Transcript Unemployment averages over 15% in the region…

Regional Challenges to Winning Peace
The Employment Challenge in the Middle East
and North Africa
Mustapha K. Nabli
Chief Economist
Middle East and North Africa Region
The World Bank
The Marshall Legacy: The Role of the Transatlantic
Community in Building Peace and Security
November 12, 2003
The fundamental development challenge
facing MENA today: Creating jobs for its
people
1
Two-thirds of the MENA population are
under the age of 30
And this increasingly educated youth in MENA,
with higher expectations than the generation
before, are facing growing disappointment in
the job market
2
Algeria
2000
2001
30
West Bank and Gaza
2002
25
Morocco
2001
2001
Iran
20
Tunisia
2000
Jordan
2002
Qatar
2001
1999
Yemen
Bahrain
2001
Unemployment rate (%)
35
Syria
1996
2000
Egypt
Oman
1997
Lebanon
10
1999
15
Saudi Arabia
2003
Kuwait
0
1999
5
UAE
Unemployment
averages over
15%ininMENA
the region…
Current Unemployment
Rates
(percent)
3
Unemployment particularly affects the young…
Youth unemployment rate (%)
Syria 1998
Algeria 1992
Egypt 2000
Bahrain 2000
Jordan 2001
Yemen 1999
UAE 2000
Qatar 1997
West Bank and Gaza 2000
Morocco 2000
0
20
40
60
Sources: ILO 2003b; except for Syria, Algeria & Qata,: ILO 2002; Jordan, AREUS 2001.
80
4
and first-time job seekers…
First-time job seekers as a proportion of total unemployed (%)
100
90
80
70
60
50
40
30
20
10
0
Egypt 2000
Jordan 2001
Morocco 2001
Yemen 1999
UAE 2000
Kuw ait 1995
Sources: ILO 2003a; except for Kuw ait, Population Census 2001; for Jordan, AREUS 2001.
5
MENA has the greatest problem with educated
unemployed…
Probability of being unemployed (%)
6
Women are increasingly entering the labor force…
Female labor supply in MENA
60
50
40
6.0
Participation rate (end of decade,
left axis)
Gender parity labor force index
(end of decade, left axis)
Average annual labor force
grow th (right axis)
5.0
4.0
30
3.0
20
2.0
10
1.0
0
0.0
1950s
1960s
Sources: ILO 1996; UN 2002.
1970s
1980s
1990s
2000s
2010s
7
But finding fewer opportunities
Unemployment rates by gender
40
Female
Male
35
30
25
20
15
10
5
0
Algeria West Jordan Morocco Tunisia
2000 Bank and 2000
1999
1997
Gaza
2001
Bahrain
2001
Qatar
2002
Yemen
1999
Iran
2000
Syria
2001
Egypt
2000
Lebanon Saudi
1997 Arabia
1999
UAE
1999
Kuw ait
2003
8
Worker productivity: Insufficient for Real Wage Growth
Average Annual Growth in Output per
Worker, 1990s (percent)
Average annual growth in output per worker, 1990s
3
2
1
0
Tunisia
-1
Egypt
Iran
Morocco Jordan
Syria
Algeria
Saudi
Arabia
Kuw ait
MENA
-2
-3
-4
9
And…
Labor market pressures are increasing
rapidly
10
The labor force is growing rapidly in MENA
Labor force grow th in developing regions, 1970-2010 (percent)
Average yearly labor force growth over decade (%)
4.0
3.5
1970-1980
1990-2000
1980-1990
2000-2010
3.0
2.5
2.0
1.5
1.0
0.5
0.0
South Asia
East Asia
Note: East Asia excludes China
Latin America
and the
Carribean
MENA
Sub-Saharan
Africa
11
The number of new jobs needed is
unprecedented…
80 million jobs in next 2 decades to keep pace with new
labor force entrants
20 million more to absorb current unemployed
100 million jobs =
Total number of jobs created over last 50 years
Double the number of jobs that exist today
12
Old modes of employment creation in
MENA fast dwindling
Public sector employment:
Has depended upon
• Oil
• Aid
• Labor Remittances
…and all financial resources declining
Labor migration
Diminished opportunities to GCC and
Europe
13
Per
oil exports,
1980-2000
Percapita
Capita
Oil Exports,
1980–2000
GCC and MENA
10000
MENA (right axis)
GCC (left axis)
Non-GCC (right axis)
300
250
8000
200
6000
150
4000
100
2000
50
0
Non-GCC
12000
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
14
Aid to GDP ratio in the MENA region, 1980-2000
1980
1985
1990
1995
2000
15
Worker remittances as % of GDP: Egypt and
Morocco, 1970-2000
16
Egypt
14
Morocco
10
8
6
4
2
20
00
19
97
19
94
19
91
19
88
19
85
19
82
19
79
19
76
19
73
0
19
70
Percent
12
16
New Engines of Growth fundamental
for creating jobs and preventing rapid
deterioration of labor market conditions…
17
MENA will require three fundamental
transitions
1) Public-sector dominated to private-sector led
economies
2) From closed to more open economies
3) From oil-dominated and volatile economies
to more diversified and stable economies
18
The private sector in MENA
remains underdeveloped
Private Sector Contribution to GDP in MENA (percent)
2000
2000
1990
2001
50
1990
1995
1997
2000
60
1983
1985
1999
2002
1999
1999
1990
70
1985
1993
80
1997
2002
1995
90
2000
100
40
1980
30
20
10
0
Lebanon
Egypt
Morocco
Jordan
Iran
Palestine
Syria
Tunisia
Yemen
UAE
Algeria
Saudi
Arabia
19
50
16.0
45
14.0
40
35
12.0
30
10.0
25
8.0
20
6.0
15
World
MNA
1995
1990
1985
1980
0
1975
0.0
1970
5
1965
2.0
1960
10
1955
4.0
MENA Exprots to GDP Ratio
18.0
1950
World Exports to GDP Ratio
Exports as a source of growth has been declining
in MENA…while increasing everywhere else
20
Exports outside of oil have been limited…
Trade Potential of Non Oil Exports, 2000
F i g u re 1 . 1 5 T ra d e P o te n ti a l o f n o n -o i l e x p o rts, 2 0 0 0
$US Million
250
M illio n U S D ollar s
200 2 0 0
1501 5 0
1001 0 0
50 5 0
0
0
M E NA 10
MENA 10
E CA 5
Europe and
Central Asia 5
E A S IA 3
East Asia 3
LA C4
Latin America
Caribbean 4
21
Oil has dominated development…
affecting growth but not producing jobs
Figure 1.2 Real oil prices and growth, 1976–99
Real oil prices (left) and GDP growth (right)
14
40.0
12
10
30.0
8
6
20.0
4
GDP Growth (percent)
16
2
10.0
0
Real oil Price
GDP grow th
1996
1991
1986
-2
1981
0.0
1976
Real oil price (dollars per barrel)
50.0
22
Essential for the transformation:
Improvement in Governance throughout region
1) Weaknesses in Inclusiveness
2) Weaknesses in Accountability
Each transition implies deep changes in role
of government
Governance challenge cannot be worked on separately
and at its own pace…It is complementary and
reinforcing to reform efforts
23
How do MENA countries stack up with regard to
MENA stacks upPublic
poorlyAccountability?
with regard to public accountability
Rest of World
MENA-NON-OIL
MENA-OIL
1
4
3
2
3
2
1
2
3
4
Lowest Deciles on
IPA
5
6
7
8
9
10
Highest Deciles on
IPA
24
are MENA
Countries
withadministration
regard to Quality
AndWhere
with regard
to quality
of public
of the Administration?
Rest of World
MENA-NON-OIL
MENA-OIL
3
1
1
2
2
2
1
2
1
1
2
3
4
5
6
7
8
9
Lowest Deciles on
IQA
10
Highest Deciles on
IQA
25
Transitioning to new sources of growth and
employment primarily internal: MENA policy
But the ability to succeed in implementing these
broad and deep reforms is contingent upon
achieving regional security…
26
Continuing insecurity…
• Diverts resources to military and security
• Degrades the investment climate
• Sustains economic and political structures not
conducive to reform or growth
27