Ideas to reduce MENA youth unemployment in short supply

Friday 05/02/2016
Wall graffiti in Kasserine, Tunisia, reads “where is employment?”

Washington - The recent protests in Tu­nisia by young people over the lack of jobs rat­tled a country that many observers hailed as the only success that emerged from the “Arab spring”.
These same observers argue that high youth unemployment was one of the chief factors that led to the 2011 uprisings in Tunisia and other Arab countries.
Indeed, many analysts had flagged youth unemployment as a serious problem before 2011. In Addressing The 100 Million Youth Challenge, a seminal study pub­lished by the World Economic Forum, Navtej Dhillon and Tarik Yousef pointed out that youth unemployment of about 30% in many Arab countries was delaying the process, particularly for young males, to obtain a job, marry and have a home of their own.
Many young people hoped that the “Arab spring” would lead to a fairer system by ending cor­ruption and crony capitalism but these hopes have been dashed. If anything, the jobless rate among youth is even higher today.
In the early years of many Arab revolutionary-republican regimes, like that of Egypt, youth unem­ployment was dealt with by guar­anteeing every university graduate a job in the civil service. Although such jobs did not pay very well and often mismatched one’s degree with a position, they at least gave a young person a certain status, job security, health benefits and a pen­sion.
This was often referred to as the “social contract”: In return for such jobs and benefits, the young intelligentsia was to support the regime. Many young people in that era (the 1950s and 1960s) were ea­ger to be part of the government to help society progress.
Over time, however, this system became untenable. The civil ser­vice expanded to such a degree that it became a bloated institution and a drain on state resources. As a result, governments eventually stretched out the hiring process to such an extent that many gradu­ates simply gave up waiting. In Egypt, the wait time for a civil ser­vice job for a graduate was nearly ten years by the 1990s.
But what is the alternative for young people? With the govern­ment no longer a viable employer, many youths have looked to the private sector. However, because of the legacy of state socialism in many Arab states, private sectors often are not very strong or well-developed and successful private sector companies, as well as sub­sidiaries of foreign companies, tend to hire those who have gradu­ated from universities abroad.
This situation led to a two-tier system that is self-perpetuating: Children of the elite tend to get the better jobs because their parents can afford the tuition at foreign universities and have connections to the business elite; those from middle- and lower-middle-class families who obtain degrees from state universities are often left with no meaningful job prospects.
Some enlightened business lead­ers in the Arab world have recog­nised this problem and are trying to change the curriculum at state universities to gear education to the needs of the private sector and make graduates more marketable. This is a commendable endeavour but it will take years to achieve, in large part because many state uni­versities in the Arab world are slow to change.
Outside players such as the US Agency for International Develop­ment (USAID) and the World Bank have also recognised the severity of the problem and are trying to help, but with mixed results. Un­der the rubric of Investing for Re­silience and Prosperity, USAID has been concentrating on job-training skills and promoting entrepre­neurship by providing start-up capital, training and mentorships in the MENA region.
The World Bank, in a 2015 re­port, called for a “new social con­tract” for the MENA region that emphasises private-sector jobs and quality services, “where the state facilitates competition in do­mestic markets and organises ser­vices delivery so that citizens can hold providers accountable.” Like USAID, the World Bank is trying to promote small enterprises.
Although such efforts will likely make some progress in reducing the youth unemployment prob­lem, not everyone is suited to be an entrepreneur nor are governments willing or able to level the play­ing field to allow for a true market economy because crony capitalism is prevalent.
On top of these problems are poor macroeconomic trends, namely the drop in the price of oil — which hurts not only oil-produc­ing countries but poorer countries that receive financial assistance from the oil states — and the de­cline in tourism because of terror­ist incidents in the region.
Until economic growth picks up, the private sector expands and state universities reform, youth unemployment will remain a seri­ous and potentially explosive situ­ation. It behoves all parties inter­ested in the stability and progress of the Arab world to develop and fund more creative ideas to tackle the problem.