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The Problem of The Arab World’s Jobless Youth

Last week, I contributed to an Al Jazeera discussion on Egypt’s chronic youth unemployment problem and the rise of political movements among young Egyptians. The debate quickly moved to the impact of the Black Bloc group, the anti-establishment movement that stormed Egypt’s political scene on the second anniversary of the January 25 revolution, but the discussion barely touched on why these young people are out on the streets. Unemployment levels fuelled the revolution two years ago, and they fuel it today.

Two years on, the government must address the fact that young people are still left out of the job market.

Unemployment in the MENA region is the highest in the world, and in Egypt it has remained stubbornly high for decades, fluctuating between 8% and 10% since the 1990s. After the revolution, the number of people without work only increased, and the jobless rate is now more than 12% as companies scaled back resources, investments dried up and wages remained stagnant.

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The unemployment rate is even more devastating at the college-level. Of the total Egyptian population registered as unemployed, a shocking 77% are between the ages of 15 and 29. Eight out of 10 graduates can’t find a job and if they do, young people often don’t have the right skills to secure it.

Why? A combination of low quality education and lack of jobs.

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But here is the interesting part: Unusually, youth unemployment is not necessarily associated with poverty or education levels.  In fact, according to research from the International Monetary Fund, unemployment tends to increase with schooling, exceeding 15% for those with tertiary education in Egypt, Jordan and Tunisia.

As Mohammed Hassan, a former advisor to the former Central Bank governor, Farouk El Okdah, wrote in this labour market analysis:

The bulk of the young and better educated unemployed can afford a long job search with family support, but the poor simply cannot afford to be out of work for long and many take refuge in the low-pay informal market [which accounts for roughly one-third of total GDP].

There is of course an important caveat to this discovery; most unemployment figures do not take into account the informal market where the youth have found jobs outside the system.

However, what is clear from this data is that the struggle to find a job is not just a problem affecting the poor, but is typical for middle and upper class youth.

And it’s not just an issue of finding any job.  The research indicates that young Egyptians are finding it difficult to even get onto the job ladder.  That speaks volumes about years of failure on the part of the Egyptian government.  That is, a poor and underfunded education system coupled with a bloated public sector that can’t employ any more people, but sucks up state funding that could be invested in a much more dynamic private sector.  

The legacy Gamal Abdel Nasser left behind created a highly inefficient and costly public sector. The Egyptian government is the biggest employer, with 6 million employees, but only a minority make a valuable contribution to the country.

Meanwhile fiscal priorities have made it more challenging for the private sector to grow, leading to a restricted number of new jobs and limited opportunities to increase income.

As Magda Kandil, an economic advisor to the IMF, and former director at the Egyptian Center For Economic Studies wrote in an August 2012 brief:

Ironically, reforms designed to accelerate growth have also torn the fabric of the middle class. Young college-educated Egyptians can no longer be sure of getting civil service jobs in an era of privatisation and greater budget discipline, and are alienated by the need for family connections (or technical skills not adequately taught in universities) to get white-collar work in private enterprises.

To fix this problem in the long-term means dramatically scaling back the public sector to completely reform public finances by cutting spending on subsidies and public employment.  These two elements contribute to more than 50% of government spending.

This would free up cash for the private sector, where jobs tend to be created, and for improvements in the education sector. But this is no short-term project, and the youth won’t feel the impact of these changes for years to come.

For now, the government should embrace the entrepreneurial spirit of Egypt’s youth – some of whom have already set up their own successful businesses, including a Shisha delivery service, an online pharmacy and several media and production organisations.

Why not invest money in training for young people to prepare them better for the right jobs?

There are signs that this is already in progress (the International Labour Organisation is working on a similar project for young Egyptians), but until the state recognises helping young people is a key prerequisite for political stability and some kind of end to the anger fuelling protests today, no real progress can be made.




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