The Arab youth in the labor market: Mismeasured, misunderstood and mistreated
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Transcript of The Arab youth in the labor market: Mismeasured, misunderstood and mistreated
The Arab Youth in the Labor Market: Mismeasured, Misunderstood and Mistreated
Zafiris TzannatosSILATECH
ERF 20th Annual Conference onSocial Justice and Economic Development
March 22-24, 2014Cairo, Egypt
Regional Aggregates
• How to define the Arab Region?– Iran accounts for 46% of the population in the “Middle East” (excluding the GCC)– Egypt accounts for 41% of North Africa (or is it in the Middle East?)– Nationals in Saudi Arabia account for 78% of the nationals in the GCC countries
• Weighted or unweighted averages? There is a difference between– The average Arab– The average Arab country
• Does it matter if 55% of the population is under the age of 25 years?– Do children matter for labor market outcomes? – And what does low labor force participation rates for the youth mean, if the
youth are in schools?
3
Context
1980s : THE LOST DECADE– Continuing “Arab socialism”, “Paternalism”, Patriarchy” amidst low oil
prices, fiscal stress, very low GDP growth and very high unemployment– Old social contract reached its limits
1990s-2000s: ARAB “RENAISSANCE” – Pro-market reforms adopted, GDP growth resumed, inflation was tamed,
employment increased, unemployment decreased– Underlying philosophy: “Economic reforms first, political later”
2010/11: ARAB SPRING – Good economics but bad politics? – Or bad economics, too?
4
Following the reforms of the 1990s, economic growth accelerated (though it remained low compared to other regions
and therefore per capita incomes increased only slowly )
GDP average annual rate of growth (%), 2000-2010
8.8
6.9
5.6 5.4 5.3 5.1 5.1 5.0 4.9 4.6
3.4
“The Renaissance”
Irrespective of other criticisms of the economic reforms (esp. whether they created competitive markets or crony capitalism)Economic growth was NOT jobless
Employment-output elasticity, 2000-2010
Yem
en
Syria
Mid
dle
East
Jord
an
Leba
non
Alge
ria
Egyp
t
Nort
h Af
rica
Tuni
sia
Mor
occo
Libya
Qat
ar
Saud
i Ara
bia
UAE
GCC
Om
an
Kuw
ait
Bahr
ain
Phili
ppin
es
Mon
golia
Indi
a
Thai
land
Kore
a re
publ
ic
Asia
Mal
aysia
Indo
nesia
Sri L
anka
Viet
Nam
Chin
a
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
0.760.70
0.66
0.32
6
Though everywhere the wage share declined over time, it collapsed in MENA, especially North Africa
7
Despite economic growth, only three Arab countries score more on the HDI compared to the level of their per capita income
And Human Development Lagged behind Economic Development Growth
oPt
Jordan
Middle Ea
st Iraq
Syria
Leban
on
Yemen
TunisiaLib
ya
Algeria
Egyp
t
North Afric
a
MoroccoSu
dan
Bahrai
n
Saudi A
rabia
UAEGCC
QatarOman
Kuwait
9
23
1
-3 -5 -10 -11
2 0
-5 -6 -8-15
-21-14 -19
-27-34 -36
-50-57
GNI per capita rank minus HDI rank in the Arab region, 2011
Initial protests were suppressed but kept coming back with added force
9
Citizens in Arab Countries Have Seen Slow Increases in Incomes and Have Had Low “Voice”
CHN
BLRAGO
ARMKAZ
KHMGEO MNGBTN INDNGA MOZVNM SLETJK MDAETHRWALAO
LTUUKRRUSTCD ALB BGRTZA TTOMDV SVKPAN CPV ESTLKA BGD ROM LVASTPAFG PER POLTHA
LBNGHAIDN
UGAMAR KORARGSRBTMP HKGJOR TWNSUR URYDOMIRN SGPTURBIHZMB MUSBWAKGZ QAT MNEMLITUN ECU NAMBFACOL CZESAM CHLPHLMYS
NPL SVNEGY HRVBRAMKDPAKCOG
ZAFPRY VCTGUY CRIOMN NER HUNALG PNGMWIBOLSWE
ZAR DJI LSOHND DMALBY MRT FINKENSENLUX
SYRAUS
GRCATG LCASLBAUT
GMB SLVISR
GRDVEN DEUSYCSWZ MLTCYP NZLIRQNLDISLBLZ CHEBRBNIC BEN CANVUT GBRBELGTM MEXBDI TON ESP
KWTNORFJI USABHRKSA YEM FRAJPNGIN IRLCMR DNKGAB JAM KNAGNB
PRTCOM
UAE MDG ITATGO BHSKIRHTICAF BRN
You want to be here
High:
Income Growth
Voice and Accountability
-2
-1
0
1
2
3
4
5
6
7
8
9
10
GD
P p
er
capita a
nnual G
row
th (
%)
2000-2
011
-2 -1.5 -1 -.5 0 .5 1 1.5 2Voice and Accountability-KKZ Index 2010
But not here
Even here
On youth issues
In 2010 there were 23m youth more than 1991
Youth unemployment has been and still is the highest in the world 26% in 199125% in 2010
Why? Popular explanations include High fertility
Too many people, especially youth (the “Bulge”)Bad quality education, training
Employment protection legislation Attitudes of the youth and adults, culture, religion ….
1950-1955
1955-1960
1960-1965
1965-1970
1970-1975
1975-1980
1980-1985
1985-1990
1990-1995
1995-2000
2000-2005
2005-2010
2010-2015
2015-2020
2020-2025
2025-2030
2030-2035
2035-2040
2040-2045
2045-20501.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
30
35
40
45
50
55
60
65
70
75
80Fertility rate: -1.3% per year Life expectancy: +0.6 per yearChildren per women Life Expectancy
How did “they” miss this? When was the youth “bulge”?Fertility Rates and Life Expectancy, Arab Region: 1950-2050
(excluding Comoros, Djibouti, Mauritania and Somalia)
Source: United Nations Population Division; World Population Prospects: The 2012 Revision
13
Myth 1: Too many youth?Ratio of youth-to-adult population
1970 75 80 85 90 95 2000 05 10 15 20 25 30 35 40 45 20500
5
10
15
20
25
30
35
40
45
50
55
60
65
70
Middle East-GCC North Africa GCC World-MENA
Yout
h/Ad
ult P
opul
ation
(%)
ME
NA
GCC
World
Myth 2: Too many unemployed youth?
In 1990, there were more than 30% unemployed youth than adultsIn 2010 there were 5% more unemployed adults than youth
1990
2010
Ratio of youth-to-adult unemployment
Arab youth have the highest unemployment rateAND SO DO ADULTS
Unemployment
Under-employment (>30 hours involuntarily)
16
Unemployment in MENA is a gender issue (deficient demand?)
Unemployment rates by sex, 2010
Some good news(it was always good news but was missed)
Status of Youth 1991 2010 ChangeTotal in million) 37,227 60,405 23,178 U-rate (U/(E+U)) 26% 25% -4%
In school (S) 17% 32% 88%Employed (E) 32% 27% -14%Unemployed (U) 11% 9% -19%Inactive+NS 41% 32% -20%TOTAL 100% 100%(NS-NE)/Total 51% 41% -20%
Talking of Education …
Education enrolments rose fast but what did the youth get out of it?
Or was the quality of education bad because of the curriculum (and the public sector teachers)?
Global Returns to Schooling, 120 countries(Montenegro and Patrinos, 2013)
Middle East and North Africa
South Asia
Eastern/Central Europe
Aging
Lower middle income
Rich economy
Formalizing
Conflict
Youth buldge
Small island
High Income
World
High income
East Asia/Pacific
Latin America and Caribbean
Low Income
Upper middle income
Resource rich
Urbanizing
Sub-Saharan Africa
Agrarian
0 2 4 6 8 10 12 14 16
Global Returns to Schooling by Education Level
Middle East and North Africa
Eastern/Central Europe
High Income
East Asia/Pacific
World
Latin America and Carobbean
South Asia
Sub-Saharan Africa
0 5 10 15 20 25
3.5
6.9
8.9
16.8
Tertiary Secondary
Returns to Primary Schooling
High Income
Eastern/Central Europe
Latin America and Carobbean
Middle East and North Africa
South Asia
East Asia/Pacific
Sub-Saharan Africa
0 2 4 6 8 10 12 14
4.8
8.3
9.3
9.4
9.6
11.0
13.4
22
Employment creation in low productivity sectorsComponents of labor productivity growth 1999-2008
(World Bank WDR 2013)
23
In relation to income, agriculture remains a significant employer
Annual growth 1995-2005 by country per capita income
24
Employment creation was not formal
2000 2001 2002 2003 2004 2005 2006 2007 20080
5
10
15
20
25
30
35
Changes in the rates of informal employment and unemployment Algeria, 2000-2008
Share of informal employmentUnemployment rate
Family businesses in the region are collectively responsible for over 85 percent of non-oil GDP of the 22 Arab countries.
http://www.zawya.com/story/Private_sector_role_in_creating_200m_jobs_for_Arabs_stressed-ZAWYA20131112052620/ - Nov 12 2013
25
Relying on foreign workers is not confined only to the GCC countries
Jordan: Employment Growth (number) 2000-2009
Technology Driven Job Polarization in EU 2000-2010% changes in labor supply/skills upgrade (ISCED)
and labor demand for skills/tasks (ISCO)(Maselli, 2012)
Low-Skilled Medium-Skilled Hgh-Skilled
-20
-10
0
10
20
30
40
50
Supply Demand
“Lack of Competition” Driven Job Polarization in MENA?
Low-Skilled Medium-Skilled Hgh-Skilled
-20
-10
0
10
20
30
40
50
Supply Demand
28
Does it matter that employers in the MENA region “repeatedly and consistently” state in various surveys that there is a shortage of skills?
(% of Firms Stating Skills Are a Major Constraint)
29
Skills is the least concern of Arab investors Probability of finding a given constraint to investment
Business, investment and enterprise surveys, MENA 2000s
Tax R
ates
Cost of F
inance
Access
to Finan
ce
Macro In
stabilit
y
Tax A
dminstrati
on
Informali
ty
Access
to Land
Corruption
Skills
55
4745 45
40 40
37 36
31
30
If there were demand for skills, the firms would provide training: In MENA they do not
31
The educated Arabs leave their countries:there is no demand for skills in their countries
(High-skilled emigration rates to the OECD and GCC countries, 2000s in per cent
Source: “Labor Migration from North Africa: Development Impact, Challenges, and Policy Options”, The World Bank, MENA Region, January 18, 2010.
32
And Arab employers do not miss the skilled% of employers reporting inadequately educated workforce
• Highest skill shortages are reported in Germany, Switzerland and Austria (more than 12%)
• 14% in the GCC• 9% in other oil-producing MENA economies• 5% in Tunisia and Egypt• 3% in Lebanon
Source: World Economic Forum 2012
33
Biggest schooling failure: The education of managers!% of managers who have not completed secondary education
34
Prospects
Mismeasured in the future
The World Bank (WDR 2013) estimates globally “600m jobs needed over the next 15 years
to keep current employment rates”
The Arabs are 5% of the world population, so would 30m or even 60m jobs (2m to 4m jobs/year)
not be enough?
Quoted in the WEF 2012 report: “Addressing the 100 Million Youth Challenge”
• “The Arab world must create up to 80 million new jobs by 2020” 10m/year
• “The Arab world faces the daunting task of creating 80 million jobs over the next decade to keep pace with population growth” 8m/year
• “About the 100 million jobs needed by 2020” 12.5m/year
• “By 2020, just to keep unemployment rates at present levels 80 million new jobs will have to be created. To actually bring unemployment rates down to more sustainable levels, a figure of 100 million new jobs is more appropriate” 10-12.5m/year
17
157
68
117
38
233
82
130
10
38
6
Children (<15) Youth (15-24) Elderly (65+)Working Age (25-64)
Population in 2010 Labor force increasePopulation in 2030
10% 11% 16%62%
Share in population growth (124m)
10% 71% 19%
Population and Labor Force Growth 2012-2030, 18 Arab Countries(excl. Comoros, Djibouti, Mauritania, Somalia)
Share in labor force
Growth(54m)
New jobs required: 54mUnemployed in 2013: 13m
Total for 6% U-rate: 60m
38
Low future economic growth, almost half of what would be required
to absorb new entrants and reduce unemployment Projected annual GDP growth (%) till 2015
All in all …
The problem is with the economy and the adults
and the adults control the economy and the youth
Thank you