Identifying opportunities to fill the youth unemployment gap
11 June, 2019
Authors: Omar El-Sharawy & Shivangi Jain
Demographic and social change have driven both prosperity and instability across much of the Middle East1. Rapid population growth has contributed to growth in economic activity and opportunities in the region, but has also strained public resources, sometimes slowed growth in GDP per capita, and increased unemployment rates2.
One concern that has arisen out of this dynamism is the rise in youth unemployment. Across the MENA region, there is a large amount of untapped talent and potential, but employment opportunities remain scarce for young workers. Global youth unemployment rates have risen steadily between 1991 and 2018 from 9.3% to 12.8%3. Over this same time period, the Middle East youth unemployment rates have consistently been double that of the global average and stood at 26.1% in 2018 (see Chart 1).
Chart 1: Youth unemployment rates in MENA and globally (%)
With the number of youth entering the labour force in the region outpacing the number of jobs created for the youth by 2.2 million over the past five years, the need for a bold and creative solutions remains. Reducing youth unemployment rates to match the global average could increase GDP in MENA countries by up to 8.6% annually according to PwC analysis, with more significant impacts in countries with higher existing unemployment rates and/or high labour productivity4 (see Chart 2). Not only does this provide direct economic benefits, it increases future economic gains5 as the younger population becomes able to consume and contribute to domestic economies.
Chart 2: Estimated gains to GDP from decreasing youth unemployment rates to global average
Many countries in the region have recognized that the private sector - rather than the public sector - must be where the jobs of the future are created. This has pushed youth unemployment to be an area of focus in several of the national agendas and visions in the region, including KSA Vision 20306, Jordan 20257 and Oman Plan 20408.
To achieve the goals laid out in these ambitious visions, work is needed to prepare and equip youth to enter and thrive in the workforce, either with future employers or as entrepreneurs. In this blog, we explore two broad policies which have been effective in stimulating employment growth for younger segments of the population across the globe and which could be applied in the MENA region.
1. Education reform
First, opportunities exist to continue to develop and modernize educational systems in the region. Education allows potential to evolve into capability. In the words of Ferid Belhaj9, World Bank Vice President for the Middle East and North Africa, “What is now a source of frustration for the millions of unemployed graduates could become a launch pad for innovations that transform the region’s economies.”
Educational reform has become a national priority for most governments in the MENA region. Successfully transforming education will reinforce efforts to improve the basic skills and knowledge of the next generation of the workforce. Egypt10 is implementing a new educational system, utilising modern technology and emphasising the importance of independent research and entrepreneurship. Saudi Arabia has also launched several educational reforms under the National Transformation Program (NTP). These efforts seek to transform the country’s educational institutions in an effort to produce graduates who can meet the demands of the job market.
As part of modernizing programmes, the region could also integrate professional qualifications within selected curricula, developed in partnership with professional associations. This is the direction of travel of Higher Colleges of Technology (HCTs) in the UAE which are implementing a ‘Hybrid Education Model’, awarding students with professional certificates in addition to their academic degrees11. . Not only does this aid universities in bridging the skills gap and making graduates more attractive to prospective employers, it serves as a unique initiative to the region.
Through these transformational reforms, academic institutions must also remain committed to offering life-long learning opportunities which are recognized and transferable on a global scale. Future institutions must be malleable and adaptive enough to still remain accessible to various segments of the population, more notably, women. As gender equality remains both a powerful regional and global aspiration, educational institutions need to develop and reinforce their Continuing Professional Development (CPD) capabilities. Such initiatives can influence decisions to enter the workforce from a young age12.
Additional reform opportunities can also be leveraged. As a recent PwC report highlights13, AI is expected to contribute $320 billion USD to Middle East GDP by 2030. Educational reforms that incorporate AI and emerging tech training provides an opportunity to realize these economic gains as well as to adequately prepare a future-ready workforce. Educational systems in the MENA region could be forward-looking by incorporating global best practices and the latest scientific and technological advances to address the gap between the current skills of the workforce and the expected capabilities of the future.
2. Apprenticeship and internship programs
While educational reform provides opportunities for the youth to improve their employability through acquiring technical knowledge, employers also seek candidates with prior experience to ensure new hires have both soft and professional skills. This creates a barrier to entry for youth in the job market and exacerbates youth unemployment.
It is estimated that the youth NEET rate (the percentage of people between 15 and 24 years old who are Not in Education, Employment or Training) in 2017 in Arab States was 27% for females and 10% for males14 compared to the OECD average of 15.6% for females and 10.9% for males15. High NEET rates have implications at an individual level16, with consequences for physical and mental health and future earning potential, which can translate into wider social and economic challenges.
Establishing apprenticeship and internship programs can help reduce NEET rates by allowing youth to gain vital work experience and skills to transition from higher education/unemployment to workforce internship opportunities. Such initiatives are developing throughout the GCC, and are particularly apparent in the UAE with organisations such as Emirates group, SkyDive Dubai, and Jumeirah Hotels having launched internship programs.
Looking forward
Efforts undertaken by the public and private sectors across the region demonstrate a commitment to lowering youth unemployment. What’s new this time around, however, is the youth bulge creates additional pressure to move aggressively to implement these efforts faster and at a much larger scale. By focusing on establishing platforms to upskill youth and creating programs that foster private sector training opportunities, MENA countries hope to create workers capable of succeeding in the ever-changing global economy. If successful, countries could see large decreases in youth unemployment, substantial gains in GDP, and more productive workers.
(1) PwC Middle East, “Middle East Megatrends.”
(2) Population Action International, Economics and Population Change, October 1997
(3) International Labour Organization, ILOSTAT database, “Unemployment, youth total (% of total labor force ages 15-24) (modeled ILO estimate)”. Data retrieved in April 2019 by The World Bank
(4) Authors’ calculations using latest available data from the International Labour Organisation and World Bank
(5) Deepali Pal, “The Life-Cycle Theory of Consumption (With Diagram).”
(6) KSA Vision 2030, Thriving Economy Rewarding Opportunities
(7) Jordan Vision 2025, A National Vision & Strategy
(8) Oman Vision 2040, National Priorities
(9) World Bank, “A New Education Approach is Needed to Prepare MENA Youth to Shape the Future”, 13 November 2018.
(10) Amr Emam, “Egypt’s new education system to focus on technology, research”. The Arab Weekly, 24 June 2018.
(11) Higher Colleges of Technology, Available at: http://www.hct.ac.ae/en/about/
(12) PwC and Dubai Women Establishment, “The power of choice”.
(13) PwC Middle East, “The potential impact of AI in the Middle East”.
(14) International Labour Organization, “Where do the world's NEETs live?”. Accessed on 2 May, 2019.
(15) OECD, “Youth not in employment, education or training (NEET)”. Access on 2 May, 2019.
(16) Scottish Government, Consequences, risk factors, and geography of young people not in education, employment or training (NEET), 2015
