Globalization and Labor Protection in Oil-Poor Arab Countries

Abstract

The ‘compensation hypothesis’ holds that voter pressures have prevented democratic governments from repealing popular forms of social protection during globalization. Can a similar dynamic shield workers in globalizing authoritarian countries from increasing economic insecurity? This article examines four authoritarian countries undergoing structural adjustment: Egypt, Tunisia, Morocco and Jordan. In each, the government sector has provided the bulk of formal-sector employment, while populist labor laws ensured that these jobs remained secure through retirement. I examine the consequences of privatization for public sector workers, and review corresponding efforts to achieve labor market flexibility through revisions to labor codes. The findings indicate that authoritarian rulers have been constrained from implementing market reforms as extensively and rapidly as multilateral lenders have sought. Nevertheless, there is reason for normative concern, as stable privatesector employment opportunities have proved inadequate, and the implementation of alternative systems of social protection lags behind the dismantling of the old models.