Dubai: Unemployment rate among young people in the Middle East and North Africa (Mena) region is the highest in the world, said a latest World Bank report which warned of a ‘high levels of vulnerability’ if governments do not take urgent steps to create jobs and ensure inclusive growth.
“As well as a source of frustration, the high level of joblessness translates into high levels of vulnerability,” said a latest report issued by the World Bank on Thursday. “The region still has large numbers of people living below the poverty line, around a quarter of the population in many instances.”
More than half the working-age population of the Middle East and North Africa (Mena) region are neither employed nor in school, and both the share of women not working and the unemployment rate for young people are the highest in the world, said the report.
“Sadly, Mena holds two world records: three out of every four working-age women in Mena are outside the labour force, and one quarter of the youth population is looking for work but cannot find it,” said the report — Jobs for Shared Prosperity: Time for action in Mena.
Female participation in the labour force tends to be lower in Mena. Mena score on achievement of universal primary schooling is 95 per cent according to World Development Report statistics which is quite high, Dr Giyas Gokkent, Chief Economist at the National Bank of Abu Dhabi, said,
“Undeniably, Mena economies will have to create a significant number of jobs and provide education given rapid population growth in the region. Mena population growth is estimated at about 1.8 per cent p.a. which is significantly higher than World population growth estimate of circa 1.2 per cent per annum,” he told Gulf News.
Poorer children have higher levels of malnutrition, in both the region’s low and medium-income countries, which can cause irreparable harm, lowering learning capacity and increasing risk of school drop-out, it says.
“The long range consequence is lowered adult productivity and generations trapped in a vicious cycle of poverty,” the report says.
Labour markets in Mena currently provide only a few good jobs for a few protected workers who are predominantly older and male. Young people and women are left to bear the brunt of these inefficient labour markets.
“The call for economic and social justice is intimately related to the need for more equal access to economic opportunities, jobs and more effective safety nets,” said Inger Andersen, World Bank Regional Vice President for the Middle East and North Africa. “By seizing this historical moment and fundamentally changing the rules of the game, the region can lay the foundations for inclusive growth, and provide the poor with the means to climb out of poverty.”
To solve this problem, the report identifies three areas of action. First, there needs to be a better business climate for the private sector to create the good jobs of the future. Lowering the barriers to both entry and exit of firms would create a dynamic private sector, which encourages investment and innovation, and ultimately increases the demand for labour, it said.
Second, the report argues for reforms across the region’s educational systems so that young people are equipped with the skills required for productive jobs in a vibrant private sector.
Third, the labour market and social protection policies in the region keep a few workers, mainly older and male, well protected, while the majority find themselves without any protection. The region needs to move towards protecting incomes for all, so that people can change employment in search of more productive jobs without risking their livelihoods.
Dr Gokkent said, the key is to have stability and moving towards a world class soft infrastructure to make it easy to start and do business in order to induce economic activity and attract foreign investment.
“The same sources of pressure such as rapid population growth also mean there is an opportunity and demand across a range of sectors in most countries in Mena,” he said. “At the same, there are significant pools of liquidity in oil-rich economies in the region where firms face more mature domestic markets and are eager for access to low penetration countries in the region. The right steps need to be taken to facilitate these flows.”
The Arab uprisings have created a demand for reform and provide an excellent opportunity for governments to address these longstanding issues.
“The old system that protected a privileged few while purchasing stability with universal subsidies is no longer viable or desirable,” said Steen Jorgensen, World Bank Director for Mena Human Development. “A new social contract that responds to the call for bread, freedom and justice is needed to unleash the region’s vast human potential and help the poor not just to survive, but thrive.”
As with reforms to the business climate and labour markets, the Arab awakening opens the possibility to truly provide social justice, by getting cash into the hands of poor people and removing the general subsidies that benefit the rich and powerful, the report says.
