times more seasonal positions.
 
How can these opportunities be capitalized? Again, the value chain approach offers a useful mechanism not only for assessing but also for coordinating such actions. Taking once more the example of agriculture, Lebanon is already competitive in regional markets for agribusiness, yet it faces a variety of constraints to translate this into success in high-value-added exports.
 
For example, most farmers in the potato value chain in the North have to sell immediately after harvesting, regardless of the demand or market conditions, because they lack cold storage and packing facilities. Coordinated investments in post-harvest facilities could help overcome this constraint. Better yet, investment in processing facilities would not only give farmers more flexibility in their scheduling and provide a hedge against external disruptions such as weather or conflict, but also provide higher-paying, skilled jobs that can be filled by the local population.

Working hand in hand with the private sector

According to the report, upgrading value chains offers a significant area of opportunity in the long term. In the shorter term, supporting the self-employed and small and medium enterprises (SMEs), both in the formal and informal sectors, is an important source of earnings opportunities. Regardless of the value chain, upgrading efforts at the firm level need to be complemented with efforts to bring labor force supply closer to private sector needs. This means raising skills levels and making them more relevant to the evolving demands of businesses.

Given the long-entrenched poverty and marginalization in North Lebanon, we should be under no illusion that things will change overnight. While significant government reforms and social changes will ultimately be necessary, the opportunities unveiled through the value chain lens may, if put into action, offer the initial ammunition needed to create more and better quality jobs in the country and to increase prosperity for all.
 
Follow the World Bank Jobs Group on Twitter @wbg_jobs.
 
Related:
Report - Jobs for North Lebanon: Value Chains, Labor Markets, Skills and Investment Climate in Tripoli and the North of Lebanon