With oil reserves decreasing in the Arabian Gulf, a major challenge will be to move towards a wealth created by the private sector.
Arabian Gulf needs 51 million jobs by 2020
DUBAI // At least 51 million jobs are needed by 2020 to avoid a rise in unemployment among Arabian Gulf nationals, experts have warned.
With regional oil reserves decreasing, a major challenge will be to move towards wealth creation by the private sector.
“We can see, based on projections by the International Monetary Fund, that between now and 2017, there are structural changes happening in the world,” said Dr Hatem Al Shanfari, a professor in economics and finance at Sultan Qaboos University and a member of the board of governors at the Central Bank of Oman.
“The landscape that is shaping up in the future with regards to these natural commodities is changing, so we are no longer likely to see the Arabian Gulf at the forefront of the proven oil reserves, but other regions like the US, North and South America are likely to take more permanent roles in that,” he said at a Nato conference in Dubai last week.
Regional unemployment is about 11 per cent but youth unemployment is up to 25 per cent, Dr Al Shanfari said.
“That is high compared to the world average of just below 15 per cent. This means job creation is at the top of the list, but the right type of jobs are needed,” he said.
More than 50 per cent of Arab youth are younger than 24 and those between the ages of 15 and 29 constitute a third of the total population.
The IMF expects six million new jobs to be created by 2015, but more than two-thirds of them will go to expatriates. This means an estimated three million unemployed nationals in the GCC.
The IMF also estimates that, for the past decade in the Arabian Gulf, about seven million jobs have been created, 70 per cent of which went to expatriates.
“There’s a mismatch between the economic growth and the jobs created for nationals,” Dr Al Shanfari said. “It’s going to be very challenging because there has to be a structural change in the economy and, as GCC countries are spending more money on their infrastructure, the nature of that investment will bring more expatriates because that’s the required workforce.
“So we have to shift towards more protective means and high value-added services and manufacturing, and that’s where the nationals can benefit.
“Most countries are struggling to move away from oil but rapid economic growth cannot be sustained unless they create jobs.”
The situation is worse for Arabian Gulf countries with fewer natural resources, he said.
“Oman’s and Bahrain’s expenditure is still concentrated on infrastructure projects and that’s not going to help the public or local population create the right jobs that will meet their aspirations,” Dr Al Shanfari said.
“There is a real challenge that we cannot be complacent about, relying on commodities that have done extremely well for us in the past.
“We have to be wiser in terms of diversity, we have to be able to compete internationally and move from this inherited wealth towards a created wealth that the private sector can drive.”
According to the BP Statistical Review of World Energy issued in June, Middle East oil reserves could last for 78 years while in South and Central America that number extends beyond 100 years.
“In the next 10 to 15 years, the US will be self-sufficient in terms of oil so they will move away from the oil market,” said Dr Firuz Demir Yasamis, the director of diplomacy at the American University in the Emirates.
“Although a third of the oil consumed in the world was produced in the Arabian peninsula, nobody can be sure about the reserves so there should be more jobs created for Gulf nationals because, one day, oil will run out.”