x Abu Dhabi, UAEFriday 28 July 2017

Private sector reforms can cure Arab joblessness

The next challenge for Arab countries is economic: how to create the conditions for job growth?

When Tunisians and Egyptians flooded the streets of their capitals earlier this year, the explanations behind the protests were nearly as numerous as the people. Corruption and fossilised regimes were part of the equation. But the principal factor for the unrest, many said, was persistent and crippling unemployment.

"Jobs, jobs, jobs," Dominique Strauss-Kahn, the former IMF director, said about the Arab revolutions in April. "If you have a recovery in terms of macroeconomic figures that doesn't translate in any way to jobs … the people don't feel any change in their situation."

As new governments look to move beyond uprisings and address their people's long-standing grievances, one question needs an immediate answer: where will the jobs come from?

The Middle East and North Africa is home to one of the world's highest rates of unemployment, at 11.5 per cent, according to the Institute of International Finance. For young people between 15 and 24 years of age, the statistic rises to 25 per cent. This problem is only expected to get worse: as The National reported yesterday, the region will need 75 million new jobs in the next decade.

Solutions do exist. But where regional governments have fallen short in the past was in finding the political will to implement them.

When in doubt, Arab leaders have turned to public coffers and state industries to put their people to work. In most Arab countries, the public sector is inordinately large. But in practical and economic terms, the most sustainable solution is robust private sector growth.

Government cannot create sustainable private-sector jobs, but it can create the conditions for job growth. Regional governments must end restrictive labour regulations, open new lines of credit and build transparency into markets to spur investment. Corruption has to be reined in.

And we know that in the long term, educational reform is key to economic competitiveness, as was re-emphasised yesterday at the World Economic Forum in Amman.

Arab leaders in Egypt, Tunisia and Libya face great challenges as they work to rebuild their economies. As Fouad Alaeddin of PricewaterhouseCoopers said, expectations are very high for governments to "create opportunities for the workforce".

Images of protesters demanding jobs show how hard it will be to balance expectation with opportunity. Governments cannot offer a cure-all, but they can clear some of the old impediments.