Activation Policies for the Poor in OIC Member States
37
traditionally pursued under job creation measures of activation. Instead, they involve imposing
quotas on employers to ensure a certain proportion of their workforce consists of citizens from that
country. The design and implementation of the policies has varied from country to country. In Oman,
for example, certain professions were reserved for the citizens of Oman only, fees were imposed on
the hiring of foreign workers and companies that met the quota requirements were given priority in
the award of government contracts.65
Policies such as that of Omanization have tended to be successful in increasing the number of
national citizens in employment. In Oman, the policy has reduced the number of expatriate workers
in both the public and private sectors. 66 However, job creation policies in high income OIC Member
States do not tend to be targeted at the poor, nor are they designed with the purpose of alleviating
poverty. The lower rates of poverty in these countries compared to the Member States in the other
income groupings may mean that poverty alleviation through job creation is not considered a high
priority. The fact that job creation measures are not targeted at the poor means there is little, if any,
evidence available as to their impact on poverty alleviation. In general, high income Member States
have little data available on poverty rates for their countries’ populations.
Upper-middle income Member States
Upper-middle income Member States are better placed than lower income countries to support job
creation in the private sector, without facing the same distortions that the high income countries
have due to the strong preference among workers to work in the public sector. The presence of a
more developed private sector also means that the environment is likely to be more conducive to job
creation, particularly if support is in place to promote business growth. OIC Member States in the
upper-middle income grouping are ranked more highly in terms of ‘ease of doing business’, assessed
by the World Bank, corroborating the opportunities these countries have to readily support job
creation in the private sector.
Employment subsidies have been used in several upper-middle income Member States to stimulate
job creation. In Turkey, for example, the government has previously introduced employment
subsidies to stimulate job creation in poorer areas of the country. Several laws introduced subsidies
including reductions in employers’ social security contributions, credits on income taxes on wages,
subsidies on electricity consumption, and land subsidies. The scheme did increase job creation in the
targeted areas, but deadweight loss was reported. This is because, as mentioned in the scope section
of our review, employment subsidies can reward employers for offering jobs they would have
offered even without the subsidies.67 However, it is interesting to note that, in comparison to job
creation measures in high income Member States, the job creation measure utilised in this example
was targeted at poor regions. These regions are characterised by low job creation, low employment
and participation rates and a large share of informal workers. Furthermore, even though deadweight
losses have been associated with the employment subsidies, evaluations do indicate that they have
had a positive effect in encouraging the formalisation of workers, through the registration of firms
and workers with social security.
Lower-middle income Member States
Although middle income countries do pursue long-term objectives in their development plans, the
focus on the long-term is contingent on the country’s environment. In countries facing instability,
short-term, reactionary policies are introduced. In Egypt, for example, the Egyptian government is
tasked with improving the country’s economy after economic discontent was presented as a reason
65 Das K.C. & Gokhale N. Middle East Institute (2010) Omanization Policy and International Migration in Oman, available at:
accessed 12th December 2014].
66 Ibid
67 Betcherman, G. et al (2008) Do employment subsidies work? Evidence from regionally targeted subsidies in Turkey. IZA
Discussion Paper no. 3508