High public sector pay no cure for Mideast unemployment: IMF
High public sector pay no cure for Mideast unemployment: IMF/node/1227296/business-economy
High public sector pay no cure for Mideast unemployment: IMF
Jobseekers at a job fair in Riyadh in January 2012. Saudi Arabia’s Vision 2030 reform plan looks to drive ‘healthier employment opportunities for citizens.’ (Reuters)
High public sector pay no cure for Mideast unemployment: IMF
Updated 16 January 2018
Richard Wachman
LONDON: High wages in state-supported sectors in the Middle East, offering jobs aplenty to work-hungry citizens fail to tackle growing unemployment as population levels rise, and do not provide better public services, according to an IMF paper.
Public sector employment is being maintained as a result of high levels of public employment, unusually large compensation, or sometimes both, said the paper entitled “Public Wage Bills in the Middle East and Central Asia.”
The International Monetary Fund said labor markets become distorted in countries where public sector compensation “grossly” exceeds that in the private sector. Nor does it spur job creation, crucial in countries where significant numbers of young people are seeking employment, the IMF said.
A better solution to mitigate unemployment and population growth would be to foster “diversified private-sector-led growth.”
That path is already being followed in Saudi Arabia via its Vision 2030 reform plan, which stated: “We will improve the business environment, so that our economy grows and flourishes, driving healthier employment opportunities for citizens and long-term prosperity for all. This promise is built on cooperation and on mutual responsibility.”
The IMF pointed out that the capacity of Middle Eastern public sectors to absorb a growing labor force is increasingly limited, making private investment and job creation the only sustainable and inclusive way of addressing persistent unemployment and low employment that are big challenges in the region.
In an interview with Arab News, Jason Tuvey, GCC economist with Capital Economics, said the IMF has been calling for years for governments in the Gulf to get a grip on their public sector wage bills.
He said Saudi Arabia, for instance, needed to close the wage gap between Saudi nationals, who tend to dominate the public sector, and migrant workers who fill positions in low-wage, low productivity private sectors.
Saudi nationals need to move into higher-productivity parts of the private sector, “which in turn needs bolstering in order to diversify the economy away from oil dependency,” said Tuvey.
Saudi Arabia is already prioritizing private sector investment, flagged in Vision 2030, and, according to a recent budget statement, KSA’s non-oil revenues are rising as diversification away from oil gathers pace.
Tuvey said: “The IMF has talked about implementing wage subsidies for Saudi nationals, to encourage private sector firms to employ them. While there would be a cost to that, it would be much less than being forced to employ these workers in the public sector.”
KSA needs to push through reforms in education to provide young Saudis with a skills set to move into higher-productivity private segments of the economy, said Tuvey. The Kingdom has already committed to this via its education modernization programs, also outlined in Vision 2030.
Last year, Capital Economics said in a paper that privatizations should reduce the Saudi government’s dominant role in the economy. And a new bankruptcy law, as well as plans to make it easier to acquire permits, would address some of the issues that hinder the conduct of business in KSA.
Speaking about the region generally, including countries in Central Asia, the IMF paper said the “disproportionate” size of national, public sectors, as well as large public wage bills have failed to improve the availability and quality of public services that are vital for addressing “economic development challenges.”
It added: “Unemployment insurance can better address the risk of unemployment while supporting well-functioning labor markets.
“Social safety nets can be developed to reduce poverty and social exclusion, as well as mitigate the cost of wage bill reforms,” said the IMF.
Fresh funding flows in even as broader market data points to a slowdown
Updated 20 December 2025
Nour El-Shaeri
RIYADH: Startup funding activity across the Middle East and North Africa delivered a mixed picture over the past week, with fresh capital flowing into gaming, fintech, deep tech, and travel, even as broader market data pointed to a slowdown in overall investment momentum.
Saudi Arabia’s Impact46 led a $1 million investment round in Hypemasters, an international game development studio focused on competitive strategy experiences for mobile. The round included participation from GEM Capital.
Hypemasters develops strategy titles designed for competitive depth and precise game mechanics and has attracted more than 7 million players globally.
The studio is currently advancing several new projects, including a title in soft launch, as it looks to expand its reach in markets with sustained demand for strategy games.
“Strategy is one of the most demanding categories in game development, and Hypemasters approaches it with uncommon discipline. Their work shows a clear understanding of what committed players expect from this genre, and we believe their upcoming titles can serve a global audience with genuine depth,” said Basmah Al-Sinaidi, managing partner at Impact46.
“We are pleased to support a team that builds with intention and long-term ambition,” she added.
Boris Kalmykov, CEO and co-founder of Hypemasters, said: “We’re focused on deepening our presence across the region and pushing forward with the next generation of strategy games, including a major new title already in soft launch. Partnering with Impact46 marks an important step for Hypemasters.”
The CEO added that Impact46 shares his company’s long-term vision for building “world-class strategy games” from the MENA region, and the support reinforces his firm’s commitment to expanding its portfolio with high-quality releases.
The investment reflects Impact46’s continued interest in game development and interactive entertainment and aligns with its broader strategy of backing studios building globally oriented titles.
Premialab raises $220m
UAE-headquartered Premialab, a provider of data, analytics, and risk management solutions for quantitative investing, has raised $220 million in a growth investment led by KKR, with participation from existing investor Balderton.
Founded in Hong Kong in 2016 by Adrien Geliot and Pierre Trecourt, Premialab operates a global platform serving the $800 billion quantitative investment strategies market.
Counterfeits don’t just impact economies; they erase identity, creativity and truth. Along with our investors, we’re building a movement to make the world’s stories verifiable again.
Walid Tarabih, founder and CEO of Relik
The company provides benchmarking, performance analysis, and risk analytics tools for institutional investors.
The funding will be used to support global expansion, strengthen core operational systems, and scale Premialab’s execution product, which was developed in partnership with Eurex, to broaden access to quantitative investment strategies.
“Quantitative investment strategies have grown rapidly in scale and importance, yet the market has lacked a truly independent standard for data, analytics and risk. Premialab was built to fill that gap,” said Adrien Geliot, CEO of Premialab.
Relik closes seed round
UAE-based Relik has closed a seed funding round with participation from KBW Ventures, Naatt Holding, Fort Holding, and Ayman Sejiny.
Founded in 2023 by Walid Tarabih and later joined by John Tsioris, Relik is an artificial intelligence-powered authentication platform designed to help collectors, brands, and marketplaces.
The company plans to use the funding to roll out additional products and expand across sectors including sports, luxury, and heritage markets.
“We are ensuring authenticity in a fakeable world,” said Walid Tarabih, founder and CEO of Relik, adding: “Counterfeits don’t just impact economies; they erase identity, creativity and truth. Along with our investors, we’re building a movement to make the world’s stories verifiable again.”
Prince Khaled bin Alwaleed bin Talal Al-Saud, founder and CEO of KBW Ventures, said: “Relik is creating a new global standard for truth and trust. At a time when counterfeiting and AI-generated content are rising, Relik’s mission to protect authenticity carries both cultural and commercial value.”
Nawah raises $23m
Egypt-based deep tech startup Nawah Scientific has raised $23 million in a series A round comprising a mix of equity and debt, marking a decade since the company’s founding.
The round was led by Life Ventures Holding, with participation from Den Ventures, Empire M, AfricInvest, Elsewedy, as well as banks and angel investors.
Founded in 2015 by Omar Saqr, Nawah operates a cloud laboratory model that enables remote access to advanced testing services. (Supplied)
Founded in 2015 by Omar Saqr, Nawah operates a cloud laboratory model that enables remote access to advanced testing services. Its operations span four business units covering life sciences, food and agriculture, pharmaceuticals, and certified reference materials.
The company plans to use the funding to build a global research and development center in Rwanda, double laboratory capacity in Egypt and Saudi Arabia, and expand into North Africa and Europe.
Algeria’s VOLZ raises $5m
Algeria-based travel tech startup VOLZ has raised $5 million in a series A funding round led by a consortium of private investors under Tell Group, with participation from Groupe GIBA.
Founded in 2023 by Mohamed Abdelhadi and Hacene Seghier, VOLZ enables travelers to book flights in Algerian dinars using online payments or cash on delivery, while comparing multiple airlines through a single platform.
Announced at the African Startup Conference in December, the transaction is Algeria’s largest startup funding round in local currency and marks the first exit of the Algerian Startup Fund.
The capital will be used to launch new consumer and corporate travel products, strengthen VOLZ’s position in Algeria, and support expansion across North and West Africa.
MENA startup funding slows in November
Investment activity across the MENA startup ecosystem slowed sharply in November 2025, with 35 startups raising a combined $227.8 million, according to Wamda’s monthly report.
This marked a steep decline from the $784.9 million recorded in the previous month and a 12 percent drop compared to November 2024, pointing to a period of consolidation as investors moderated deployment toward the end of the year.
More than half of the capital raised during the month was driven by a single debt-backed transaction by erad, which propelled Saudi Arabia to the top of the regional rankings. Across 14 deals, the Kingdom attracted $176.3 million, accounting for more than three-quarters of all capital deployed in November.
Despite funding activity spanning 35 startups, capital was concentrated in just 5 markets. After Saudi Arabia’s dominant lead, the UAE followed with $49 million across 14 transactions.
Egypt recorded $1.12 million across 4 deals, while Morocco raised $1.1 million through 2 transactions. Oman saw 1 deal with an undisclosed value, with limited activity reported outside these markets.
Fintech emerged as the most funded sector in November, raising $142.9 million across 9 deals, largely influenced by the same debt-driven transaction.
E-commerce followed with $24.5 million across 6 rounds, while property tech, which topped the charts in October, slipped to 3rd with $18.9 million raised by 3 startups.
Debt financing dominated the month, accounting for more than $125 million through a single transaction.
The remaining capital was largely channelled into early-stage startups, with no later-stage funding rounds recorded in November, underscoring continued investor caution.
From a business model perspective, B2B startups captured the majority of capital, with 20 companies raising $197.1 million.
B2C startups lagged, with 9 companies raising a combined $22.2 million, while the remainder was split across hybrid models.
The gender funding gap showed no signs of narrowing, with male-led startups absorbing 97 percent of the capital raised during the month. Female-led and mixed-gender founding teams accounted for the remaining share.
