Algeria's high youth unemployment mars economic growth

Economists see little prospect of improvement despite a recovery in global oil prices.
Wednesday 12/09/2018
Youths sit near the Martyrs' Memorial in Algiers, Algeria September 10, 2018. Picture taken September 10, 2018. (Reuters)
Youths sit near the Martyrs' Memorial in Algiers, Algeria September 10, 2018. Picture taken September 10, 2018. (Reuters)

ALGIERS - Two years after graduating from university, Ali Lamir, 26, spends his days sitting in a cafe in central Algiers thinking about how to land a job.

He is not alone – more than one in four Algerians under the age of 30 are unemployed in a country which remains heavily reliant on its exports of oil and gas, despite numerous official promises of economic diversification over many years.

And economists see little prospect of improvement despite a recovery in global oil prices, saying the government of veteran President Abdelaziz Bouteflika, 81, will probably spend any increased revenues on imports, not on job-creation initiatives.

“My university degree is of no use. I have been looking for a job for two years but to no avail,” said Lamir, a graduate of the Algiers Institute of Law and Administrative Sciences.

Unlike neighbouring Tunisia or Morocco, Algeria has so far made little headway in attracting foreign tourists, while foreign investors outside the energy sector give it a wide berth, deterred by security concerns and onerous bureaucracy.

A scheme of interest-free loans, introduced two decades ago to encourage young Algerians to start their own businesses, has not borne out early hopes that it could boost the non-energy sector, which today accounts for only 6% of exports.

“I have applied for jobs at many firms but get nothing other than promises. I am willing to accept any position even with a low salary,” said 24-year-old Aziza Bari, a graduate in economics from Algiers University.

Overall unemployment stood at 11.1% in the first quarter of 2018, official data shows, but was 26.4% among the under-30s, who make up more than two thirds of Algeria’s 41 million people.

Not all gloom and doom

Such figures do not make for happy reading for Bouteflika, who has been in power since 1999 and is considering seeking a fifth term next year despite poor health.

“The employment rate… reflects sluggish non-hydrocarbon growth,” the World Bank said in a report. “Unemployment is particularly high among the educated, youth and women.”

It is not all gloom, and the recovery in global oil prices led to a 15% increase in Algeria’s oil and gas revenues in the first seven months of 2018 to $22 billion. Energy exports account for 95% of its foreign earnings.

Algeria has also gradually opened up industries such as food, home appliances and mobile phones to private investors. That helped the non-energy sector to grow by 3.1% in the fourth quarter of 2017, according to the most recent available data, up from 2.5% for the same period in 2016.

But business leaders are demanding bolder steps, including increased investment in education.

“Our country is in need of accelerating the transition movement to an economy of knowledge and innovation,” Aliu Haddad, head of the country’s largest business association Algerian Business Leaders Forum (FCE), told a conference.

Economists, however, remain sceptical about the outlook.

“I do not expect any improvement. It will be difficult to secure jobs,” said economics professor Abderrahmane Aya. “The extra money (generated by improving oil revenues) will be used to finance government debt and imports.”

(Reuters)