x Abu Dhabi, UAEWednesday 17 January 2018

Davos focus on jobs for youth

DAVOS DISPATCH: Masood Ahmed, director of the Middle East and Central Asia Department of the International Monetary Fund said economic growth in in Tunisia, Egypt and other troubled oil importers must increase rapidly to create jobs for disaffected youths in those countries.

DAVOS // Economic growth in Tunisia, Egypt and other troubled oil importers must increase rapidly to create jobs for disaffected young people, says the regional director of the IMF.

Public spending power is being squeezed by rapid population growth and below average emerging market GDP expansion, said Masood Ahmed, the director of the Middle East and central Asia department of the fund.

"Our bottom-line message is that faster growth will be key and it has to be done in a way that creates jobs and protects those most vulnerable," Mr Ahmed said on the sidelines of the World Economic Forum's (WEF) annual meeting in the Swiss ski resort yesterday.

The depth of the jobless problem has been thrown into the spotlight in recent weeks as dissatisfaction with Tunisia's government spreads. Protests over unemployment and other issues led to the overthrow this month of Zine al Abidine ben Ali, the president of Tunisia. The unrest has even spread into neighbouring Egypt, where demonstrators staged angry protests this week.

The north African situation will be an important discussion topic for delegates at the forum. A session entitled "Tunisia - Tipping Point or Tsunami" was recently added to the agenda.

Unemployment has been highlighted as the main challenge for many oil importers in the coming years. The IMF estimates more than 18 million jobs need to be created across six oil-importing countries in the Mena region - Egypt, Jordan, Lebanon, Morocco, Syria and Tunisia.

Finding sufficient jobs for young nationals remains a significant obstacle for the Gulf region, too. Unemployment in the UAE has reached about 13 per cent.

The financial cushion afforded by the Gulf's oil revenues meant the jobless issue was not so pressing in the region, said Mr Ahmed.

"The issue is about providing the right skills set for young people to take jobs in the private sector," he said.

Professor Nouriel Roubini, a New York University economist, said recent higher oil revenues in the Gulf needed to be used to invest in oil-importing countries to help stimulate jobs expansion.

"Those in the Middle East enjoying an oil windfall need to use it in a productive way," he said. "There's a huge amount of capital that can go from rich Gulf countries like Saudi Arabia to other parts of the Middle East that can be a source of growth."

At more than 20 per cent, youth unemployment among oil importers is among the highest in the world.

GDP growth in the vicinity of 12 per cent over the past decade has been insufficient to arrest joblessness. Lower expansion caused by the global financial crisis exacerbated the situation.

It was still too early to assess what the direct impact of the Tunisian troubles would be on the country's economy this year, said Mr Ahmed.

A large part of Tunisia's economy is propped up by foreign investment and the flow of tourists from nearby Europe. Both sectors are expected to be hit by the political uncertainty and ongoing sovereign debt concerns in the euro zone, he said. As a result, Tunisia needs to diversify its trade and investment links with faster-growing emerging markets as happens in the wider region and Asia, Mr Ahmed said.

"It's clear that governments have limited resources, so they have to be focused on infrastructure developments key to getting growth going, and targeted subsidies and social protection for the poor and most vulnerable."

Mr Ahmed said young people needed to be trained to better equip them with the skills for the private sector. The country has no shortage of well-educated young people, but a lack of suitable opportunities makes finding work difficult, he said.