Business | Features
Young expectations
Despite the economic boom in the Mena region, high youth unemployment poses a major concern for many governments .
- By Roula Khalaf, Financial Times
- Published: 00:11 June 4, 2008
When the World Bank issued a landmark report on Middle East and North African (Mena) labour markets in 2003, estimating that 100 million jobs would have to be created by 2020 to bring the unemployment rate down, the international community took notice.
The predicament of Arab youth - people under 25 make up 60 per cent of the population - had been troubling the region's governments and societies for many years. But after the September 11 attacks on the US, it had also moved up the agenda of decision-makers far beyond the Middle East.
A youth bulge in a strategic region beset by sluggish economic growth not only augured badly for containing political and religious radicalisation. The demographic gift a young population should provide for emerging economies looked like a looming threat.
At the time the report was released, economic growth in the region was rising at a yearly average of only 3.6 per cent and unemployment stood at around 15 per cent, but was much higher among youth. The report suggested that growth rates would have to double to produce the number of jobs needed - levels that seemed unattainable.
Five years on, the picture is less gloomy. The region has been blessed with an economic boom, driven in large part by a spectacular rise in oil prices, but also by accelerating economic liberalisation, including in poorer economies such as Egypt.
The higher rates of annual growth - more than five per cent region-wide but nearly double digits in some Gulf states - have started to generate jobs, with regional unemployment estimated to have dropped to about 12.7 per cent. Yet anxiety over youth unemployment remains the most nagging concern as experts find that new jobs are going to foreign workers in the thriving construction industry or tend to be in the informal sector, leading to seasonal rather than sustainable employment.
"There is a boom in the region and youth unemployment is benefiting but the kinds of jobs created, especially in non-Gulf countries, are not necessarily the kind of jobs we need," says Tarek Yousuf, dean of the Dubai School of Government and an expert on youth employment. "They are low-paying jobs, without long-term contract, without social mobility, for people in the non-formal private sector, and in sectors not high on technology."
Mismatch
This job creation, he says, does not fit into the aspirations of typical youth in the region, whose idea of economic security is a well-paid government job with tenure and social mobility.
These aspirations are associated with an unspoken bargain, particularly relevant in the oil-rich Gulf: for while governments have monopolised power, they have in return provided nationals with economic and social security. This contract came under strain in the 1990s, when oil prices tumbled, eroding the generous welfare states. To redefine it, governments at the very least now have to ease their control over the economy and allow for a larger, more vibrant private sector to create the quality jobs to which nationals aspire.
The gap between the expectations of young people and the realities of the labour markets has also widened because education levels have increased, including for young women who now outnumber male university graduates in several Middle Eastern countries. The problem, however, is that education systems across the region have churned out more and more graduates, but many of them remain unsuitable for the demands of the job market. Women seeking higher education, meanwhile, face additional social barriers, which often limit them to specific sectors, such as teaching or nursing.
"Why are so many graduates unemployed? Because education systems are not compatible with the world," says Nada Al Nashif, regional director of the International Labour Organisation's office for Arab states. "There's a big mismatch between what's being taught and what's needed in labour markets."
A recent World Bank study showed that despite spending a high percentage of their gross domestic product on education and successfully raising the average level of schooling, the achievement of the Mena region is below countries with similar levels of development. It also noted that education failed to develop critical thinking, innovation and solving skills, thus explaining the relative lack of entrepreneurship in the region.
Although many countries, including Saudi Arabia, have been committed to education reform, change instituted one year is sometimes reversed the next, as governments cave in to vested interests and to social and religious pressure. To get around the barriers, governments in recent years have encouraged the opening of private schools and universities. But while this trend has no doubt benefited the elite, it still leaves most students stuck in a failed, and sometimes neglected, public education system.
Experts say the region needs to look beyond broad growth-generating strategies to tackle the unemployment problem, combining efforts to create greater competitiveness, more flexibility in labour markets and in access to credit, and training schemes that can compensate for weak education systems.
Non-governmental organisations (NGOs) have launched a series of initiatives to try to match young people to the needs of the labour market. Injaz, a programme run by Save the Children and now operating in a dozen Middle Eastern countries, goes into schools to introduce students to the world of business.
Initiative
The World Bank's global partnership for youth investment, meanwhile, is looking to transfer to the region its experience in Indonesia, where a public-private partnership and customised training schemes have been helping find jobs, including in the Gulf, for thousands of people.
Pawan Patil, chief executive of the global partnership, says the plan is to work with a Qatar-backed initiative, Silatech, to test the programme on a larger scale in the Middle East.
Experts agree that the challenge for all these initiatives is scale. "If you can't scale it up we might be playing the same game, giving the impression of something substantial being done but we can't have impact in the heart of the Arab world," says Yousuf.
As civil society tries to build mechanisms to ease young people's move into the job market, governments and the business community recognise that the sustainability of the economic boom rests on providing hope and opportunity to the region's youth.
As Mohammad Al Abbar, head of Dubai's Emaar Properties, the real estate giant, said at a recent forum: "If the region can nurture its enormous human resources, we will enter into an era of peace and prosperity... If it does not, we face a future of dissatisfaction, unrest and economic decline."
More from Business Features
More from Business
Business Editor's choice
-
DFSA chief to step down in September
Executive has been at post since 2008
-
Geepas idea blossomed in Dubai
The journey led from a small shop in Bahrain to a $1.27b company in the UAE
