Summary: The unemployment rate in the Arab region is one of the highest in the world and Arab governments need to institute political and socioeconomic reforms in order to counter the negative effects of youth unemployment in their countries.
In the Middle East and North Africa (MENA), two-thirds of the population is under 18. Recent political turmoil in the Arab world has put these youth at the forefront of the political and economic debate. They suffer from high unemployment—the MENA region ranks among the worst in the world for youth unemployment, which approaches 30 percent—high demographic growth, and poor education.
Youth unemployment can be traced back to a number of serious economic, political, and social problems, including the absence of sound development strategies, weaknesses in the business environment, poor governance, lack of transparency and accountability, and widespread corruption. The Carnegie Middle East Center hosted experts on Algeria, Egypt, Jordan, Lebanon, Morocco, Syria, Tunisia, and Yemen to discuss the issues surrounding youth unemployment. Carnegie’s Lahcen Achy opened the discussion.
Roots of Youth Unemployment
Demographic factors: All experts agreed on the fact that MENA countries have witnessed high population growth rates over the past several decades, leading to what is today considered to be a “youth bulge.” As a significant part of the population in every MENA country is below the age of 35, the youth represent a prominent share of the labor force. This large section of the population, particularly those between the ages of 15 and 29, puts immense pressure on the labor market, emphasized Achy.
Low economic growth and weak economic diversification: Economic growth in the region cannot absorb the flow of jobseekers entering the labor market. Additionally, private investments are flowing primarily to informal sectors that create few or poor-quality jobs, particularly the small retail industries, stressed Ibrahim Awad, from The American University of Cairo (AUC).
Ill-adapted education system: University graduates are struggling to find a job, let alone one that matches their qualifications and expectations, stressed Hana El-Ghali, from the Institute for International Studies in Education at the University of Pittsburgh. Ultimately, the educational system is not adapting to the labor market, said Nacer Eddine Hammouda, from Algeria Research Center (CREAD), leaving graduates with training that does not serve the needs of potential employers.
Institutional factors: Public institutions and policies are neither efficient enough to deal with labor-market reforms nor able to implement the macroeconomic strategies necessary to deliver long-term growth, according to Nader Kabbani, from the Syria Trust for Development. This deficiency in governance impedes job creation by discouraging potential investors and encouraging the growth of the informal sector.
Growing Risks in Arab Societies
Persisting high levels of youth unemployment throughout the region create a number of demographic, social, educational, economic, and political risks, the panelists agreed.
Increased poverty: As the youth population ages, the current “youth bulge” risks transforming into a “generational bulge.” The lack of personal finance—given low employment rates—combined with the inefficiency of safety nets, pensions, and social benefits could leave an entire generation mired in poverty, warned Ibrahim Saif, from the Social Council of Jordan. As demographic growth continues, unemployment has a multiplier effect on poverty, he added.
Decreased value of education: Both Achy and Mongi Boughzala, Professor of Economics at the University of Tunis El Manar, stressed that long-term unemployment contributes to a depreciation of the value of higher education. The degree acquired by an unemployed graduate will gradually become obsolete. Furthermore, low return from education provides no incentives for families to invest in higher education for their children. Eventually, such disincentives can only hurt the development of human capital in the region
Weakened social and cultural structures: Justin Sykes indicated that youth unemployment undermines social and cultural mores. Young people who cannot find jobs are much less likely to start families or purchase houses.
Social unrest and political instability: The long-term social frustration and disillusionment resulting from unemployment can lead to a sense of marginalization and exclusion, both at the individual and the collective levels, said Achy. This leads to extremes in individual behavior and even a collective sense of generational exclusion and resentment. Examples of such extreme behavior can be seen in the recent suicides by immolation in Tunisia, Algeria, Egypt, and Yemen and other part of the region.
Key policy reforms need to be implemented to address the issue of youth unemployment in the region. These reforms should include:
Institutional reforms: Achy pointed out that, to bolster the efficiency of public policies in reducing unemployment, institutional reforms are needed to enable the effective rule of law and the implementation of anti-corruption measures.
Empowerment of the judicial system: Awad underlined that the judiciary should be strengthened, so it can serve as a means for defending the rights of young people whose unemployment results from discrimination. Gender discrimination in particular remains a serious problem in the region.
Boosting business creation: Governments should use financial, fiscal, and regulatory means to promote the creation small and medium enterprises, which can serve to increase potential employment. Access to credit should also be widened. According to Kabbani, smarter regulations in the labor market, and notably to enhance labor flexibility, would improve the investment climate. Finally, barriers to entering the labor market - such as nepotism, corruption, and the lack of job market transparency- should be removed, and free and fair competition should be guaranteed, said Saif.
Public-Private Partnerships (PPP): PPPs can provide a partial solution to the need to merge the job-creating role of the public sector with the expertise, flexibility, and labor-market knowledge of the private sector. Boughzala and Kabbani indicated that PPPs can provide viable alternatives to the public sector’s incapacities, such as the need to monitor the labor market and manage the large influx of funds from international aid.
Educational reform: Most of the countries in the region, with the notable exception of Yemen, have achieved satisfactory levels of education among their youth, stressed Ibrahim Saif. A good number of students are obtaining degrees. However, policy makers need to focus on the quality of education to ensure that the skills being taught match the needs of the labor market, said Achy. University degrees should be more oriented toward job-creating and growth-prone sectors of the economy, such as construction, innovation, and new technologies, concluded Kabbani.
Defining a clear long-term macroeconomic strategy: Youth unemployment is a structural concern that requires long-term solutions. According to Ibrahim Awad, governments in the region need to formulate clear long-term strategies for a series of job-creating sectors, which can be implemented in partnership with and in support of the private sector. In this regard, Awad addressed the need for a macroeconomic vision powered by the state to initiate investment and development in some specific sectors.