Youth unemployment in the Arab world

MENA's generation jobless

The countries of the Middle East and North Africa are wasting their most important resource:  youth. In a recent survey of 16 to 30-year-olds in eight countries across the region, 43% of respondents said they did not have job and were neither attending school nor university. Many had never had a job. Only one in five was gainfully employed.

Among young women, the share of the unemployed is particularly high. Nowhere in the world is female participation in the labour force as low as in the Middle East and North Africa.

In the past, the state apparatus used to serve as an overflow basin for the annual flood of young people newly entering the labour market. In view of reduced tax revenues and nascent structural reforms, the public sector is increasingly unable to play that role. 

Furthermore, educational curricula mostly do not meet the requirements of the economy, especially those of private-sector industries. So it is unsurprising that recruiting companies pay more attention to work experience than to formal qualifications.

Few chances of long-term employment

To give young people any chance of a job at all, governmental labour-market programmes have been arranging internships in companies. This has been done in Tunisia, for instance, where the internships generally last twelve months. Apart from going to work, the participants attend training courses. State-funded wage supplements top up their income.

The government's aim is to offer a mixture of financial incentives and sanctions in order to motivate employers to provide long-term jobs for young people. Yet the programmes have had little impact on youth unemployment. Employers readily accept the state-subsidised trainees, but do not necessarily create more jobs.

Rampant unemployment among academics in the Arab world: "among young women, the share of the unemployed is particularly high. Nowhere in the world is female participation in the labour force as low as in the Middle East and North Africa," writes Nassir Djafari

Who gets an internship is another critical issue. Preference is given to young unemployed academics and graduates of higher education institutions, while the majority of young people with fewer academic qualifications are ignored.

One positive aspect, however, is that the programme targets young women and men equally. Similar programmes are also in operation in other countries of the Middle East and North Africa. Regardless of the conceptual shortcomings, the main problem is that these measures’ impact is limited from the outset – the companies concerned do not grow fast enough to be able to offer interns a prospect of long-term employment.

Start-up assistance and support for small businesses

Initiatives that help jobless young people become self-employed or start up micro‑businesses are arguably more effective than government-sponsored internships. A number of governments in the MENA region have adopted programmes to promote this cause. Participants receive free training and advice to prepare them for business and are eligible for grants that facilitate transitional funding.

There are also a number of international support programmes offering micro, small and medium enterprises (MSMEs) access to loans. Such initiatives take account of the fact that around 80% of people in gainful employment work for MSMEs or their own small business. 

Lack of finance is a major obstacle to growth for many small businesses.  Shortage of qualified labour and managerial skills is another. This bottleneck affects start-ups that receive special state support in many MENA countries.

Sales, business development and business leadership skills are particularly weak, so MSME support programmes that combine better access to credit with training opportunities generally promise to deliver the best results.

SMEs need to use the Internet more

One reason small and mid-sized enterprises are not tapping their full potential is that they hardly use the Internet. In Egypt, for example, a mere seven percent of MSMEs are online. Companies with stronger digital networks could increase exports and expand employment.