The Middle East and North Africa (MENA) has a large reservoir of untapped human resources, with the world’s highest unemployment rate among youth and the lowest participation of females in the labor force. Desirable jobs, defined as high-paying or formal jobs, are few, and private employment is overwhelmingly of low added value.
If you think that you’ve read this sentence before, it’s probably because you have. It opens a 2013 World Bank report on jobs in MENA. Since then, much has happened, in the region and the world. In the wake of the Arab Spring, countries such as Iraq, Libya, Syria and Yemen have been plagued by conflict and fragility. Lebanon first flourished and then plunged into one of the deepest recessions in recent history. Notwithstanding fiscal and current account imbalances, countries such as Jordan and Egypt have grown steadily; Morocco has led the pack in integrating in global value chains. GCC countries embarked on a diversification journey; a new devastating conflict erupted in 2023 reshaping geopolitical equilibria in the Levant and beyond. Globally, oil prices took large dips (2015) and soared to unexpected highs (2022); automation changed who does what in the world of work, and the emergence of big tech redesigned the private sector landscape. A pandemic swept the world. Generative AI is now capable of discovering new molecules. And yet those 2013 summary diagnostics for MENA are still valid now: youth unemployment is 25 percent, is still the highest in the world and, at 16 percent, female labor force participation remains the lowest in the world.
As the President of the World Bank Group Ajay Banga has highlighted, job creation is the most effective way to defeat poverty. Jobs are key to unlocking the potential: they empower women and give hope to younger generations. This is particularly true for MENA. With 54 percent of its people below the age of 30, MENA could reap a demographic dividend if it were to secure peace and take important structural reforms head on.
The stakes are high, but so are the opportunities. One statistic to put this into perspective: in MENA by 2050 (about 25 years away from today) nearly 300 million young people will be looking for a job. Where will those jobs come from? Globally, the private sector is the main engine of job creation. But what will it take for the private sector to grow and generate high productivity jobs in MENA?
Take education and labor force participation. With 60 percent of the population now with at least a lower secondary education degree, the region has experienced a 40 percent increase in the average years of schooling in the past 20 years, the fastest improvement in the world. How will curricula need to evolve to empower young people with the appropriate skills to sustain a dynamic private sector and to foster innovation?
However, while schooling has improved, employment has stagnated, primarily because of low female labor force participation. In a country like Egypt, equalizing the employment rate between male and female can deliver in the long run a GDP per capita that is 50 percent higher. What changes – including in availability and affordability of child and elderly care, in rights protection, in regulatory barriers – can materialize those gains?
Another challenge is widespread informality. In Egypt, for instance, informal employment accounted for 69 percent of total employment in 2018. In countries like Morocco and Jordan, it is about 59 percent and 77 percent, respectively. The picture is even more grim when these are benchmarked against private sector employment. About 86 percent of all private sector employment is informal in Egypt; Morocco and Jordan are not far with 84 percent and 75 percent. In such conditions, which regulations, continuing education frameworks, and pension systems design can support dynamic labor markets while protecting workers from risk?
Then, there are emerging vulnerabilities. As the climate change crisis looms large, and oil prices are on a downward trend, what policies will effectively support diversification away from hydrocarbons towards job-rich growth in oil-rich countries?
Against the backdrop of large spatial inequalities and limited internal mobility, how can cities provide the necessary ecosystems to sustain robust growth in manufacturing and services, which are particularly job-rich?
Overall, with resource-rich and resource-poor countries, countries that are net sources of migration and countries with small native populations that instead need immigration, increasing fragility and devastating humanitarian crises unfolding side by side to some of the richest societies in the world, MENA is exceptionally diverse. Clearly, no one-size-fits-all solution will magically create the jobs needed to sustain growth and make it an inclusive process.
But the very reasons that make it difficult to find the silver bullet for a jobs agenda in MENA are the ones that make this region a unique laboratory for new ideas. With this commentary, we intend to open a platform for discussion to crowd in solutions from different sectors and vantage points on what it takes to create jobs in MENA. You are invited. RSVP.
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