Monday, January 31, 2011

Youth Unemployment Highest in the World for MENA

The Nation: Jobless Youth Tell of Their FrustrationsCNBC: Bleak Jobs Picture in the Middle EastThe Nation: Davos Focus on Jobs for YouthGulf New: Middle East Joblessness World’s HighestDeloitte: Wanted: A National Labor Force

On January 25, 2011, the International Labor Organization (ILO) released the Global Employment Trends 2011 report, finding that the Middle East and North Africa (MENA) region has the highest unemployment rate in the world, at 10.3%. The unemployment situation is exacerbated for youths between the ages of 15–24 who also face the highest rate of unemployment in the world, at 23.7% in the Middle East and 23.8% in Northern Africa, according to a November 2010 study by Deloitte. Even those that are employed receive meager wages. According to an ILO study, 40% of the Middle East working population and 32% of the North African working population live on less than $2 a day. Furthermore, the unemployment numbers do not reflect the number of youths who are unemployed and have given up looking for work.

As highlighted at the World Economic Forum in Davos, lowering the alarming level of youth unemployment is essential for increasing social inclusion and future economic security in the region, given that youths comprise a staggering 60% of the regional population. While the issue of job creation is not new, recent political unrest in Tunisia and Egypt have drawn attention to the problem. Commentators like Monica Malik, Chief Economist at EFG-Hermes, have stated that youth unemployment is the “biggest challenge facing the region.”

There are inherent inadequacies in the growth and development of the labor market in MENA countries. While the region as a whole faces similar concerns, MENA can be divided into two groups: (1) countries that have an accumulation of wealth driven by oil revenues (including Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and UAE) and (2) import countries that do not have the oil-revenue buffer (including Egypt, Jordan, Lebanon, Morocco, Syria, and Tunisia). In oil-exporting countries, job creation has grown at a constant rate of approximately 100,000 jobs annually, yet unemployment for nationals remains high because many of those jobs are filled by expatriates. While oil-exporting countries have the resources to invest into job creation, the existence of oil revenues does not necessarily translate into lower youth unemployment rates. For example, Saudi Arabia, a large exporter of oil, has a youth unemployment rate of 25.9%.

Another problem for both oil importing and exporting countries is that the skills required by private companies do not match those acquired through the vocational and higher education systems. With university graduates remaining unemployed for an average of three years after graduation, both governments and employees must make efforts to lower unemployment rates. Private companies should provide skills guidance while governments must make greater efforts to provide for educational opportunities that match employer needs.

Discussion Questions
1. Do companies operating in the region have a responsibility to create opportunities for employment to nationals or should the government of the respective country be largely responsible?

2. What government programs initiatives would be most effective in eradicating youth unemployment?

3. Should oil-exporting countries assist non-exporting countries in developing youth employment opportunities, to avoid regional disruption?

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