Report by: Ibrahim Saif and Joulan Abdul Khalek from Carnegie Endowment
THURSDAY, OCTOBER 27, 2011
Creating good jobs for young people in the Middle East is a longstanding challenge, but one that is now attracting more attention in the aftermath of the Arab Spring. Unemployment among youth in the Middle East is hovering around 25 percent. (For comparison purposes, unemployment among youth in the United States and United Kingdom, which are still mired in the fallout of the financial crisis, is 18 percent and 19 percent, respectively.) While it is difficult to generalize about youth unemployment across the entire Middle East and North Africa (MENA) region, it is possible to discern some important common themes.
First, unemployment is high among both young men and young women. Second, unemployment is structural in nature and not only linked to cyclical factors. The link between growth and job creation is also weak in MENA countries. In part, this is because growth is overly reliant on the oil sector. The public sector, in addition, is bloated in most of the MENA region, while the private sector is underdeveloped. Finally, there is a mismatch between education and skill levels among the unemployed and labor market demand.
The Nature of the Problem
Young people between the ages of 15 and 24 account for over 70 percent of the unemployed in Qatar, over 60 percent in Egypt, and over half in Syria and Bahrain (see chart). Unemployment takes a personal toll on youth, but it also means that young people are less able to contribute to society. Most unemployed young people, for example, are unmarried and live with their parents. This makes it difficult for the parents to save and improve their station in life.
Declining labor productivity is another serious problem across the region. While lower labor productivity, other things being equal, generally means higher employment, it also means lower real wages and less attractive jobs. As the chart shows, GDP per worker in the MENA region has fluctuated around one percent for the past 20 years. Because real wages are directly related to worker productivity, wages in the region have either declined or stagnated during this time. This means that, even if young people succeed in joining the labor market, they are more likely to hold low-wage jobs.
Demography—a Curse or a Blessing?
Demographic challenges will define the Middle East’s economic future. High population growth rates are exerting enormous pressure on labor markets as new generations prepare to enter the workforce. As shown in the chart, the Middle East has exhibited the highest labor force growth rate in the world, surpassing even sub-Saharan Africa.
In 2009, the region’s labor force totaled some 135 million workers. By 2020, it is expected to reach 185 million. This means that countries in the Middle East need to create 50 million jobs over the next 10 years or five million jobs per year, compared to an average of around three million jobs per year over the last 10 years. Accounting for some 14 million who are already unemployed, the annual target for job creation would rise to around 6.5 million jobs per year, which is not an easy task. Youth population projections (see table 1) indicate that the need to create similar numbers of jobs each year will likely persist beyond 2020.
But this challenge may also bring opportunity. The extent to which the MENA countries benefit from a young workforce and gain a leg up in a global economy increasingly geared towards knowledge and innovation will determine whether the demographic boom is really a curse or in fact a blessing.
|Table 1: Percentage of Population Between Ages 15-24|
|Source: 2010 UN World Population Prospects.|
Continue report here
Ibrahim Saif is a resident scholar at the Carnegie Middle East Center. Joulan Abdul Khalek is a research assistant at the Carnegie Middle East Center.