Eighteen million jobs will need to be created in the region’s resource-poor countries to stave off a ‘lost generation’ the International Monetary Fund (IMF) has said.
The warning, made during the IMF’s regional economic outlook in Dubai on Sunday, comes as unemployment figures in Egypt, Lebanon, Syria, Morocco, Jordan and Tunisia show an average of about 12 percent over the last 20 years.
“If you look at unemployment in the region, it’s been high for a long time,” said Masood Ahmed, director of the IMF’s Middle East and Central Asia department.
“We see this is the key issue facing policy makers in the region. If you look behind it, there’s a set of problems, including skills mismatches, the education system, labour market rigidities, growth of the public sector and the fact that the public sector sets wages which make it harder for the private sector to offer competitive jobs.”
If governments fail to take action, the result will be a “lost generation, disconnected from the labour market, with a progressive loss of skills and motivation,” the IMF said.
Ahmed added that the inability of the region’s oil-importing economies to solve unemployment was translating into a GDP growth per capita gap with other countries, and dwindling export rates.
The report revealed that public sector employment shares are especially high in some countries when agricultural employment is taken out of the equation. In Jordan, that share is now up to 42 percent, while it has soared to 70 percent in Egypt.
Ahmed also said that to absorb currently unemployed and new entrants into the labour market across the next decade throughout the MENA plus Pakistan region, annual GDP growth would need to reach 6.5 percent.
“This lackluster performance in GDP growth per capita and exports growth is translating into a lack of jobs,” Ahmed said.
“Behind this is competitiveness. Why are they not able to compete? If you compare competitiveness rankings for the countries in this region with indicators for elsewhere…the bottom line is that for most of the dimensions that go into competitiveness at the foreign level, countries in this region are not doing all that well.”