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With 30% of Arab youth unemployed, a fuse is being lit

A wave of oncoming Arab baby boomers is being labeled as a ticking bomb instead of an opportunity.

“High youth unemployment in the Arab world is a threat to peace,” Frode Mauring, resident representative of the UNDP said during the International Youth Day celebration event in Dubai last year.

Youth unemployment is deep, complicated and widespread, but unless solved, the region will have its hands full soon.

What’s the story so far?

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Research site Stratfor said labor markets in the MENA continue to face the acute challenge of massive youth unemployment.

“Even if these states do foster more robust private sectors, they may not be able to mitigate the economic hardship when it hits their citizens, due to the uncontrollable nature of the free market, said Stratfor.

At Dubai’s World Government Summit, discussions were around a pressing issue right on the Emiratis’ doorstep: the prospect that 5 million workers are set to enter the Middle East’s job market each year, even as gainful employment is in short supply.

“Hampering the youth quest for jobs are a number of factors, including weak private sectors, mismatched skills and a regionwide overreliance on the public sector,” it said.

Where’s the GCC in all of this?

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Similar issues  

Stratfor said youth unemployment rate runs to nearly 30% in many of the countries members of the GCC.

“Young people in the Gulf frequently opt for comfortable employment in the public sector rather than seek work in the more demanding private sector,” it said.

A 2017 Asda’a Burston-Marsteller surveyof Arab youth found that optimism among young Arabs is waning, as they want their countries to do more for them, and many feel overlooked by policy makers.

“They view unemployment and extremism as their biggest problems, say their education systems fall short of preparing them for jobs in the future,” said the survey.

“The UAE sprints ahead as the country most Arab youth would like to live and want their countries to emulate, and Facebok is the number one medium for daily news.”

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What tech can do

Afshin Molavi a senior fellow at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies commented on the survey saying: “30% Arab unemployment takes place against a backdrop of rapid urbanization, technological connectivity, and growing middle classes.”

He opined that technology has opened new avenues of opportunity, crowded public sectors and declining jobs in the Arab world have failed to take advantage and reap the benefits of an educated, motivated youth.

“The UAE has done a better job at employing their youth.”

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Failed strategies

According to Stratfor, to consolidate their legitimacy, Gulf Arab states have relied on their hydrocarbon wealth to build large public sectors that are becoming increasingly expensive and unproductive with their offers of cushy jobs.

“Now, states in the region are struggling to push their youth toward the private sector despite a preponderance of jobs in the industry, with some eschewing the available private sector jobs in favor of remaining unemployed until a public sector job opens up,” said Stratfor.

“As part of a continuing drive to increase the number of Emiratis working in the private sector, the UAE’ federal government recently froze public sector salaries for 2018.”

It added that in their bid to find jobs for their youth, many MENA countries are faced having to lean on technology to provide a pathway forward, especially Gulf states such as Saudi, the UAE and Qatar.

Any solutions?

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Emergence of start-ups

According to Forbes, in recent years, across the  MENA, young entrepreneurs have started new companies presenting a potential boon to the countries’ economies, which suffer from slow growth and high unemployment

“Although there’s a continued increase in funding in the region, more is required to help grow the startup base as well as to fund later stage investments,” says Philip Bahoshy, CEO and founder of Magnitt.

“The Arab world is growing fast, and the number of young workers, aged 15-24, will grow to 58 million in 2025,” said Forbes.

“In Saudi Arabia, about 70% of working people are employed in the public sector and according to Jadwa Investment, a Saudi research firm, the working-age population is expected to increase to nearly 18 million by 2025, meaning 226,000 Saudis will enter the labor force each year.”

The public sector simply cannot absorb all of them.