Abu Dhabi: Over 15 million young people will enter the workforce over the next decade in the Middle East and North Africa (Mena), presenting serious challenges for regional governments, a report has claimed.
The Rapid Growth Markets (RGMs) Forecast report by Ernst & Young, a market research company, said that Mena governments urgently need to develop the non-oil economy to meet growth.
"The average annual growth rate in the labour force in Mena over the next 10 years is expected to be around 2 per cent," Bassam Hage, Mena markets leader at Ernst & Young, said. "While a growing labour force adds to potential growth in the region, creating jobs for this next generation in Mena will be one of the most important economic developments."
According to the International Monetary Fund (IMF), infrastructure investment can have a sizeable impact on employment generation — about 40,000 annual direct and indirect new jobs can be created in the short term for every $1 billion spent on infrastructure projects, the report said. On this basis, 1 per cent of GDP spent on the right kind of infrastructure projects could generate up to 87,000 new jobs in Egypt, for instance. Shady Shaher, economist at Standard Chartered Bank, said: "You need to have an infrastructure in place and you need to have a diversified economy because diversification will create jobs."
The United Arab Emirates, Qatar, Saudi Arabia and Egypt will register an average growth of 4 per cent per annum, the report said.
In the UAE, GDP growth has been supported by the oil sector, tourism and business services as well as government spending. The UAE economy has been insulated somewhat from the problems in Europe through close links with the fast-growing Asian economies.