8.2 Employment Growth

Economic growth and employment growth are correlated in short-term estimates; longer term perceptions of growth may be more influenced by wider factors such as technological advancements

In the short-term, economic growth expectations and expectations for employment growth are fairly strongly correlated (Pearson correlation of 0.479). In the medium-term, the relationship is less correlated (Pearson correlation of 0.228), suggesting that this growth to a large extent may be driven by technological or other advances in the value creation process.

Business owners generally expect lower growth rates when it comes to employment compared to economic growth. When asked about their perceptions and estimates regarding the short-term growth of their business, business owners, on average, in the best-case scenario, estimated their potential growth for the next year at 28%. On the other hand, in the worst-case scenario, they estimated their growth at a value of 14%. Among the sectors with the most optimistic best-case scenarios is construction, which is also highlighted in the KII data as a sector with good employment potential:

“Construction work is always requested in Kikla, and the workers are mostly Libyans due to the lack of migrants into the city.”

Ministry of Labor, Kikla

Construction is also highlighted by 54% of the companies41 in the PSS sample as having a high potential to create jobs. The two other sectors in the top three most optimistic short-term employment growth scenario are education and accommodation and food services. However, education is among the sectors with the least optimistic worst-case scenario and also have a fairly high range of responses, suggesting some uncertainty around the sector’s likely employment

41 Disregarding companies from the same sector in the sample i.e. construction companies’ responses are not included in analysis of companies’ perception of the construction sector’s employment potential.

performance. Also, only around a third of the companies in the PPS sample perceive education to be a sector with a high potential for job creation.

Arts, entertainment and recreation and wholesale/retail are the two other sectors in the bottom three together with education when it comes to worst-case scenario growth, and these two sectors are also in the bottom three in the best-case scenario together with agriculture. Wholesale/retail is however highlighted by 76% of the companies in the PSS sample as having a high job creation potential. This is potentially a reflection that despite the relatively pessimistic outlook, the sector remains the biggest employer in the private sector in Libya.

In the medium-term, accommodation and food services and education are also in the top three, having the most optimistic best-case scenarios together with the real estate sector. While accommodation and food services thus appear to have a strong self-perceived employment potential, KII data suggests that smaller food projects are among the industries with the least potential for employment growth, together with garment factors and other niche construction companies due to limited amount of manpower required in those industries. Also, only around a third of the companies in the PSS sample highlighted food and accommodation services as having a high employment potential.

Again wholesale/retail and arts, entertainment and recreation are in the bottom three in terms of optimism when it comes to medium-term employment growth together with the information and communication sector.

As with economic growth, the expected employment growth is largely determined by the cities where companies are located. When controlling for gender and size, companies based in Tripoli, Benghazi and Bayda have a more negative employment growth outlook in both short and medium-term. This is worrying given that Tripoli and Benghazi are among the key economic hubs in Libya and of course the most populous areas. Companies based in Misrata have a more positive employment growth outlook in the medium, but no difference to other areas in the short term. The areas that expect higher employment growth are generally similar to the ones that expect higher economic growth i.e., Sabratha, Bani Walid, Sirt, Kufra and Ghat.