MENA’s youth bulge is a regional security challenge

Youth unemployment in MENA is among the highest in the world.
Sunday 04/02/2018
A young roller skater performs his freestyle skills on the Mediterranean waterfront promenade in Beirut.              (AP)
Demographic dividend. A young roller skater performs his freestyle skills on the Mediterranean waterfront promenade in Beirut. (AP)

Many developing countries, especially in the Middle East, are experiencing a “youth bulge,” described as a population increasingly made up of young, new entrants to the labour market. The World Bank says nearly two-thirds of the people in the Middle East and North Africa (MENA) region are under the age of 30.

The youth bulge represents a critical challenge to economic development in affected countries, including Egypt, Saudi Arabia, other Gulf countries and Algeria. The long-term economic prosperity that underpins national security and political stability hinges on providing this growing segment of society with job opportunities as well as education, affordable housing and health care.

The youth bulge challenge has been described as promising a double dividend — in the growing pool of human capital to be harnessed productively — or double jeopardy — in which socially excluded youth fosters social strife and political instability.

For MENA, as long as the undercurrents of radicalisation remain, the challenges posed by burgeoning youth populations are especially acute. Elevating youth development will prove as crucial to national security as defence readiness and international ties.

However, youth unemployment in MENA is among the highest in the world with almost one-in-three young people unemployed. This is especially alarming since many MENA countries have experienced their best economic performance over the last two decades but youth prospects have not broadly improved.

The International Monetary Fund said job growth in key MENA labour markets, such as Egypt, Saudi Arabia and Algeria, will struggle to keep up with youth population growth.

The challenge of youth development is difficult to overstate. The Gulf Cooperation Council (GCC) region, for example, has seen its population double in the last 20 years and is expected to triple in the next 50 years. These demographic trends have led to exponential rates of urbanisation: 85% of the GCC population is urbanised.

Population explosions in MENA reflect prosperity but also point to challenges, exasperated by the realities of a post-oil age, as people flock to urban areas in search of employment and better living standards. Such high urbanisation trends mean infrastructure becomes outdated more quickly, crime often rises, housing becomes more expensive, slums emerge and public health risks grow — trends evident for many years across MENA.

MENA countries — in particular, oil-producing ones — are reorienting approaches to job creation and youth employment. MENA countries often provide nationals with secure public sector careers and salaries as much as 70% higher than the private sector. However, as a report from the Abu Dhabi-based Centre for Economic Growth recently stated, GCC budgets will not be able to sustain huge public sector workforces even for the next ten years.

The focus is shifting to addressing youths’ needs to be properly prepared for highly competitive and internationalised labour markets. A combination of poorly prepared entrants into the labour market and not enough private sector jobs has meant that young people in MENA can face unemployment rates nearly twice the world average with waiting time for a first job sometimes lasting years.

As far as the private sector remains underdeveloped and largely dependent on public sector spending, achieving the economic growth and job creation target will be impossible. Oil-producing countries spend billions annually in aid and financial assistance to non-oil producing nations around MENA so the effects of the post-oil economy will be regional.

Small and medium-sized enterprise (SME) development, encouraging entrepreneurship and research and development (R&D) will be key areas to foster innovation and enable the private sector to become dynamic and self-sufficient.

However, R&D spending in Saudi Arabia is less than 1% — the Organisation for Economic Co-operation and Development average is 2.4% — yet Riyadh’s expenditures in this key sector are among the highest in MENA.

Saudi Vision 2030, Egypt Vision 2030 and other strategic economic plans in the region need to make sure that economic competitiveness and innovation are genuinely unlocked for its growing and increasingly young populations.