Arab countries need to create nearly 40 million jobs by 2020 to tackle unemployment that has remained the highest in the world despite a steady expansion in the private sector, according to an official study.
Although it was cut from around 14.3 per cent in 1990 to about 13.7 per cent in 2008, the unemployment rate in the region is still the highest in the world and requires intensification of reforms to spur economic growth and ensure jobs for unemployed citizens, mostly the youth, said the study by the Abu Dhabi-based Arab Monetary Fund, a key Arab League establishment.
Given their massive oil wealth, the UAE and other Gulf Co-operation Council (GCC) states have maintained the lowest jobless rate in the region but unemployment has largely deteriorated in such low income nations as Mauritania, Djibouti, Somalia, Sudan, Yemen and Palestine.
“As a group, the Arab countries are suffering from the highest unemployment rates in the world despite a slight improvement in the past years… the Arab joblessness rate is estimated at 13.7 per cent compared to an international average of nearly 5.7 per cent,” the study said.
“The improvement over the past years has been mainly a result of greater participation by the private sector… but the region now faces a serious challenge in matching the rapid growth in the population and labour force and how to ensure jobs for those who are about to join the labour market, mainly the youth, who account for nearly 50 per cent of the total jobless Arabs… if the Arab countries want to face that challenge and reduce unemployment by half, they will have to create nearly 40 million jobs by 2020.”
The study said creation of those jobs would not be easy following the end of the second oil boom of between 2002 and 2008, adding that the surge in crude export earnings largely boosted growth in the Gulf and other Arab oil producers and at the same time increased financial transfers into non-oil Arab nations.
“Now that the oil boom is over, creating jobs will be very difficult… this should prompt Arab countries to step up reform programmes they launched during 1980s and 1990s… there is a strong need for efforts to improve the business and investment environment in the region and encourage the private sector so it will offset the eroding employment capacity of the public sector.”
A breakdown showed that in 2008 GCC nations, which sit atop 45 per cent of the world’s proven oil wealth, had the lowest jobless rate in the region, with Qatar having the best record at only 0.5 per cent.
The rate was as low as 1.2 per cent in Bahrain, 1.3 per cent in Kuwait and 3.7 per cent in the UAE. Medium jobless rates were put at 8.2 per cent in Lebanon, 8.4 per cent in Syria, 8.8 per cent in Egypt, 9.6 per cent in Morocco and 10 per cent in Saudi Arabia and Libya.
Djibouti had the highest jobless rate of 59 per cent while it was also as high as 25 per cent in Somalia, 22 per cent in Mauritania, 21.6 per cent in Palestine and 15.9 per cent in Iraq and Yemen.
According to the Cairo-based Arab Labour Organisation (ALO), another Arab League body, the number of unemployed people in the region has exceeded 20 million and that the problem could worsen in the absence of reforms.
In a recent study, ALO said that several decades of socio-economic development have failed to tackle the problem and warned that the rate could jump to 100 million by 2020 without real efforts to match an upsurge in the workforce.
“Arab countries are facing a serious challenge as they entered the new millennium burdened with severe economic and social problems, including unemployment and poverty… they have no choice but to intensify their efforts to support economic development and ensure jobs for their citizens,” AMF said.
“Developments over the past years have shown that the fiscal policies in Arab countries lack flexibility because they are heavily reliant on limited sources of income, including oil… this reliance has made them highly susceptible to any shocks to those sources… besides, the accumulating domestic debt in an increasing number of Arab states is seriously aggravating their financial situation… in some members, the debt has reached alarming levels that are consuming up a large part of their public revenues and seriously affecting their development spending… this is hindering economic growth and their efforts to improve living standards and find jobs for their citizens.”
In another study, the United Nations Economic and Social Commission for Western Asia, which groups most regional nations, also blamed what it called poor economic performance, high population growth and inadequate planning. But it cited other factors in the Gulf, including preference of the public sector.
“In the Gulf, there is a problem of reluctance by citizens to take up technical and productive jobs and their preference of administrative, office and supervisory jobs...their preference of the public sector is also aggravating the redundancy problem and widening the gap in real production… preference of the less costly expatriate workers by the private sector is another obstacle.”
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