Report
TUNISIA, GOVERNMENT OF
Tunis, Tunisia

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Tunisia risk: Alert – Protests staged by UGTT labour union may affect economic recovery


NEW SCENARIO

Risk Briefing's risk scenarios are potential developments that might substantially change the business operating environment over the coming two years. We analyse the drivers, provide the context and conclude with recommended action. The following scenario has been added to the latest country update.

LABOUR MARKET RISK

Labour union actions cripple economic recovery and prevent reforms

High probability; high impact; Risk intensity = 16

Union Générale Tunisienne du Travail (UGTT), is Tunisia's most prominent labour union, and retains significant power over government policymaking. IMF-driven reforms, including reining in public-sector wage growth and reforming major state-owned companies such as Tunisair, the national airline, pit the government directly against the UGTT. Although the urgent need to secure IMF funding led to a tentative agreement between the government and the UGTT in late March 2021, the agreement was lacking in detail, and the re-emergence of significant labour action remains a major risk to Tunisia's economic prospects. If an early election removes or weakens the current government, or if attempts to reform state-owned companies move too quickly, there could be mass nationwide strikes backed by the UGTT. In such a scenario, this would probably lead to power outages, as state electrical company workers will join the strikes and cause major disruption to businesses. In addition, as happened in 2020, labour action could spread to Tunisia's oil and gas fields, weighing on hydrocarbon exports, which would affect the revenue of foreign oil companies. Firms should carefully follow any negotiations between the government and the UGTT, particularly over reforms related to state-owned companies. They should adequately prepare contingency plans, including various approaches to stockpiling in case of labour disruption.


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Tuesday, May 11, 2021