Youth Employment in Arab Resource-Endowed Economies

Regional Agenda A New Vision for Arab Employment Youth Employment in Arab Resource-Endowed Economies Project Update First Quarter, 2014 Contents 3 Introduction 4 Dynamics and Vulnerabilities of the Current Employment System 9 Insights from the Session at the World Economic Forum Annual Meeting 2014 9 Next Steps 10 Annex: Acknowledgements © World Economic Forum 2014 - All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum. REF 200614 2 A New Vision for Arab Employment Introduction In light of the long-term economic aspirations of the Arab world as well as the current social context, addressing the employment challenge is at the top of policy and business agendas. Generating economic opportunities for the youth is a particularly high-stake issue, with Middle East and North Africa recording the world’s highest youth unemployment rate at 27%. There is a clear need to develop action-oriented partnerships that will deliver job opportunities in the quantity and quality and at the pace necessary to address the urgency of the challenge. This requires an extraordinary increase in collaboration, innovation and commitment. Initiated by the World Economic Forum and its Middle East and North Africa Business Council in May Hala Hanna 2013, the New Vision for Arab Employment initiative provides a neutral platform to facilitate these Senior Programme Manager and Global partnerships. It brings together government, business and civil society leaders at the highest level to Leadership Fellow, share knowledge and best practices, as well as advance common action for creating employment in Middle East and North the Arab world. Africa The initiative recognizes the diversity of the Arab region, and aims to address the challenge in all Arab countries. The first project of the initiative,Youth Employment in Arab Resource-Endowed Economies, which started in August 2013, seeks to advance institutional reforms that will sustainably increase productive youth employment in resource-endowed Arab economies. Developed in collaboration with key stakeholders, using the World Economic Forum’s Strategic Foresight approach, the project generates new insights on the root causes of youth unemployment and provides a framework for better-informed decision-making and more effective policy reforms. The goal of this approach is to encourage implementation on a structural level. Between August and December 2013, the Youth Employment in Arab Resource-Endowed Natalie Hatour Economies project engaged leaders from business, government, civil society and academia in a Associate Director, consultation process. Insights emerging from this consultation have nurtured the development of Strategic Foresight a system map analysing the reasons, underlying dynamics and vulnerabilities of the employment situation in Arab resource-endowed economies. At the World Economic Forum Annual Meeting 2014, a session convened business and government leaders to explore policy interventions to sustainably increase the number of young people productively employed in the private sector, using the system map as a framework. Discussions contributed to creating a common understanding of the youth employment challenge in Arab resource-endowed economies and led to the prioritization of policy interventions, which will be taken forward by the Middle East and North Africa Business Council and through the Employment, Skills and Human Capital project, which is a global effort of the World Economic Forum. The next phases will address the Arab economies that are non-resource endowed. About the Middle East and North Africa Business Council The Middle East and North Africa Business Council is the primary gathering of foremost business leaders from the Middle East and North Africa, helping the World Economic Forum steer and structure its initiatives and programmes related to the region. The leading initiative of the council is the New Vision for Arab Employment, launched in recognition of the importance of business and government leaders’ interest in solving one of the region’s top challenges. Step 1: Perspectives and Step 3: Synthesis and Step 2: Exploration of Insights Analysis Implications January 2014 August – December 2013 February – September 2014 High-Level Strategic Dialogues World Economic Forum Annual Stakeholder Consultation Meeting 2014, Davos-Klosters, In-Country Dialogues in January 2014 Resource-Endowed Arab Economies A New Vision for Arab Employment 3 System Map System SystemEmployment Dynamics and Vulnerabilities of the Current Current pressures on the system, which impact its stability and sustainability Potential pressures on the system, which might impact its stability and sustainability in the future Political pressures (middle class, youth, Entrance of Protective parents, non-nationals Non- governments and in the country nationals teachers leaving and not entering Education driven dynamics Ensuring economic Securing social prosperity Non-nationals filling Youth Protected local stability the majority of unemployment youth relying on Economic contract between private-sector jobs the government Social contract between country and non-nationals government and locals Incentive driven dynamics Local youth Limited integration employed in and rights of guaranteed and non-nationals comfortable public-sector jobs Productivity decrease in Social Budget Public the private tensions constraints productivity constraints sector Figure 1: System map depicting the employment system in Arab resource-endowed economies and its vulnerabilities Summary of Dynamics and Vulnerabilities The system map and description of its dynamics reflect the most dominant stakeholders’ views and understandings of the situation of youth employment in Arab resource- endowed economies expressed throughout the consultation process and during the session at the World Economic Forum Annual Meeting 2014. The employment system in Arab resource-endowed economies serves two purposes: securing social stability and ensuring economic prosperity. To this end, the system relies on two parallel sub-systems, the first one representing the relationship between the state and its citizens, and the second one depicting the relationship between non-national workers and their host countries. While these sub-systems operate side by side, following different dynamics, their outcomes are closely linked to each other. As social stability cannot be sustainably ensured without economic prosperity, and vice versa, both sub-systems must be well-functioning for the whole employment system to be a success. One sub-system is aimed at securing social stability and based on the interplay of protective authorities and a dependent youth. The other sub-system intends to ensure economic prosperity by providing economic benefits for non-national workers whose rights and integration in society remain limited. Pressures represent current and future threats to the stability and sustainability of the system. Four of these pressures – political pressures; decrease in private- sector productivity; social tensions; and departure of non-nationals – are not yet hindering the functioning of the system. However, the two other pressures – public productivity constraints and budget constraints – are seen by stakeholders as already threatening the sub-system aimed at securing social stability, as some governments are no longer able to provide enough public- sector employment opportunities to absorb the youth bulge. A New Vision for Arab Employment 5 Securing Social Stability: The Social Contract The social contract aims to provide citizens with services Political pressures and rests on the government’s ability to secure its citizens’ (middle class, well-being. The social contract is reflected in the caring youth, women) and protective relationship established between authorities – government, parents and teachers – and young people, generating two dynamics: Protective parents, governments and teachers Education-driven dynamics Education driven dynamics The educational system does not stimulate enough independent and creative thinking and is designed primarily to provide citizens with the skills needed to take Securing social up public-sector positions. Protected by their parents Protected local stability youth relying on and teachers, young people grow up in an environment the government Social contract between where their current and future needs are answered for, government and locals perpetuating a culture of dependency on authorities. Incentive Young people in turn seek comfortable and secure driven dynamics public-sector jobs. Local youth employed in guaranteed and Incentive-driven dynamics comfortable public-sector jobs Governments’ commitment to providing secure and well-remunerated jobs attracts young people to the public sector, elevating their expectations and limiting their appetite for risk in a context in which the ecosystem Budget Public constraints productivity for entrepreneurship is still nascent. Additionally, the constraints absence of a comprehensive tax system levied on the private sector, while financially advantageous, limits its ability to contribute to wealth redistribution and hurts its image with the local population. This strengthens the role of the

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