How to create jobs and a civil society.
The demographic timebomb of more than 50% of Arab youths under the age of 24, along with the dramatic eruption of widescale political protest, has once again focused the minds of policy makers, businessmen and bankers, academics, journalists and others on the deep-seated economic problems facing many Arab countries. Pioneering approaches will be needed that combine innovation and investment with sweeping political and social reforms.
Young people in the Middle East aged between 15 and 29 years old constitute about one third of the region's population, according to Generation in Waiting, a study published last year by the prestigious Brookings Institution in Washington, DC. At present, this age group is growing faster than anywhere else in the world, except for sub-Saharan Africa.
Yet, as the report noted, even before the tremendous upheavals which broke out this year, young people in the Middle East face severe economic and social exclusion due to substandard education, high unemployment, and poverty. The inclusion of youth is the most critical development challenge facing the Middle East today. Greater investment is needed, they maintain, "to improve the lives of this critical group".
Creating more jobs is equally vital: "Unemployment rates in the Middle East remain high, at nearly 11%." Among young people, the rate is double that, "averaging between 20 to 25%". Many unemployed youth, the study notes, "wait for two to three years for their first position. Young women often face the most daunting prospects in securing a job."
Other knowledgeable observers, particularly in the Arab countries themselves, regard some of these figures as an underestimate, as the widespread unrest, and the swiftness of its spread, seems to confirm.
In Saudi Arabia, a recent report by the Central Department of Statistics stated that unemployment amounted to 10.5% in 2009, the last year for which figures are available. But, as some observers noted, even assuming the figure is correct, it is still too low to absorb the 13.7% increase in new university graduates that is expected between now and 2013.
The Middle East Youth Initiative (MEYI), a Dubai-based partnership between the Dubai School of Government and the Wolfensohn Centre for Development at Brookings, set up in 2006, estimates that unemployment may range "from 20 to 30% in the most countries in the region, but exceed 45% in some countries" such as Algeria and Iraq.
The Brookings study, which covers an area from the Maghreb to the Levant, also goes on to point out even more significant implications for the younger generation. Their poor job prospects "have led to delayed marriage and difficulties securing housing. These challenges," the authors report, "are reinforced by weak financial markets that do not allow opportunities for young people to leverage future earnings in order to purchase housing. Rental laws," the study adds, "create disincentives for landlords to provide affordable living opportunities to young families."
The Arab Human Development Report, published by the New York-based Regional Bureau for Arab States in partnership with the United Nations Development Programme, highlights the root causes behind the biggest challenges to development in the region. "Increased access to education and knowledge, the full enjoyment of freedom as the cornerstone of good governance and the empowerment of women" are vital for future human development, it maintains.
Like Brookings and the MEYI, their latest findings, published in 2009 under the title, Challenges to Human Security in the Arab Countries, also focus on the rapidly growing younger generation. They estimate that about 30% of the youth in the Arab states are unemployed and that more than 50% of the population is aged under 24. Significantly, the report goes on: "Fifty-one million new jobs are needed by 2020 in order to avoid an increase in the unemployment rate."
But the central message in all the Arab human development reports is that good governance is the key to the achievement of results. Measures to reduce unemployment and poverty, to tackle problems of water scarcity and food security and to empower women cannot take place without it.
Solving these development challenges and preventing conflict, or recovering from it, requires "responsive, transparent and accountable" governments, with "all citizens empowered". There must be the "rule of law, checks and balances and participation". Above all, "bold thinking holds the key to realising grand visions for the future," the authors conclude.
Brookings is equally adamant about the need for wide-scale reform. "This includes revisiting tracking and admission policies within regional educational systems," it insists, "as well as public sector hiring practices, which propagate the skills mismatch. Holistic, inclusive reform," it argues, "will require the respective efforts of local and national governments, international donors, educators, business leaders and young people and their families."
MEYI is particularly insistent on the need for political and social reform, and measures to increase the civic participation of the younger generation. "The majority of youth in the Middle East, if given the chance, are more interested in contributing to their society and future than being involved in extreme behaviour," the Initiative, which includes policy makers, academics, youth leaders and leading thinkers from the private sector and civil society, observes. "The challenge remains with Middle East countries to provide an enabling environment for young people to give voice and actively participate in economic, political and social affairs."
Anticipating this year's upheavals throughout the Arab world, MEYI argued forcefully last year that: "Young people are at the heart of a process of political change and debate that now defines the region. They are emerging as agents of change in some countries which are moving towards more participatory forms of government. Through the expansion of civil society and the rise of local social and environmental movements," the Initiative points out, "young men and women can be mobilised to exert greater influence in shaping their societies positively."
Innovative ideas to promote social inclusion and to create new jobs are now the subject of much debate throughout the Arab world. One of the most impressive is MEYI's latest focus on social entrepreneurship, "an issue whose time has come," US Secretary of State Hillary Clinton said recently. Ehaab Abdou, an Egyptian-born activist, advisor to MEYI and the lead author of its new report, Social Entrepreneurship in the Middle East: Towards Sustainable Development for the Next Generation, explains that the aim is to "generate awareness about the potential of social enterprise to address social, economic and environmental challenges in a financially sustainable way."
In other words, charities and international aid are not enough; reforming society requires funding that is ongoing and reliable and which involves the participation of the recipients as well as the donors.
In the coming months, MEYI is concentrating on three areas to promote social entrepreneurship in the region.
The first involves setting up coordinating mechanisms between foundations, social investors, philanthropists and the corporate sector within individual Arab states. The second aims to establish a regional social investment forum for "scaling up youth initiatives" to access business planning, funding and technical support. Finally, MEYI plans to convene "national and regional policy dialogues" aimed at introducing new legal frameworks and regulations to encourage the establishment of social investment funds that could also attract finance from global, as well as national and regional, players.
Similar ideas are being promoted by the Skoll Foundation in an address by the highly respected former Algerian foreign minister, Lakhdar Brahimi, who is now an advisor and special envoy at the UN. The Foundation was created in 1999 by Jeff Skoll, the first president of the global auction site, eBay, to encourage the development of social entrepreneurship as a way to solve the world's most pressing problems.
Other ideas involve rethinking current priorities and agendas. Navtej Dhillon, one of the authors of the Brookings study, feels investment should be directed to sectors that have been relatively ignored in the past, "particularly the social sector."
He argues that the Middle East needs more qualified teachers, social workers and nurses. There also needs to be a "larger reform agenda," he adds, "where business costs are reduced and deregulation is promoted, so that greater private investment can come to the region that can lead to the creation of more jobs."
Other policy recommendations in his report include measures to reduce young people's tendency to opt for government employment; promoting skilled workers, including women, through improvements in education and training; engaging Arab youth in decision-making processes; providing state-of-the art, technologically equipped centres for job information and counselling; helping workers in the informal sector to develop their skills; and, finally, increasing social security benefits such as income support and unemployment insurance.
Jad Chaaban, author of the Regional Bureau for Arab States' latest research paper, Job Creation in the Arab Economies: Navigating through Difficult Waters, argues that government actions to reduce unemployment would be more effective if a distinction were made between the voluntarily and involuntarily unemployed.
Those who refrain from formal working in the expectation of higher wages, as is common in many of the Gulf states, will need government programmes and macroeconomic reforms to improve competitiveness and to attract investment into those sectors which have a comparative advantage regionally and globally.
More immediately, Chaaban adds, the emphasis should be on targeting those who lack jobs through no fault of their own, and who urgently need employment services, training and skills. More work needs to be undertaken, he insists, to simply find out where they are, what their expectations are and what skills they may have.
Housing loans and subsidies should be available to the unemployed in rural areas who need to relocate to the cities and towns where the job opportunities are.
Investment and subsidies to improve and expand access to transportation networks, especially in urban areas, is also vital so that mismatches between those areas where jobs are available and those where they are needed can be avoided.
Still other experts have focused on current emigration policies in the Arab countries and on the remittances that their workers send back home. Lax emigration policies in countries such as Morocco, Tunisia or Egypt can alleviate pressure on local job markets in the short term, they note, but may carry a higher cost in the medium to long term, given the loss of a country's own human capital.
More also needs to be made of the funds that the millions of Arabs working abroad remit to their home countries. Remittances from emigre Egyptian workers surged to $3.2 billion in the second quarter of 2010, according to Bloomberg's Alaa Shahine. This was 78% higher than a year earlier. For the fiscal year that ended last June, the figure was up 25% to $9-5 billion.
Such funds, analysts point out, have helped to fuel retail spending, construction and social expenditure in Egypt, all of which are sectors that are important for job creation. Channelling these funds through mechanisms to encourage their best deployment and use in the future would help Egypt and other Arab countries make the most of an undervalued resource, the analysts say.
The Gulf states are host to a significant number of Egyptian immigrants who have contributed to the growth of these economies, especially in the medical and academic fields, noted Sultan Sooud Al Qassemi, a fellow at the Dubai School of Government. He cites figures showing that 70%, or 4.z million, of Egypt's six million worldwide emigrants live in the GCC. About $L5 billion was transferred from Kuwait alone by Egyptians living there, along with another $1 billion from Saudi Arabia in the 2009-2010 fiscal year.
"What is required today from the energy-rich Arab Gulf States is for them to take the initiative and collectively assist Egypt in its time of need," he notes, as Egypt did for the Gulf states during the 1990-91 war with Iraq. "Gulf finance and development ministers must call for an urgent summit with their Egyptian counterparts in order to understand fully the situation and provide the necessary assistance."
Egypt itself is now looking to promote investment in its small and medium-sized enterprises to help create jobs, increase income and make up for the losses sustained during the 25 January revolution.
Trade and Industry Minister Samiha Fawzi told an audience at the Egyptian Trade Union Federation in late February that government representatives would be sent to promote this message to investors in Kuwait, the UAE and France this spring
Finally, Abdou and other influential researchers and advisors in the Arab countries point to the need for more investment from the Muslim world and from Islamic funds.
Addressing the 3rd World Congress of Muslim Philanthropists (WCMP) in Doha a year ago, Abdou called for action to integrate the efforts of the philanthropic, public and private sectors so that they could better respond to worsening issues of hunger, poverty, disease and violence, as well as unemployment and social exclusion.
On hand to hear his words was a distinguished audience that included members of a variety of regional ruling families, as well as celebrated Muslim thinkers and scholars.
The question now is whether their efforts will find a ready response in those Arab governments that are still standing, as well as in the new regimes struggling to put in place a better way to the future.
AVERAGE UNEMPLOYMENT IN MENA
INCREASE IN NEW UNIVERSITY GRADUATES
JOBS NEEDED BY 2020
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|Title Annotation:||Arab Economic Development|
|Comment:||How to create jobs and a civil society.(Arab Economic Development)|
|Author:||Smith, Pamela Ann|
|Publication:||The Middle East|
|Date:||Apr 1, 2011|
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