DEAD SEA, JORDAN // Slowing economic growth and escalating unemployment after the 'Arab Spring' uprisings is deepening the challenge of creating millions of jobs for the region's youths.
Creating employment and stimulating growth is taxing some of the top business and government leaders from the Arab world and beyond at the World Economic Forum's regional meeting at the Dead Sea resort in Jordan.
The annual gathering is the first in the Arab world since the outbreak late last year of protests, fuelled in part by anger at a lack of jobs.
While the familiar topics of jobs and economic reform are on the agenda again this year, the unrest in the region this year is also focusing minds.
"Over the last 12 months, people have been busy fighting and on the streets, so over the last 12 months the labour force has been crippled," said Fouad Alaeddin, the Middle East managing partner of PricewaterhouseCoopers. "But at the same time, expectations of the people are very high for the government to improve productivity and growth and create opportunities for the workforce coming into the labour market."
Unemployment is 11.5 per cent in the Arab world, according to the Institute of International Finance (IIF). Joblessness is even more pressing among the young, with as many as 25.2 per cent of youths out of work, says the IIF. Youth unemployment in the region is the highest in the world, more than twice as high as in South Asia, according to estimates from the International Labour Organization (ILO). The task is likely to intensify in the coming years as an increasing number of young people enter the job market. Over the next 10 years, the region has to create about 75 million additional jobs, a rate of job generation 40 per cent greater than the current rate, the World Economic Forum estimates.
Creating jobs has been made tougher since unrest broke out in the region. Frustration at a lack of work was a factor in protest movements in Bahrain, Egypt, Libya, Syria and Tunisia. But the instability that has followed the unrest has stifled economic growth and scared off foreign investment.
"I expect unemployment to rise this year and next," said George Abed, the senior counsellor and director for Africa and the Middle East at the IIF. "I can't see how jobs will be created in Egypt and Tunisia, as the employment situation is getting more difficult during the transition."
Greater uncertainty accompanying the political transitions in Egypt and Tunisia has prompted the IIF to lower its economic performance forecasts for next year. Both economies would enter recession this year, the IIF said. Egypt's GDP would grow by only 2 per cent next year, down from the 4.2 per cent forecast in May, the IIF said in a report last week. It lowered its forecast for Tunisia's GDP next year to 4.2 per cent, from 5.2 per cent previously. Such growth is not high enough to create the number of jobs required, the IIF said.
Even before unrest began in the region, unemployment was rising. It rose by 0.2 per cent between 2008 and last year, the ILO said in a report this month.
Unlike the unemployment in the US and Europe since the global financial crisis, weakness in the labour markets of the Middle East and North Africa is structural. Over the past two decades, about one in four youths of working age have been out of work.
"You have the dominant role of the state, and you don't have the dynamic private sector that have created jobs in Asia and elsewhere," said Mr Abed.
But some in the region remain optimistic.
"Yes, it's a very tough job, and yes, we have to set up the right channels, and there's lots of work to be done, but at the same time let's not forget the region is an emerging market, and emerging markets always present opportunities," said Habib Haddad, the chief executive of Wamda, an arm of the private-equity firm Abraaj Capital that invests in start-ups.