The Millennium Challenge Corporation is assisting the nation of Tunisia in achieving greater economic growth by getting it to improve its government and private-sector institutions, which MCC says suffer from a bloated workforce and strict labor laws that keep that unwieldy labor market intact.
Tunisia, a North African nation tucked between Libya and Algeria, has agreed to pursue their reforms as a step toward signing a formal compact with MCC. First it must undergo scrutiny via MCC’s Threshold Program, which:
assists countries in implementing policy changes in order to improve prospects for MCC Compact eligibility. MCC has signed 23 threshold program agreements with 21 countries totaling nearly $500 million to date. Of the 21 countries, eight countries have been selected as Compact eligible; seven have signed Compacts; and one is in Compact development.
MCC, a U.S. government-funded corporation, in this latest instance is following up on what is known as a market “constraints analysis,” or CA, that the government of Tunisia, the African Development Bank, and the Obama Administration jointly conducted last year.
The CA reached the conclusion that one of the biggest constraints to economic growth in Tunisia is the absence of institutions capable of ensuring “public sector accountability, the rule of law, and checks and balances on power.”
Another conclusion is that Tunisia spends too much on social security and has regulations making it too difficult for even the private sector to fire employees. As a result of this “high fiscal and regulatory cost of employing workers,” Tunisian companies face one of the “highest payroll tax burdens in the world.”
As Tunisia has some of the most stringent worker-dismissal laws around the globe, it discourages investment and reduces demand for workers of all skill levels, MCC says. Consequently, Tunisia negatively affects its ability to compete internationally, according to MCC.
MCC seeks to correct this situation by hiring independent contractors to assist Tunisia in carrying out relevant reforms.
The organization is seeking, in separate solicitations, contractors capable of assisting the Tunisian government is achieving reforms via contract vehicles known as Design of Tunisia Threshold Program Labor Markets (Solicitation #MCC-13-RFQ-0024) and Design of Tunisia Threshold Program Public Sector Accountability (Solicitation #MCC-13-RFQ-0029).
The Obama Administration claims it is helping Tunisia in its transition to a more a democratic society, following what have been hailed as "free and fair multiparty elections for a Constituent Assembly," which was then tasked with drafting a new constitution.