On Wednesday, May 21, Tunisia’s parliament approved a seismic shift in labour laws. Subcontracting for core business functions and fixed-term contracts are now largely obsolete.
In a nation plagued by job insecurity and stagnant economic growth, Law No. 16–2025 represents a significant attempt to redefine the employer-employee relationship.
However, as history teaches, transformative change hinges on understanding the past and anticipating the future.
The May 2025 decision as a new landscape for Tunisian employment
The law, passed with overwhelming support, is undeniably radical. It outlaws subcontracting for essential and ongoing roles in both the public and private sectors. Fixed-term contracts are limited to specific, justified circumstances.
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The law mandates that workers performing core tasks be directly employed as permanent staff. Probation periods are capped at six months, renewable once. This acknowledges business needs but leans heavily toward worker stability.
Critics have long condemned the use of subcontracting and short-term contracts as tools to deny workers benefits and long-term security. The government has now closed that avenue. Companies violating the new regulations face significant penalties: fines, exclusion from public tenders, and potential imprisonment for repeat offences.
The law includes provisions for automatically converting subcontracted positions into permanent jobs. This aims to eliminate the ambiguity that has allowed businesses to avoid their responsibilities.
Parliament Speaker Brahim Bouderbala framed the reform as a matter of “human dignity and the right of every citizen to work under decent conditions.” The message is clear: precarious employment is incompatible with Tunisia’s social vision.
The March 2024 subcontracting law
This transformation didn’t happen overnight. In early 2024, the government, led by President Kais Saied, initiated a determined effort to reform Tunisia’s labour market. The March 2024 law began the process of dismantling abusive subcontracting and casualization.
It established permanent contracts as the default, restricted the use of fixed-term contracts, and prohibited subcontracting for a company’s “essential business activities.” The reform also imposed substantial penalties for non-compliance, signalling a commitment to enforcement.
Here’s a snapshot of how the law evolved:
The 2024 reform was a critical first step, but it left room for interpretation and, in practice, loopholes. The May 2025 ban closes those gaps, making Tunisia’s stance on precarious work among the toughest in Africa.
Tunisia’s age of precarity before 2024 reform
To understand the significance of these changes, one must look back at Tunisia’s labour market before 2024—a landscape shaped by uncertainty and informality.
For decades, fixed-term contracts and subcontracting were the norm, especially in the service sector and among low-wage workers. Employers enjoyed wide latitude to hire and fire at will, often leaving workers without income, social security, or healthcare.
The statistics are sobering. Unemployment hovered around 16% for much of the past decade, with youth unemployment at nearly 40%. Informal employment accounted for nearly half of all jobs, concentrated in sectors like agriculture, construction, and retail. Even those with university degrees found themselves in low-skilled, low-productivity roles, or worse, jobless and adrift.
This system was not just inefficient—it was unjust. Workers had little recourse when contracts ended abruptly. Social protections were patchy at best. The result was a labour market that failed both workers and the broader economy, stifling growth and fueling social discontent.
The promise and peril of Tunisia’s subcontract ban
As a senior editor covering African labour markets, one cannot help but see Tunisia’s May 2025 ban as both a necessary correction and a high-wire act. The logic behind the law is compelling: by ending subcontracting for core tasks and making permanent contracts the norm, Tunisia is betting on a future where stability begets productivity, and dignity is not a privilege but a right.
But the risks are real. The private sector, especially multinationals and tech startups, has relied on flexible staffing models to compete in a volatile global economy. The new law’s rigidities could prompt companies to slow hiring, automate roles, or even relocate.
Economist Aram Belhadj has warned that while the law may reduce job insecurity, it is unlikely to lower unemployment or spur growth. There is also the risk that employers will shift instability to the probation period, hiring and firing within the allowed window.
Moreover, enforcement remains a question mark. Tunisia’s labour inspectorate is under-resourced, and the informal sector remains vast. Without robust oversight, the law could become more symbol than substance—well-intentioned but toothless.
Yet, the alternative—perpetuating a system that traps millions in insecurity—is equally untenable. Tunisia’s labour market has long suffered from a mismatch between supply and demand, high barriers to business growth, and a glut of low-quality jobs. The old model was not working. Something had to give.
A broader African perspective
Tunisia’s experiment is being watched across the continent. Many African economies face similar challenges: high youth unemployment, rampant informality, and a growing disconnect between education and job creation. The gig economy, once hailed as a panacea, has too often become synonymous with precarity.
By drawing a line in the sand, Tunisia is forcing a conversation about what kind of labour market Africa wants. Is flexibility worth the price of insecurity? Can dignity and dynamism coexist? The answers will not come easily, but Tunisia’s boldness deserves attention—and, perhaps, emulation.
What workers and employers should know
For workers, the message is clear: the era of disposable labour is ending. Permanent contracts, social protections, and direct employment are now the law of the land. For employers, adaptation is not optional—those who fail to comply risk not just fines but exclusion from public contracts and reputational damage.
But both sides must recognize that laws alone cannot create jobs or prosperity. Tunisia’s unemployment rate remains stubbornly high, and the informal sector is unlikely to disappear overnight.
The real test will be whether the new framework can foster the kind of investment, innovation, and trust needed to build a more inclusive economy.
Tunisia stands at a crossroads, as the ban on subcontracting and fixed-term contracts marks a revolution in labour relations, one that seeks to right historic wrongs and chart a new course for the country’s workforce. It is a gamble on dignity, stability, and the power of the law to reshape society.
Success will depend not just on enforcement but on a broader commitment to economic reform, education, and entrepreneurship. If Tunisia can meet that challenge, it may yet turn its labour market from a source of frustration into a foundation for growth.
For now, one thing is certain in Tunisia: precarious work is no longer business as usual. And that, in itself, is news worth knowing.