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Dire consequences await Gulf countries whose youth stay unemployed

There is nothing worse than unemployed youth.

Their options are to stay home and live off of their parents, become demotivated and leave the country, rebel or steal.

Yet youth unemployment is here in the GCC and getting worse.

The International Monetary Fund (IMF) said this week that nearly a quarter of the Middle East’s youth are unemployed, warning that unless deeper reforms are made, millions of young people entering the labor market each year may not find jobs.

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The IMF says current levels of growth across the region will not generate a sufficient number of jobs to reduce unemployment, which was one of the main grievances behind the 2011 Arab Spring uprisings.

State of the GCC

For the Middle East’s oil-importing nations, economic growth is expected to remain steady at well over 4%, the global organization reported.

Economic growth for oil-exporting countries in the region topped 5% in 2016 but slowed to 1.7% just a year later, it added.

The IMF also predicts an upward trend of close to 3% this year and 3.3% in 2019.

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“The GCC is a very young region. Almost 60% of the population is below 30, and the level of unemployment at the youth level exceeds 30%,” said Jihad Azour, the IMF’s Mideast and Central Asia department director.

The IMF predicts growth rates of about 4.9% over the coming five years for oil-importing Middle Eastern countries, but says these “growth rates remain too low to reduce unemployment, particularly for young people effectively.”

These countries, which include Egypt, Jordan, Lebanon, Morocco, and Syria, would need sustained growth of at least 6.2% a year to keep unemployment at its current average rate of 10%, the IMF report found.

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Unemployment rates

At 50%, Oman has the highest percentage of youth unemployment of any Arab country, according to The Washington Post (WP).

70% of women in Oman are also outside the labor force, according to the IMF.

According to the WP, countries like Egypt and Saudi Arabia have more than 30% of youth unemployed and close to 80% of women are outside the labor force.

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VAT is good for employment

Traditionally known for being tax-free havens, Saudi Arabia and the UAEs introduced a 5% VAT this year on most goods and services to increase state revenues.

The UAE, for example, has used some VAT returns to invest in education and innovation.

Bahrain plans to introduce VAT by end 2018.