Region’s Crucial Battle against Unemployment

Region’s Crucial Battle against Unemployment

  • 15 February 2012

The story of unemployment in the Middle East has been a mixed bag of hits and misses in recent years. With stunted economic recovery in the Western world and political turmoil in the region, the focus is now increasingly on the ‘disturbingly high’ levels of youth unemployment. The situation looks grim if one considers the rather pessimistic prospects of global job market in 2012 and the urgent need to create 600 million new jobs in the next decade. Fortunately, Gulf countries have done better than most and continue to promote the participation and competitiveness of national workforce in the labor market.

Nevertheless, the deteriorating global economic crisis has left an inevitable impact on the situation in the region. The International Labour Organisation (ILO) Global Employment Trends Report of 2012 says the region’s incrementally positive employment trend during the first half of the decade stagnated in 2008, with the onset of the crisis. In 2011, the unemployment rate is estimated at 10.2 percent, an increase of 0.3 percentage points in comparison with 2010, says the report. As a result, together with North Africa, the Middle East today is only one of two regions in which the aggregate unemployment rate is estimated to exceed 10 percent.

This has happened in spite of the rapid economic growth witnessed across most parts of the region. Unfortunately, the prospects of getting out of this cycle are also limited, at least in the near future, as the outlook has been worsening against these labor market challenges. ILO’s baseline projection shows no change in the global unemployment rate between now and 2016, remaining at 6 percent of the global labor force.

The situation on the youth unemployment front is even more disturbing. In 2011, 74.8 million youth aged 15–24 were unemployed, an increase of more than 4 million since 2007. The ILO report puts global youth unemployment rate at 12.7 percent, a full percentage point higher than the pre-crisis level. Globally, young people are nearly three times as likely as adults to be unemployed and an estimated 6.4 million young people have given up hope of finding a job and have dropped out of the labor markets altogether. The story is repeating itself in the Middle East region where youth continue to bear the brunt of the unemployment problem.

However, it is not a case of doom and gloom from all quarters, especially when it comes to the Gulf region. More importantly there is evidence to suggest that intense efforts are being made to address the situation. International Monetary Fund (IMF) report – Gulf Cooperation Council Countries: Enhancing Economic Outcomes in an Uncertain Global Economy – says the issue of how to create more jobs is high on the minds of policymakers everywhere and the economies of the GCC countries are no exception.

“While unemployment rates differ across countries, even those with very low levels of unemployment – such as Kuwait, Qatar and the UAE – are focusing on how to create more opportunities for nationals in the private sector,” says the report. According to IMF, the GCC has created about 7 million new jobs over the past 10 years which is a significant achievement for a region with a total population of about 40 million.

Policy prescriptions to tide over this situation have been divergent considering the unequal nature of the problem. There may be 1.1 billion people unemployed or living in poverty across the globe this year but half of the jobs lost in recent times have been in the advanced economies. This could be a matter of relief as well as cause of anxiety for the region. Despite the difference in scale of the crises faced by each country, what is needed now is consensus that allows for additional public spending in support of both domestic and the global economies.

Region’s policy-makers have to guard against global spillover effects from large economies to avoid further deterioration in global economic conditions. On the specific challenge of job-creation, steps need to be taken to target the real economy to support job growth. The ILO has expressed concern that despite large stimulus packages, these measures have not worked to roll back the increase of 27 million unemployed from the initial impact of the crisis. Clearly, policy measures have not been well targeted and need some reassessment to make them effective enough.

Countries in the region are doing their best to tackle the challenge of promoting employment of nationals without imposing undue costs of doing business that would erode competitiveness. Saudi Arabia, for instance, is already implementing new initiatives to provide added impetus to private sector activity and job creation. Other countries in the Gulf region are also undertaking similar initiatives.

Over the years the UAE has taken a slew of measures to stay ahead of the curve in this domain. With bodies such as Khalifa Fund for Emiratisation Empowerment and the National Human Resource Development & Employment Authority (Tanmia) at the forefront, the country has managed to successfully tackle the challenge. Through one such initiative, the emirate of Abu Dhabi alone is expected to create more than 600,000 new jobs over the next decade. At the annual Tawdheef Recruitment Show, which was inaugurated recently by Shaikh Nahyan bin Mubarak Al Nahyan, the UAE Minister of Higher Education and Scientific Research, approximately 2,000 vacant positions were offered for Emiratis in more than 100 public and private organizations.

Labor Minister Mr. Saqr Ghobash Saeed Ghobash recently launched a Labour Market Data System (LMDS), which aims to support formulation of suitable policies to improve the efficiency of the labor market and take decisions to facilitate recruitment of Emiratis and contractual expatriate workforce. “The incorporation of this system comes in line with the UAE government vision 2021, which underscores boosting the participation of the national workforce, developing its capabilities and enhancing the competence, flexibility and productivity in the labor market by adopting policies made on the basis of thoughtful information, statistics and evidence, which will also contribute to the enactment of suitable legislation,” Mr. Ghobash said on the occasion.

This launch also saw the signing of MoUs with the Federal Council for Demographic Structure, the National Centre for Statistics, Tanmia, the Abu Dhabi Employment Council (Tawteen), the Abu Dhabi Statistics Centre and the Pension Fund of Abu Dhabi. Such initiatives clearly suggest that there is a multi-pronged strategy in place in the UAE to make employment creation the focus of development and emiratization of jobs as the path of empowerment.