LONDON: Arab countries need to do more to create private sector jobs and bolster inclusive growth amid growing youth unemployment and regional dissatisfaction, said Christine Lagarde, managing director of the International Monetary Fund (IMF), said on Tuesday.
Speaking at an IMF conference in Marrakesh, Morocco, she said 27 million young people would join the workforce in Arab countries in the next five years in a region that has the highest rate of youth unemployment in the world at 25 percent.
Although Arab states are progressing with reforms, they must move away from being “state employers” and focus on improving social safety nets, Lagarde said.
During the two-day conference on inclusive growth, Lagarde said the public dissatisfaction that is “bubbling up” in several countries is a reminder that even more ‘urgent action’ is needed.
In Tunisia, violent demonstrations broke out again this month as anger mounts over IMF-backed measures that include subsidy cuts and tax increases.
Chris Doyle, director of the Council for Arab-British Understanding (CABU), told Arab News: “Frustrations across the Arab world are growing.”
Doyle said: “The region must urgently deploy more resources to tackle youth unemployment and these resources must be deployed far more effectively.”
The director said Middle Eastern governments must take action to end its “many conflicts and crises” to unlock the region’s potential.
Doyle urged the region to look at redesigning its education system to ensure it provides the right skills for a twenty first century jobs market.
“The region needs to look at skilling up for the digital economy,” he said. “However, be under no illusion, it’s a massive challenge.”
The Cabu expert said that Egypt represents a particularly pressing challenge due to its central location and large and growing population.
“[Joblessness] will have an immediate impact on the country and it’s not rosy,” he warned.
“We may well witness more protests and discontent. Governments really should be really aware that [protests] represent genuine economic weaknesses and reflect the levels of corruption in the region.”
Wes Schwalje, COO of GCC research firm Tahseen Consulting, agreed that regional education systems are struggling to produce national workforces with the skills that meet “the needs of knowledge-based economic development and the Fourth Industrial Revolution.”
Schwalje told Arab News: ” A youthful, growing labor market can be beneficial to economic development if it is accompanied by job creation. Without job creation, the counterfactual is youth becoming unemployed, discouraged, or entering the informal economy.
“Discontent among youth is particularly significant since there is a strong link between youth bulges experiencing economic hardship and political violence. If the public sector is unable to create sufficient jobs for Arab youth, the only other option is private sector job creation.”
High levels of public sector employment in the Arab World have been criticized as “perpetuating low productivity, lack of economic diversification, and high public sector wage bills, Schwalje said.
The COO added: “Market reforms will need to reorient Arab youth toward private sector jobs… A number of Arab countries are piloting ambitious labor market reforms, such as unemployment benefits, minimum wages, fees on foreign workers, and increased mobility of foreign workers, but their success is far from certain.”