In many Middle East and North African (MENA) economies, formal systems of employment coexist with informal practices like wasta , using personal connections or intermediaries to secure favors. This article examines the relationship between wasta , informality, and governance quality for sustainable employment. Data reveal that inadequate corruption control systems increase dependency on wasta and informal labor markets, limiting job creation potential. Strong governance mechanisms, however, enhance formal job availability, reducing insider advantages. Wasta operates as both favoritism and relational coordination, filling gaps where formal structures fail. The study frames wasta as a double-edged institution, suggesting that regulation, not elimination, can better balance equity and efficiency in employment systems. This research links informal relational governance to macro-level employment sustainability and offers guidance for policymakers and organizations seeking to align social embeddedness with meritocratic governance in developing labor markets. By addressing informal practices and governance, this article contributes to improving labor market dynamics in MENA economies.
Bofala et al. (Thu,) studied this question.