Opportunities, challenges, and power of media and information
The Arab youth in the labor market: Mismeasured, misunderstood and mistreated
1. The Arab Youth in the Labor Market:
Mismeasured, Misunderstood and Mistreated
Zafiris Tzannatos
SILATECH
ZTzannatos@Silatech.org
ERF 20th Annual Conference on
Social Justice and Economic Development
March 22-24, 2014
Cairo, Egypt
2. Regional Aggregates
• How to define the Arab Region?
– Iran accounts for 46% of the population in the “Middle East” (excluding
the GCC)
– Egypt accounts for 41% of North Africa (or is it in the Middle East?)
– Nationals in Saudi Arabia account for 78% of the nationals in the GCC
countries
• Weighted or unweighted averages? There is a difference between
– The average Arab
– The average Arab country
• Does it matter if 55% of the population is under the age of 25 years?
– Do children matter for labor market outcomes?
– And what does low labor force participation rates for the youth mean, if
the youth are in schools?
3. Context
1980s : THE LOST DECADE
– Continuing “Arab socialism”, “Paternalism”, Patriarchy” amidst low oil
prices, fiscal stress, very low GDP growth and very high unemployment
– Old social contract reached its limits
1990s-2000s: ARAB “RENAISSANCE”
– Pro-market reforms adopted, GDP growth resumed, inflation was
tamed, employment increased, unemployment decreased
– Underlying philosophy: “Economic reforms first, political later”
2010/11: ARAB SPRING
– Good economics but bad politics?
– Or bad economics, too?
3
4. Following the reforms of the 1990s, economic growth accelerated
(though it remained low compared to other regions
and therefore per capita incomes increased only slowly )
GDP average annual rate of growth (%), 2000-2010
8.8
6.9
5.6 5.4 5.3 5.1 5.1 5.0 4.9 4.6
3.4
East Asia South Asia SSAC/SEE (non-EU) & CISSAEP GCC Middle EastMiddle East excl. GCCArab States North Africa LAC
4
“The Renaissance”
5. Irrespective of other criticisms of the economic reforms (esp. whether they
created competitive markets or crony capitalism)
Economic growth was NOT jobless
Employment-output elasticity, 2000-2010
0.76
0.70
0.66
0.32
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Yemen
Syria
MiddleEast
Jordan
Lebanon
Algeria
Egypt
NorthAfrica
Tunisia
Morocco
Libya
Qatar
SaudiArabia
UAE
GCC
Oman
Kuwait
Bahrain
Philippines
Mongolia
India
Thailand
Korearepublic
Asia
Malaysia
Indonesia
SriLanka
VietNam
China
6. Though everywhere the wage share declined over time,
it collapsed in MENA, especially North Africa
6
7. Despite economic growth, only three Arab countries score more on the
HDI compared to the level of their per capita income
And Human Development Lagged behind
Economic Development Growth
9
23
1
-3 -5
-10 -11
2 0
-5 -6 -8
-15
-21
-14
-19
-27
-34 -36
-50
-57
oPt
Jordan
MiddleEast
Iraq
Syria
Lebanon
Yemen
Tunisia
Libya
Algeria
Egypt
NorthAfrica
Morocco
Sudan
Bahrain
SaudiArabia
UAE
GCC
Qatar
Oman
Kuwait
GNI per capita rank minus HDI rank in the Arab region, 2011
7
9. Citizens in Arab Countries Have Seen Slow
Increases in Incomes and Have Had Low “Voice”
CHN
BLR
AGO
ARM
KAZ
KHM
GEO MNGBTN INDNGA MOZVNM SLETJK MDAETHRWALAO
LTUUKRRUS
TCD ALB BGRTZA TTOMDV SVKPAN CPV ESTLKA BGD ROM LVASTPAFG PER POLTHA
LBN
GHAIDN
UGA
MAR KORARGSRBTMP HKGJOR TWNSUR URYDOMIRN SGPTURBIHZMB MUSBWAKGZ QAT MNEMLITUN ECU NAMBFACOL CZESAM CHLPHLMYS
NPL SVNEGY HRVBRAMKDPAK
COG
ZAFPRY VCTGUY CRIOMN NER HUN
ALG PNGMWIBOL
SWE
ZAR DJI LSOHND DMALBY MRT FINKENSEN
LUX
SYR
AUS
GRCATG LCASLB
AUT
GMB SLV
ISR
GRDVEN DEUSYCSWZ MLTCYP NZLIRQ
NLD
ISLBLZ CHEBRBNIC BEN CANVUT GBRBELGTM MEXBDI TON ESP
KWT
NORFJI USABHRKSA YEM FRAJPNGIN IRLCMR DNKGAB JAM KNAGNB
PRT
COM
UAE MDG ITATGO
BHSKIRHTICAF BRN
You want to be here
High:
Income Growth
Voice and Accountability
-2
-1
0
1
2
3
4
5
6
7
8
9
10
-2 -1.5 -1 -.5 0 .5 1 1.5 2
Voice and Accountability-KKZ Index 2010
But not here
Even here
9
11. In 2010 there were 23m youth more than 1991
Youth unemployment has been and still is the highest in the world
26% in 1991
25% in 2010
Why? Popular explanations include
High fertility
Too many people, especially youth (the “Bulge”)
Bad quality education, training
Employment protection legislation
Attitudes of the youth and adults, culture, religion ….
13. Myth 1: Too many youth?
Ratio of youth-to-adult population
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
1970 75 80 85 90 95 2000 05 10 15 20 25 30 35 40 45 2050
Youth/AdultPopulation(%)
Middle East-GCC North Africa GCC World-MENA
13
ME
NA
GCC
World
14. Myth 2: Too many unemployed youth?
In 1990, there were more than 30% unemployed youth than adults
In 2010 there were 5% more unemployed adults than youth
1990
2010
Ratio of youth-to-adult unemployment
15. Arab youth have the highest unemployment rate
AND SO DO ADULTS
Unemployment
Under-employment (>30 hours involuntarily)
16. Unemployment in MENA is a gender issue (deficient demand?)
Unemployment rates by sex, 2010
16
17. Some good news
(it was always good news but was missed)
Status of Youth 1991 2010 Change
Total in million) 37,227 60,405 23,178
U-rate (U/(E+U)) 26% 25% -4%
In school (S) 17% 32% 88%
Employed (E) 32% 27% -14%
Unemployed (U) 11% 9% -19%
Inactive+NS 41% 32% -20%
TOTAL 100% 100%
(NS-NE)/Total 51% 41% -20%
18. Talking of Education …
Education enrolments rose fast
but what did the youth get out of it?
Or was the quality of education bad because of
the curriculum (and the public sector teachers)?
19. Global Returns to Schooling, 120 countries
(Montenegro and Patrinos, 2013)
0 2 4 6 8 10 12 14 16
Middle East and North Africa
South Asia
Eastern/Central Europe
Aging
Lower middle income
Rich economy
Formalizing
Conflict
Youth buldge
Small island
High Income
World
High income
East Asia/Pacific
Latin America and Caribbean
Low Income
Upper middle income
Resource rich
Urbanizing
Sub-Saharan Africa
Agrarian
20. Global Returns to Schooling by Education Level
3.5
6.9
8.9
16.8
0 5 10 15 20 25
Middle East and North Africa
Eastern/Central Europe
High Income
East Asia/Pacific
World
Latin America and Carobbean
South Asia
Sub-Saharan Africa
Tertiary Secondary
21. Returns to Primary Schooling
4.8
8.3
9.3
9.4
9.6
11.0
13.4
0 2 4 6 8 10 12 14
High Income
Eastern/Central Europe
Latin America and Carobbean
Middle East and North Africa
South Asia
East Asia/Pacific
Sub-Saharan Africa
22. Employment creation in low productivity sectors
Components of labor productivity growth 1999-2008
(World Bank WDR 2013)
22
23. In relation to income,
agriculture remains a significant employer
Annual growth 1995-2005 by country per capita income
23
24. Employment creation was not formal
0
5
10
15
20
25
30
35
2000 2001 2002 2003 2004 2005 2006 2007 2008
Changes in the rates of informal employment
and unemployment Algeria, 2000-2008
Share of informal employment Unemployment rate
24
Family businesses in the region are collectively responsible for over 85
percent of non-oil GDP of the 22 Arab countries.
http://www.zawya.com/story/Private_sector_role_in_creating_200m_jobs_for_Arabs_stressed-ZAWYA20131112052620/
- Nov 12 2013
25. 25
Relying on foreign workers is not confined only to the GCC countries
Jordan: Employment Growth (number) 2000-2009
26. Technology Driven Job Polarization in EU 2000-2010
% changes in labor supply/skills upgrade (ISCED)
and labor demand for skills/tasks (ISCO)
(Maselli, 2012)
-20
-10
0
10
20
30
40
50
Low-Skilled Medium-Skilled Hgh-Skilled
Supply Demand
28. 28
Does it matter that employers in the MENA region “repeatedly and
consistently” state in various surveys that there is a shortage of skills?
(% of Firms Stating Skills Are a Major Constraint)
29. Skills is the least concern of Arab investors
Probability of finding a given constraint to investment
Business, investment and enterprise surveys, MENA 2000s
55
47
45 45
40 40
37
36
31
Tax Rates Cost of Finance Access to
Finance
Macro Instability Tax
Adminstration
Informality Access to Land Corruption Skills
29
30. If there were demand for skills, the firms would
provide training: In MENA they do not
30
31. 31
The educated Arabs leave their countries:
there is no demand for skills in their countries
(High-skilled emigration rates to the OECD and GCC countries, 2000s in per cent
Source: “Labor Migration from North Africa: Development
Impact, Challenges, and Policy Options”, The World Bank, MENA Region, January
18, 2010.
32. And Arab employers do not miss the skilled
% of employers reporting inadequately educated workforce
• Highest skill shortages are reported in
Germany, Switzerland and Austria (more than
12%)
• 14% in the GCC
• 9% in other oil-producing MENA economies
• 5% in Tunisia and Egypt
• 3% in Lebanon
Source: World Economic Forum 2012
32
33. Biggest schooling failure: The education of managers!
% of managers who have not completed secondary education
33
35. Mismeasured in the future
The World Bank (WDR 2013) estimates globally
“600m jobs needed over the next 15 years
to keep current employment rates”
The Arabs are 5% of the world population,
so would 30m or even 60m jobs (2m to 4m jobs/year)
not be enough?
36. Quoted in the WEF 2012 report:
“Addressing the 100 Million Youth Challenge”
• “The Arab world must create up to 80 million new jobs by 2020”
10m/year
• “The Arab world faces the daunting task of creating 80 million jobs over
the next decade to keep pace with population growth”
8m/year
• “About the 100 million jobs needed by 2020”
12.5m/year
• “By 2020, just to keep unemployment rates at present levels 80 million
new jobs will have to be created. To actually bring unemployment rates
down to more sustainable levels, a figure of 100 million new jobs is more
appropriate”
10-12.5m/year
37. 17
157
68
117
38
233
82
130
10
38
6
Children (<15) Youth (15-24) Elderly (65+)Working Age (25-64)
Population in 2010 Labor force increasePopulation in 2030
10% 11% 16%62%
Share in population growth (124m)
10% 71% 19%
Population and Labor Force Growth 2012-2030, 18 Arab Countries
(excl. Comoros, Djibouti, Mauritania, Somalia)
Share in
labor force
Growth
(54m)
New jobs required: 54m
Unemployed in 2013: 13m
Total for 6% U-rate: 60m
38. Low future economic growth,
almost half of what would be required
to absorb new entrants and reduce unemployment
Projected annual GDP growth (%) till 2015
38
39.
40. All in all …
The problem is with the economy and the adults
and the adults control the economy and the youth