Middle East Youth Initiative A Joint Project of The Dubai School of Government & The Wolfensohn Center for Development at Brookings
Missed by the Boom, Hurt by the Bust Making Markets Work for Young People in the Middle East
An Agenda for Policy Reform and Greater Regional Cooperation The MIDDLE EAST YOUTH INITIATIVE (MEYI) is a joint project of the Wolfensohn Center for Development at the Brookings Institution and the Dubai School of Government. The first policy research program of its kind, MEYI is devoted to promoting the economic and social inclusion of youth in the Middle East. The initiative’s main objective is to accelerate the regional policy community’s ability to better understand and respond to the changing needs of young people in the region. By creating an international alliance of academics, policymakers, youth leaders and leading thinkers from the private sector and civil society on research and policy, MEYI aims to develop and promote a progressive policy agenda.
The Wolfensohn Center for Development at the Brookings Institution (WCD) was founded in July 2006 by James D. Wolfensohn, former President of the World Bank and a member of the Brookings Board of Trustees. The Center analyzes how resources, knowledge and implementation capabilities can be combined toward broad-based economic and social change.
The Dubai School of Government (DSG) is a research and teaching institution focus- ing on public policy in the Arab world. Established in 2005 under the patronage of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai, the school aims to promote good gover- nance by enhancing the region’s capacity for effective public policy.
The Middle East Youth Initiative has embarked on a new partnership with Silatech — a regional initiative which seeks to promote large-scale job creation, entrepreneurship and access to capital and markets for young people. Guided by principles presented in this policy agenda, the Middle East Youth Initiative and Silatech will work towards generating solutions in critical youth areas by promoting new knowledge, innovation, and learning across borders. Acknowledgments 1 E EASTY TIVE V I AT I T I N I H T U YO T S A E LE D D I M he main authors of this report are Navtej Dhillon, their invaluable suggestions and feedback. Finally, we Djavad Salehi-Isfahani, Paul Dyer, Tarik Yousef, sincerely appreciate the outstanding research of the TAmina Fahmy, and Mary Kraetsch. This report following scholars: Ragui Assaad, Aziz Ajbilou, Ghada has benefited greatly from the contributions and guid- Barsoum, Christine Binzel, Samia al-Botmeh, Brahim ance of Samantha Constant, Caroline Fawcett, Diana Boudarbat, Jad Chaaban, Emily Cupito, Daniel Egel, Greenwald and Jamil Wyne. Several colleagues were May Gadallah, May Hanania, Nader Kabbani, Noura kind enough to review the text. We would like to thank Kamel, Taher Kanaan, Mohamed Ramadan, Edward Johannes Linn, Jean Louis Sarbib, Elaine Wolfensohn, Sayre, Hilary Silver, and Diane Singerman. Homi Kharas, Samuel Harris, and Abdul Malik for Introduction
oung people in the Middle East face a unique Global Economic Downturn: struggle to secure a larger stake in their economy What is Next for the Middle East’s Yand society. This generation faces deep and accel- Young Generation? erating economic change, having lived through the oil The adjustment from a boom to a downturn poses three boom and bust of the 1980s and the era of structural major challenges for Middle Eastern economies. First, adjustments and liberalization of the 1990s. Now, as the the Middle East region is entering the downturn with Middle East’s recent economic revival shifts to a down- large pre-existing education and labor market challenges turn, future prospects for the region’s young people are which were not resolved during the boom era. With again at stake. expanding access to education, young job seekers are increasingly more educated, aspiring for high quality When Middle Eastern economies rebounded in 2002 jobs. However, these expectations are being dashed as the after a decade of slow growth, young people expected to see improvements in their living standards. Instead, economic boom has not created sufficient quality jobs. As education systems have continued to be unsuccessful in a result, young people continue to encounter low skilled, preparing young workers for competitive labor markets; low wage employment. youth unemployment levels have remained the highest among developing regions; new job seekers have faced Second, the global economic slowdown could ignite a deteriorating quality of employment; and too many new jobs crisis in the Middle East. The current downturn young people have been forced to delay marriage and coincides with demographic pressures reaching their family formation. The current global downturn will historic high, placing an unprecedented strain on the intensify this generational struggle for greater economic labor market. As global demand for goods, services and inclusion. exports contracts, the formal private sector is likely to shed labor, diminishing labor market prospects for new How Middle Eastern countries respond to the current and first time job seekers. The informal sector is likely crisis will determine whether their young citizens can to become a refuge, depressing already low wages and exploit the new opportunities which lie beyond today’s limiting opportunities for human capital development. global slowdown. The path to economic recovery and These trends could impose new costs on Middle Eastern regeneration must be consistent with long-term goals societies in the form of higher incidence of poverty, that have already been established: cultivating a skilled inequity, and a depreciation of skills and lower lifetime and entrepreneurial labor force, expanding the role of earnings among young people enduring long periods of the private sector and reducing the lure of public sector unemployment or low quality employment. employment, and building a solid foundation for the region’s future middle class. Decisions made during the Finally, the crisis also comes at a time when some Middle downturn will either accelerate this transformation or set Eastern countries have enacted reforms to ease labor the region back. market regulations, scale back public sector employment, 3 INTRODUCTION - The final part of this report is devoted to assisting policy policy assisting to devoted is report this of part final The makers, the private sector and civil society organizations to address two profound challenges: first, to safeguard young people from the risks of becoming more excluded and vulnerable; second and more importantly, to seize the opportunity of having the largest youth cohort the in historyregion’s to generate economic recovery and sustainable growth. In section five, we provide guiding principles and ten policy recommendations designed to the of those and moment the of challenges the both meet near future. In section six, we argue that these priorities underline the importance of Middle Eastern countries working together to emerge stronger out of the current crisis. We recommend fostering greater regional coop eration on policies, knowledge, and investment in order generations. to improve the lives of current and future
- This This report, based on three years of a provides research, facing challenges economic the addressing for framework young people in the Middle East. The behind first partcauses main of the this understanding to devoted is report of In exclusion young the people. two, section continued the in outcomes on focusing transitions, youth analyze we housing. and marriage employment, education, of markets In section three we look back to assess why many youth economic the despite persist to continued have challenges boom. argue We that a vital lesson of the boom years is alone that improvements will macro-economic not erase the deep inequities that divide the older and generations. youngerInstitutions in education, employment, and welfare the against work often markets credit and housing of young people and are responsible for their exclusion. Section four examines the impact potential of the global people. young of lives the on crisis economic Emerging Stronger through the Emerging Stronger Agenda Policy A Proposed Downturn: tainty may make a retrenchment or even reversal of some of reversal even or retrenchment a make may tainty liberalizing policies more appealing,resist this temptation because flexibility and opennesscountries in must people. those markets are key to integrating young and promote an active role for the private These sector. efforts are aimed at resetting expectations of young The economic environment is already creatingpressure some across the region to employmentincrease and subsidies.public While sectorthis time of uncer citizens away from the state and economies which creatingcan harness their talents. With - dimin diversified ished trust in markets and the private sector, pursuing difficult. these reforms now is politically more Jamila Hassoune’s “Caravane du Livre Annual Workshop” April 2007. Amizmiz, Atlas Mountains, Morocco. © Photo: Samantha Constant The Boom Times: How Did the Young Fare? 5 TIMES: HOW DID Y ARE? E R FA G N U YO E H T D I D W O H : S E M I T M O O B E H T uccessful transitions to adulthood entail young education systems continue to face two particular chal- people acquiring skills while in school that lenges: guaranteeing the equity of educational access and Sempower them as workers in the employment improving the quality of public education. market; engaging in a purposeful search for careers rather than idly waiting for life-long jobs; and, in time, Education systems in the region are proving unsuccessful being able to settle down and start families by drawing on at fostering greater social equity. The inequitable access savings and access to credit to afford housing. to higher education across the region is exacerbating the exclusion of young people from lower socioeconomic However, despite six years of relatively high growth in backgrounds. High repetition and dropout rates con- the Middle East between 2002 and 2008, the transition tinue in some countries, particularly among low-income to adulthood for many young people has remained stalled youth, and low enrollment remains a common problem and, in some ways, outcomes have worsened. Young people in rural areas in the region. Students from low-income continue to struggle in attaining job-relevant skills and high backgrounds are also more likely to end up in the voca- quality education. They continue to wait for good jobs, tional education and training (VET) track. In Jordan, enduring long spells of unemployment or spending their for example, the majority of those in VET programs most productive years trapped in informal jobs that fail to are from low-income backgrounds, while 95 percent of prepare them for better positions. In turn, young men and those pursuing the academic secondary track come from women increasingly delay marriage and family formation, middle- and upper-income backgrounds.2 unable to meet the costs associated with these life stages. Moreover, since outcomes in these spheres are interdepen- In regard to educational quality, countries across dent, failure in one transition spills over into others, result- the region, including most notably Jordan, have had ing in a debilitating state of waithood, when young people some success in reforming curricula. However, on are left waiting to achieve a full state of adulthood. the whole, instruction in the region at all levels of the education system remains dependent on outmoded pedagogy. Limited attention is given to cultivating Education: Access, Equity and Quality critical thinking and problem solving skills, and the Countries in the Middle East have made significant continued dependence on rote teaching methods investments in initiatives aimed at enhancing education stifles creativity and independent thinking. Poor and training for young people, especially over the last outcomes in skills acquisition are reflected in the low six years. On average, Middle Eastern countries have average scores of Middle Eastern countries in inter- spent 5 percent of their gross domestic product (GDP) national examinations. For example, results from the on education in recent years in contrast to an average of 2007 Trends in International Mathematics and Science 3 percent spent in East Asia and Latin America.1 Access Study (TIMSS) examinations show that a significant to education has improved on the whole, and attainment number of the region’s students fail to meet the test’s in terms of years in schooling has expanded. However, lowest performance benchmark, indicating merely MIDDLE EAST YOUTH INITIATIVE 6 (Chestnut Hill, MA: TIMSS & PIRLS InternationalStudy Center, &PIRLS (ChestnutHill,MA: 2007InternationalScience Report, TIMSS TIMSS BostonCollege,2008). Source: Ina V. InternationalStudy Center, &PIRLS (ChestnutHill,MA: 2007InternationalMathematics Report, TIMSS S.Mullisetal.,TIMSS etal., BostonCollege,2008);MichaelO.Martin and high administrative fragmentation (See Box 1). ing, weak linkages between curricula and the labor market, mentshavebeenunderminedqualitylowtrain theofby investedheavily inVETprograms; however, these invest skills,widerofsetgovernments witha regionthe havein impartyoungeffortpeopletoan In 8). page on Figure2 than in other regions such as Latin America and Africa (See constraintbusinessongrowth, representing higher ratea majorskillsregionamongreportofworkerslacka the as the in firms of percent 25 survey,than recentmore a In voicingconcernsgraduatesnewthat job-readylack skills. regularly sector private region’s the of representatives increasinglytheparedfor competitive labormarket,with unpre graduates leaves education of quality poor The subject the of 1). Figure (See area knowledge elementary or basic some
Mean TIMMS Score 200 300 400 500 600 700 100 0 Figure 1:Mean8thGrade TIMMS ScoresforParticipating MiddleEasternCountries, 2007
Algeria
Bahrain
Egypt
Iran
Jordan
Kuwait
Lebanon
Morocco - - - Intermediate Benchmark 6 percent over this period. this over percent 6 and 3 between reduced were rates unemployment total example,forJordan, andMorocco,SyriaEgypt, In tries. tive impact on job creation in many Middle Eastern coun The economic revival between 2002 and 2008 had a posi Unemployment, Long WaitsThe Transitionand to theLaborMarket: Informality to expatriate workers. expatriate to created annually between 2001 and 2007, 63 percent went additional55,000thejobsexample, ofJordan,for In ers. or, in some cases, migrant laborers over young, new work establishedworkersmore and olderfavored hascreation Oman Even 8). page on 3 Figure (See prospects employment countries within the region reported a sense of weakening severalin people youngwherein2006/2007Poll, Gallup a in reflected as depressed, remained people young for Advanced Benchmark
Qatar High Benchmark Low Benchmark
Saudi Arabia
Syria 4 In turn, labor market prospects prospects market labor turn, In West Bank andTunisia Gaza 3 In many cases, however,job cases, many In Math
Singapore Science
U.S.A. - - - 7 THE BOOM TIMES: HOW DID THE YOUNG FARE? 27 Other 1237 Other Ministries/ Authorities
Training Centers Training signals Ministry Ministry of Culture Ministry Ministry of Health Vocational Vocational education and training suffers from a lack of coordination due to the large number of agencies involved involved agencies of number large the to due coordination of in regulating and providing programs. Furthermore, there is needs the and programs training between coordination little of the labor market: curricula are and outdatedmany training centers reviewed frequently, pre- provide and are not the meet necessarily not do which courses training designed sector. needs of industry and the private Migration Ministry of Ministry Manpower & Manpower
- 232 Vocational 232 (Industry-Specific Training) (Industry-Specific Agriculture Ministry of Ministry Education Training Centers Training Education
LABOR MARKET Ministry Ministry
of Housing signals Industry Ministry of Ministry Education) Ministry Ministry of Higher
Education Institutes
(Post-Secondary 47 Technical 47 signals Box 1: A Fragmented Approach to Vocational Education and Training in Egypt Training and Education Vocational to Approach 1: A Fragmented Box
Schools Education Ministry of Ministry
ocational education and training in Egypt is undermined is Egypt in training and education ocational highly a and strategy and vision common a of lack the by & Vocational & 1600 Technical 1600 (Secondary Education) Vocational and Technical Education Structure Structure Education Technical and Vocational tional education training centers. tional education training or authorities, which operate somewhat independently in 19 governorates. The Ministry of Educationaround administers1,600 technical and vocational schools while Ministry theof Higher Education manages 47 middle technical institutes. Additionally, six other ministries run 232 voca
complicated administrative structure. There are 1,237 - voca tional training centers in Egypt, affiliated to 27 ministries V Maggie Kamel, “Situation Analysis of Youth Employment in Egypt,” (Cairo: Centre for Project Evaluation and Macroeconomic Analysis, Ministry of International and Macroeconomic Evaluation for Project Centre in Egypt,” (Cairo: Employment Youth “Situation Analysis of Maggie Kamel, from: Information drawn 2006). Cooperation, 8 MIDDLE EAST YOUTH INITIATIVE 81 percentofunemployednationalsareyouth. of approximatelyof percent24percent,57 and respectively. withuppersecondary education faceunemployment rates women and men young example, for Iran, In 10). page on 4 Figure (See attainment educational of levels high relatively with youth those among highest are countries some in rates unemployment fact, East—in Middle the in unemployment against guarantee a not is Education unem total the ployed population. of percent 61 comprise In youth unemployed. Syria, total region’s the of share large a up make also youth group, peer large their among jobs for competition and rates unemployment high with Faced percent. 14 of average world the to compared percent, those between the ages of 15 and 24 remains at nearly 25 In the Middle East, the aggregate unemployment rate for (See Box 2). employment quality low and unemployment to regard challengesinface continuedespecially women,toyoung people, young growth, economic high of context the in Source: Datafrom World in37 countries(2008). BankEnterprisesurveys as a Major Constraint on Business Development Figure 2: Firms Identifying Skills of Labor Force Percent of Firms Surveyed 20 25 30 10 15 East Asia 0 5 and Pacific
South Asia
5 Europe and In the United Arab Emirates (UAE), Central Asia
Latin America and Carribean
Africa
and North Africa Middle East 6
Total - 7
youth in 2005 had been searching for a job for more more for year. one job than a for searching been had 2005 in youth mon. For example, more than com half of unemployed Syrian are durations unemployment long East, Middle the in transition people’sschool-to-work young During of job quality (See Box 3 on page 11). terms in especially prospects, employmentdeteriorating secondary and post-secondary education are experiencing months. 34 of period average an for searching reported 24 and tificates are most likely to be without a job. unemployment; of amongrates women, those with university post-secondary institution highest cer the Egypt, have in men graduates young among Similarly, the Brookings Institution, Washington D.C.,November 8,2008). Between Hope and Disillusionment: Toward Source: Datafrom Gallup Worlda Poll 2006/2007.Figure source: Ahmed Younis,New “Arab YouthU.S. Strategy in the Middle East,”(presented at in the private sector) are declining. are sector) private the in secondary and post-secondary graduates, and particularly (particularlymarketlaborthefor education inreturns to class, urban backgrounds are generally slower to enter enter to slower generally are backgrounds urban class, their waiting times and choices. and times waiting their affect to shown been has person young a of background socioeconomic the Egypt, In available. jobs of quality the and expectations between mismatch a reflects ment
Percent of Youth Responding that Now is a ‘Bad Time’ to Find a Job in Their Area 20 30 40 50 60 70 80 90 10 Figure 3: Youth Attitudes toward Local 0 11 11 For many, the state of prolonged unemploy prolonged of state the many, For Egypt 10 Job Prospects, 2006/2007 In Egypt, those between the ages of 20 of ages the between those Egypt, In Iran Jordan Kuwait 12 Youth from middle- from Youth 9 Young people with Youngpeople Lebanon 8 Furthermore, Saudi Arabia - - -
9 THE BOOM TIMES: HOW DID THE YOUNG FARE? workers are more likely to educated experienced an estimated GDP growth O CC O R By 2006, more than 70 percent of first-time job O 14 M Furthermore, employment prospects for youth in entrants in Egypt found employment in the informal For low-income youth, in particular, the quality of jobs available is of increasing concern,pushed into unpaid family aswork or theythe informal sector. are often Jobs in the informal sector offer little in the way of job but security increasingly or new stability, entrants to the labor market are finding their first jobs in thisAs ansector. example, job creation for new entrants in Egypt between 1998 and 2006 was greatest insector. the informal rate of rate 6.5 percent in 2008. the with Along total this growth, unemployment rate has dropped more than 6 percentage points in the past decade, falling below 10 percent in 2007 many- for ofthe thefirst improve time in 35years. However, ments in unemployment rates during the lastmask significantfew disadvantages amongyearsyouth, women, and educated workers. In part, the decline in the overall - unem ployment rate resulted from a drop of 8 percentage points in the labor force participation rate. This signals that youth are staying longer at school. While this would otherwise be a positive sign, young experience long-term unemployment than those with a basic a with those than unemployment long-term experience level or no education. Around two-thirds of the unemployed with secondary level degrees or higher are unemployed for at least a year. urban areas remain particularly bleak. Nearly 76 percent of unemployed Moroccan youth live in urban areas. Urban un- employment nearly doubled between 1982 and 2000, rising 12 from to 22 In percent. to 2007, down 15 this dropped rate percent; it however, was still nearly four times higher than rate. unemployment the rural
------13 Box 2: High Growth in Jordan and Morocco, But Has It Been Pro-Youth? in Jordan and Morocco, 2: High Growth Box
has experienced many macroeconomic improve
For young Jordanians, the recent period of growth has period of growth the recent Jordanians, young For need be will jobs 200,000 that estimated is it Currently, DAN R ments over ments the over last few years. Its annual GDP growth rate O J between 2000 and 2007 averaged 6 percent55,000 additionaland jobs nearlywere created per year. Despite this growth and rapid job in creation, unemployment Jordan has un total the 2007, of As youth. for particularly high, remained youth and percent, 13 at remained Jordan in rate employment Data unemployed. the of percent 73 comprised 29 to 15 aged jobs new of percent 63 2007, and 2001 between that indicate workers. foreign by filled were Jordan in created not meant better employment opportunities: while educa tion reforms have led to improved enrollments and quality, the labor market has assumed a greater informalityjob creation has been concentrated in low skilled andpositions. Jordanians. many young been shunned by These jobs have addition In 2009-2015. during entrants market labor new for ed to about this 172,000 jobs number, will also need to be cre has Jordan While unemployed. of number existing the for ated it whether remains questions the jobs, create can it that shown labor a with commensurate are that jobs of types the create can workers. educated more by defined increasingly market the labor market than both the poor and the rich. ed. Navtej Dhillon and Tarik Yousef (Washington, D.C.: Brookings D.C.: Brookings (Washington, Yousef Tarik ed. Navtej Dhillon and Waiting, in in A Generation Exclusions in Jordan,” and May Hanania, “Youth Kanaan Taher from: is drawn Information on Jordan Bank, 2008). World D.C.: The Experience (Washington, of Jordan,” Reduction: without Unemployment Iqbal, “Job Growth forthcoming and Farrukh Institution Press, 2009); Susan Razzaz ed. Navtej Dhillon Waiting, in in A Generation Urbanization and Poverty” Growth, Volatile of in an Era Youth Boudarbat and Aziz Ajbilou,“Moroccan Brahim from: is drawn Information on Morocco forthcoming Press, 2009). D.C.: Brookings (Washington, Yousef Tarik and These youth can afford to search longer for good jobs than the poor because they are able on to familydepend supportmore than those from low-income fam ily backgrounds. However, they lack the connectionsthat wealthier youth can draw decenton to jobs.actually Youngsecure people from poor backgrounds are likely to enter the market more quickly,completing of expense the butat jobs quality lower in oftenengage formal education. 10 MIDDLE EAST YOUTH INITIATIVE educational attainment and those living in rural areas areas rural in living those and attainment educational of levels low with men Egyptian young hand, other the future.On the in securebetterjobs to able most are and mobilitysomeinformalshowsector the in outstart who Source: NavtejDhillonand Tarik Yousef, ed.,AGeneration in Waiting (Washington, D.C.:Brookings 2009). Institution Press, forthcoming jobs. second mal infor to on move jobs first formalwiththose percentof 7 only later,while jobs second formal secure to able are informal sector the in jobs first their find Egyptianswho of percent 11 only that shows Egypt in study recent A trajectories. career and prospects employment future on impact major a have one’s can ofnature job first The security systems. social under coverage lacked more even contract; work formal a have not did employers sector private formal with work found who those of half sector.Furthermore,
Country/Level of Education
Lebanon Iran Jordan Egypt Figure 4:Unemployment rates by level ofEducation inSelected MiddleEasternCountries Females Males Post-secondary institute Post-secondary institute Some uppersecondary University andabove University andabove University andabove University andabove Technical Secondary Less thansecondary General Secondary Upper secondary Lower secondary 15 Intermediate Intermediate Well-educated, urban Egyptian men men Egyptian urban Well-educated, Elementary Secondary Secondary Vocational Illiterate Illiterate Illiterate Illiterate Primary Primary 0 10 20 - secure them.secure to unable are but jobs want region the in women many theexistence of high female unemployment indicates that work,desiretheseexplainedtonumbersnot beamay by of ten working age men are employed. While a portion of contrast,outseveninjobs; havewomenworking age ten difficult school-to work transitions. Only two out of every most the faceEast Middle the in womenOverall,young informal job, eventually exiting the labor market. be trapped in the informal sector once they have started an Egyptexperience mobilitylessjobmorelikelyare andto facemore difficult transitions. Similarly, young women in phenomenon is one that remains almost unchanged, unchanged, showing no almost signs of improvement as comparedremains to men. that one is phenomenon ger wait periods than do young men. In fact, this particular 30 Unemployment Rate 16 Furthermore, women also face much lon muchFurthermore,face also women 40 50 60 70 17 - 11 THE BOOM TIMES: HOW DID THE YOUNG FARE?
1985 1975 Males, Secondary and Above Secondary and Above Females, 1965 Year of Birth Year 1955 (10-year moving average) moving (10-year 1945 Educational Level and Year of Birth Year and Level Educational Males, Less than Secondary Males, Less than Secondary Less Females, Assaad’s standardized job quality index is built on the on built is index quality job standardized Assaad’s Notably, within the findings of the standardized job Figure B: Predicted Job Quality in First Job by Sex, Sex, Job by First Job Quality in B: Predicted Figure 1935 1 0 -1 .5
-.5
-1.5 Standardized Job Quality Index Quality Job Standardized sector. sector. In turn, they queue for jobs in the public sector even as these sectors retrench. Increasingly, however, youth face the prospect of not finding work in either the public sector or the formal private Instead, sector. many have to settle for low-skill, low quality informal jobs, International Labor Organization’s decent jobs framework, which takes into account earnings, job stability, aspects of type and under- of over-employment, workplace and access to social insurance. Drawing from official data, in this job quality index for the Egyptian labor job’ market ‘good a context, this theIn 0. of meanvalue a given is job value quality or above. of 0.5 one with a value is considered quality index, 72 percent of young Egyptians never secure do percent 64 jobs, good secure do who those Of jobs. good importance the underlines figure This jobs. first their with so of the quality of firstone’s job in terms of long-term career outcomes: the quality of one’s first trajectory. job career defines one’s in Egypt largely 1990 All Females 1980 All Males 1970 1960 Year of Birth Year 1950 (10-year moving average) moving (10-year Box 3: Egypt’s New Labor Market Entrants: Searching in Vain for Good Jobs Vain Entrants: in Labor Market Searching New 3: Egypt’s Box 1940
Figure A: Job Quality in First Job by Year of Birth Year Job by A: Job Quality in First Figure
1930 1 0 -1
or young people, a good first job need not be a permanent a be not need job first good a people, young or a decent wage but for it time should worked, job, provide
0.8 0.4 0.2 0.2 0.6 -0.4 -0.8 -0.6 Standardized Job Quality Index Quality Job Standardized
access to regular work and some job security. Recent career. Thesea building towards stones importantstepping are Egypt in transition school-to-work the on Assaad by research when Egyptians young for outcomes declining demonstrates it When incomes viewed termsto of the quality of first jobs. a standardized job quality index, the ability of young men in Egypt to secure good first jobs has dropped steadily for those born since 1965. For young women, prospects for se- 1975 since born those for declined has job good first a curing first of quality the education, lower with those For A). (Figure jobs has while remained steady for although men quite low, quality the above, and education secondary with women and B). (Figure of the first job has decline precipitously F In sum, despite a period of high economic growth, young growth, economic high of period a despite sum, In people across the region who are engaged in the transi- tion from school to work face a series of disappointing scenarios. Many find themselves unprepared and under- qualified for jobs in emerging industries in the private Ragui Assaad and May Gadallah, “Pathways from School to Work for Egyptian Youth,” Middle East Youth Initiative Working Paper (Washington, D.C.: Wolfensohn Center for Wolfensohn D.C.: (Washington, Paper Working Initiative Youth Middle East Youth,” for Egyptian Work School to and May Gadallah, Assaad from Source: Ragui “Pathways Inequality in MENA: forthcoming Assaad, “Intergenerational Economic, and 2009); Ragui Demographic, Institution and the Dubai School of Government, at the Brookings Development 23–25, 2008). Egypt, November Cairo, Conference, Forum at the 15th Annual Economic Research Institutional Determinants” (plenary presentation 12 MIDDLE EAST YOUTH INITIATIVE Wolfensohn Center forDevelopment attheBrookings InstitutionandtheDubaiSchoolofGovernment, 2008). Source: Djavad Salehi-Isfahani andNavtejDhillon,“Stalled Youth Transitions intheMiddle East:AFramework forPolicy Reform” MiddleEast Youth Initiative Working Paper 8 (Washington, D.C.: few a in norm the be to continues marriage early While own. their of families form and marry to plans their ing young delay by adjustments make East employment, Middle the in people gainful with comes that status social and independence economic the secure to Unable Marriage, Housing, and Access to Credit The Transition to Family Formation: formation. family to transition the in steps decisive make to ability market their impacts labor and long-term, and short- the in prospects their for poorly bodes path This ment. employ- sector formal to transition eventually to hoping H housing boom was also reinforced by the rising number of of number rising the by reinforced also was boom housing recent The abroad. from managed easily are that returns are favored markets because such investments provide solid housing and estate real and home, at remittances their vest in to opportunities seeking by contributed also have Gulf the in residing expatriates Arab countries. neighboring in by investment from the Gulf countries directed at real estate increasingly costly. become boom—has oil the before region considered the in expensive housing—already wherein boom housing a experienced recently has East Middle the factors, these of result a As goods. imported to relative housing) (including goods non-tradable of price the raise to tends and demand expands reserves oil of expenditure the because increases Land and housing prices are particularly sensitive to oil price howprices. of asset because affect ways they inequitable in generally,wealth incomes redistribute lift can howeverthey stress during the region’sthe stressduring booms Such boom. recentoil particular under came people young for options ousing Further,region’sthe largelywas boom drivenhousing Box 4:OilandRealEstate Booms:Leaving the Young Out - - ment. Recent data from Iran shows that having a job and employ- quality low and joblessness to attributed be can East Middle the in marriage in delay involuntary The transitions ofyoungpeople. the protracting by difficulties economic and social new delay of marriage is a form of exclusion and is generating involuntary the adulthood, to passage of rites damental where region marriage and forming a a family are considered In fun- regions. developing other in counterparts their than periods longer for marriage delaying are who East, Middle the in men young for true particularly is This marriage. of delay involuntary often an toward is trend regional the areas, rural in and countries poorer ally do not raise incomes at the same rate as housing prices. gener thus and inputs capital human on heavily as depend not do hands, other the on booms, Oil prices. housing with tandem in youtharerise educated moreto of likely incomes personal Asia, East in as such goods, knowledge-intensive of export and production the on based is boom economic an Where housing. to access youth maintain to sufficient be not may market credit well-functioning a However,even prices. housing with pace in rise incomes as long as house, appreciating an purchase to afford still and income future against borrow can youth market, credit well-functioning a In increased. have prices as housing purchase to it difficult found have they credit, securing in persons older than difficulty greater have they Because ways. several in fected recent years, young people have been disproportionately af- states suchasEgypt,Jordan andSyria. neighboring in wealth their investmentsecureof and dation accommo- safe havesought 2003, since Iraqirefugeeswho, As demand for housing and property has increased in increased has property and housing for demand As - THE BOOM TIMES: HOW DID THE YOUNG FARE? 13 - 3.31% 5.26% 2.03% 5.66% 0.38% 8.08% Female 1.19% Male 1.53% 0.12% 1.28% 0.43% 0.88% 4.14% Total 0.57% 2.74% 7.29% 9.09% 6.60% Middle East as Percent of GDP Country Table 1: The Costs of Youth Joblessness in the Joblessness Youth of Costs The 1: Table otal MENA Jordan (2002) Jordan (2004) Lebanon Qatar (2004) Egypt (2004) T Syria (2004) Syria Jad Chaaban, “The Costs of Youth Exclusion in the Middle East,” Middle East Youth Youth Exclusion in the Middle East,” Middle East Source: Jad Chaaban, “TheYouth Costs of at the Center for Development Wolfensohn D.C.: 7 (Washington, Paper Working Initiative 2008). Institution and the Dubai School of Government, Brookings rate rate is the summation of the unemployment The definition of the joblessness Notes: the labor force This is used to capture not in school. who are of youth and the inactivity rate participation labor force rates participation males and females since females’ gap between - unemploy This data assumes a target than those for males in the region. lower much are rate. equal to the adult unemployment for youth ment rate The Costs of Exclusion of Exclusion Costs The Regional economies collectively face direct costs from and wages foregone of terms in youth for outcomes poor restricted economic opportunities. In terms of foregone wages alone, youth joblessness costs the region nearly 7 percent of its GDP annually 1). (See In Table Jordan, the costs of youth exclusion as a whole assessment(including of youthan joblessness, early school dropout, adolescent pregnancy, and youth migration) amount to nearly 7.3 percent of and GDP, in Egypt, they amount to a staggering 17.5 percent of GDP annually or close to 19 percent of value added by the country’s agricul tural sector. During the economic upturn, these during costs Now, development. further and growth restricted recovery economic on impinge costs these downturn, the and regeneration. housing, new tenants often must pay significant amounts significant pay must often tenants new housing, of ‘advance rent.’ Subsequently, for young prospective renters, problems renting a property have mirrored the problems of effectivelypurchasing housing, requiring of start-up capital. considerable amounts But young people, 21
In Egypt, poor labor 19 18
20 The inability to access credit intensifies the challenges young people face in finding affordable housing.individ- allow to is markets credit of role Theimportant most uals to smooth their consumption by borrowing against future income. Here, credit markets in the Middle East are failing youth. Access to housing credit enough is for establisheddifficult adults: housing credit is a small share of total loans, estimated at around 7 Egypt and percentAlgeria and 10 percent in(compared in Tunisia to 44 percent in the United States). market outcomes among young men mean that many are many that mean men young among outcomes market unable to afford the high costs associated with marriage or to adequately signal their eligibility for marriage to their families. potential brides and the number of years spent in employment are the two strongest predictors of marriage. The oil boom has raised young people’s expectationsof living standards—including aspirations for nuclearfamily living arrangements upon marriage. However,the boom has also increased obstaclesthese expectations, especially toin regards actualizingto independent living (See Box 4). Across the Middle East, the cost of young most for reach of out remains housing purchasing people. In Algeria, Lebanon and Morocco, for example, a middle-income family would need to accumulate nine in home average an afford to income entire their of years Housing costs in Egypt, Jordan and Tunisia a major city. are comparatively lower, but still out of reach for most individuals. Renting is not always a viablecouples alternativein the Middle forEast youngdue to supply constraints.Across the region, rent control laws and rental contracts open-endedmean that there is little turnover in the rental market, and landlords have few incentives to rent rental secure To people. young to properties available out at the start of their adult lives, lack the collateral, steady jobs and reputational capital needed to qualify for the limited credit available in the region. Education for Employment — Jordan Career Education Foundation, “Workplace Success Program,” April 2008. Amman, Jordan. © Photo: Samantha Constant Stalled Transitions: How Institutions Are Failing Young People 15 ALL TRANSITIONS N O I T I S N A R T D LE L TA S ecisions taken by millions of young people and Egypt’s recent housing reforms are a case in point (See their families across the Middle East in education, Box 5). However, across the Middle East, existing institu- Demployment and family formation are linked to tions governing the markets of education, employment the structure of institutions and incentives that shape and housing provide the wrong incentives and perpetuate behavior at the micro level. The institutions of relevance challenges facing young people. Examples of outmoded to youth transitions are the rules and regulations that institutional features and their effects on young people govern the education system; the markets for labor, are summarized in Table 2 on page 16. credit, and housing; plus non-market institutions such as social norms regarding marriage. These institutions Middle Eastern labor markets are characterized by a provide the signals that tell young people what skills high share of public sector employment and pervasive to learn, tell firms whom to hire and how much to pay, job protection in the formal sector (See Table 3 on page tell credit agencies and banks to whom to lend, and tell 17). When first established, these arrangements served families how to evaluate the potential of a young person important social objectives: public sector employment as a future spouse and parent.22 guarantees for high school and university graduates in Egypt and Morocco in the 1960s encouraged youth to When institutions function well, they go a long way in stay in formal education. But today, these institutional assisting young people through important transitions. arrangements work to the advantage of adults at the
Box 5: Egypt’s Housing Reforms Pave the Way for Young to Marry
n Egypt, a series of recent housing reforms have reduced Assaad and Ramadan shows that these reforms have led to Ibarriers to young people entering the rental housing mar- a reversal in delayed marriage among young men, beginning ket. This has, in turn, had positive effects in the marriage with those born after 1972. For example, among urban men market. These reforms have liberalized restrictive rent con- the average age of marriage dropped from a peak of 29 years trols, allowing for definite duration contracts and reducing for those born in 1972 to 27 years for those after 1972. A the need for young home seekers to provide large capital one-year drop in the median age of marriage translates into outlays, or “advance rent,” in order to obtain initial housing. an additional 230,000 25- to 29-year-old men able to marry, As unaffordable housing is one of the main factors or 16 percent of those married in that age range. The onset causing delayed marriage among men in Egypt, these re- of the decline in male age of marriage is consistent with forms have simultaneously had a positive spillover effect in the time at which the far-reaching housing reforms of 1996 the marriage market for young Egyptians. A recent study by would have begun to affect the supply of rental housing.
Source: Ragui Assaad and Mohamed Ramadan, “Did Housing Policy Reforms Curb the Delay in Marriage Among Young Men in Egypt?” Middle East Youth Initiative Policy Outlook 1 (Washington, D.C.: Wolfensohn Center for Development at the Brookings Institution and the Dubai School of Government, 2008). 16 MIDDLE EAST YOUTH INITIATIVE Current policies and institutions pertaining to wages wages to pertaining institutions and policies Current pensions. decent to access including benefits, and rity, secu job incomes, the decent provide that providing jobs—jobs as best employment to sector continue public alike perceive parents and students this, Despite students. educated for and opportunities in fewer slowed provides has large it hiring sector remains public sector countries, many public the While growth. economic in role its and sector private the of expansion the including strategies greater development pursuing market-oriented explicitly are governments Today, Why Do Young People Prefer PublicS effects onyouthtransitions. positive have can they how improved, when and, people young of exclusion the of heart the at are arrangements institutional how demonstrate examples following The borne byyoungandfemaleworkers. reduced entry of of new workers. These burdens are largely because growth employment total undermines and turnover reduces costs) firing (higher protection ment employ example, For generations. younger of expense Housing Labor Education Sector Table 2: Institutions intheMiddleEastand Their Effects on Young People • • • • • Absence of mortgage facilities Absence ofmortgage Rent controls Employment protection Tracking mechanisms University admission policies Institutional Feature ector Employment? - - because they teach more valuable skills but because they but because skills valuable more teach they because much so not higher are tracks academic the Perceived to returns market. labor the and education formal institutions of the to closely tied are training vocational low to attract good students. good too are attract to education low VET from rewards the employer and with needs up keep to fails provided training the because suffer programs VET region, the across ever, how a skills; job-relevant attain provide to students for should pathway training and education Devalued: Is Vocational (VET) Training and Education Vocational lowing dimensions: fol- the along formation skill and learning impacts This degree. university a requiring as jobs” “good perceive receive from the labor market. Parents and students alike they signals the on based children their for investments educational make to continue parents Eastern Middle Despite poor labor market outcomes for educated youth, Why IsSkillMismatchaRecurring Problem? Box 6 on page 18). 18). page on 6 Box (See jobs government of lure the reinforce benefits and • • • • • • • accumulate physical assets Prolongs dependencyonparents andfailure to buy orrent housing Limits accessforfirsttimebuyers toafford to forhumancapitaldevelopment fewer opportunities Contributes toinformalitywhere young peoplehave employees (lower turnover) Makes firmslesslikelytohire new, younger for young workers Protects olderworkersand reduces opportunities Promotes rote memorizationover investment inskills Undermines value ofvocational education Effects on Young People 23 The low rewards for for rewards low The -
17 ALL TRANSITIONS N O I T I S N A R T D LE L TA S provide the option for entering university. Because of as a second class education. Testing on the basis of the associated link between public sector employment ability, which usually takes place around ninth grade and university education, few choose the vocational (14 years old), reinforces these perceptions. Moreover, education track, as this track would exempt them employers—knowing the resulting distribution of from pursuing university education at a later date. talent—see vocational education as a dead-end track Consequently, only the least able and least motivated for poorly motivated students and offer lower pay to students are perceived to opt for VET, while those VET graduates, thus perpetuating the cycle. Laws that involuntarily “tracked” to vocational education due to prevent employers from dismissing workers further poor academic performance at earlier stages of their discourage employers from taking risks in hiring VET educations face the stigma of having what is perceived graduates in the face of these probabilities.
Table 3: Indicators of Institutional Rigidity in the Middle East
Government Difficulty of Rigidity of Hours Difficulty of Rigidity of Country/region wages Hiring Index Index Firing Index Employment Index (% of GDP) Algeria 7.1 44 60 40 48 Egypt 6.2 0 20 60 27 Iran 10.6 11 60 50 40 Jordan 14.4 11 20 60 30 Kuwait 14.7 0 40 0 13 Lebanon 8.2 44 0 30 25 Morocco 11.1 100 40 50 63 Saudi Arabia .. 0 40 0 13 Syria .. 22 40 50 37 Tunisia 10.5 28 40 80 49 United Arab Emirates 3.9 0 60 0 20 Yemen 12.8 0 60 40 33 Regional averages Middle East 8.3 21 43 46 37 Africa 5.6 40 35 37 37 East Asia 3.4 19 19 39 26 Developed 3.2 22 26 21 23 economies Latin America 3.8 54 51 29 44 South Asia 1.6 14 20 62 32
Notes: Government wages reflect average values for 1992–2002. Indices are on a scale from 0–100, with higher values reflecting more rigid regulatory environments. Regional averages are population-weighted means of scores for the countries for which data is reported. Source: World Bank, World Development Indicators 2006; World Bank, Doing Business 2008. 18 MIDDLE EAST YOUTH INITIATIVE in demand by private sector employers. notacquiring moneyknowledgeisandenergy thattime, spending up end parents their and students education, university-tracked of allure and structure the to Due training. skills productive towards resources those ting tutorsspecializethatpreparation,test in rather putthan across the Middle East spend considerable sums on private broader range of knowledge and skills. Moreover, families theseforingexaminations expensethedevelopingatof a prepar time spend students thinking, independent and knowledge through rote memorization rather than critical designedprimarily to measure the acquisition of facts and university.examinationstoaresuch accessgainingSince to key high-stakesareexaminationsnational forthat ing youngstudentsenergiesprepardevoteandtheir timeto turn, In experience. job-relevant and skills productive foster not doschool—that high to childhoodearly from learningstrategies—intopeople young drives job sector public a to pathway the as diploma university a of lure Race to University Entry Encourages Rote Memorization: The Institution andtheDubaiSchoolofGovernment, 2009). Source: NaderKabbani, “Why Young Syrians Prefer Public Sector Jobs,”MiddleEast Youth Initiative Policy Outlook2(Washington, D.C.: Wolfensohn CenterforDevelopment attheBrookings A publicsectorremainedhas steadyover pasttheseven years the in workers of share the employment, sector public ing exclusively inthepublicsector. are interested in public sector jobs and 60 percent seek jobs olds year 29 to 15 unemployed of percent 80 Over jobs. tor sec- privateover sector public for preference overwhelming Syrians’young encourage hiring, government of levels high continued and wages including government, the from tives incen and signals however, retrenchment, sector public in interest government’s the Despite solutions. sector private contract based less on government intervention and more on the government is taking steps to instill a new social social new a instill to steps taking is government the economy, market social a toward transitions Syria s In contrast to the government’s stance toward reducgovernment’stoward thestance to contrast In Box 6:Syria MarketReforms Pursues While Youth Still Prefer PublicSector Jobs - - - - - the right signals about rewards for productivity and a and productivity for rewards about signals right the sending from firms private prevent layoffs of cost high hiring, the and their scales Wage practices. firing and compensation, regulate that laws labor to they adhere because must reinforce formation skill often for signals sector employers public private larger, Second, job better above. noted as cases, security, most in and, sector private the than pay higher graduates offer cases, some in that, signals sector public strong by out drowned are firms private by sent signals the countries, many in First, ways. two in weakened is development skills on sector private the of will influence The youth. among accordingly) formation skill benefit reward will (and productive they deem skills what signal to employers region. the private across Enabling workers skilled hiring in role tant impor increasingly an plays sector private formal The Development? Why Isn’t thePrivate S reinforced young people’s preference for government jobs. packages and job security provided by the public sector have education or below). These increases in wages, better benefit primary a with men exceptionof the (withgroups all among public sector workers exceed those for private sector workers young for earnings lifetime result, a As workers. vatesector pension system compared to lessthe than 9 with percent of youngregistered pri are employees sector public young of increased by only 50 percent. Furthermore, nearly 89 percent percent employeeprivatesector a of70 wage averagehourly the whileby increased 29 and 20 of ages the between worker sector public a of wage hourly nominal average the increasedsubstantially since 2000. Between 2001 and 2007, have wages sector publicaddition, In percent. 27 around at ector InfluencingSkills - - 19 ALL TRANSITIONS N O I T I S N A R T D LE L TA S wider skill set. Given the hiring and firing restrictions, ties, through their admission policies, nor employers in the private sector gives more weight to ex ante signals the public and private sectors sufficiently value volun- of productivity (e.g. diplomas, university degrees, test tary work to make it worthwhile for youth to shift time scores), reinforcing the importance of credentials. away from leisure or study.26
Why Are Young People Not Building Skills Through Volunteer Work and Community Service? Making Institutions Work For Internationally, there is a great deal of learning that goes Young People on outside of schools. For instance, young people learn The above examples demonstrate how prevailing institu- life skills and gain valuable experience through volunteer tions—public sector wage policies, tight regulation of work, extracurricular activities and summer employment. private employment, and narrowly defined university This is especially the case in developed nations, where admission policies—contribute to distorted signals and youth engage in volunteer work while in high school incentives for young people. While many of these insti- and university, or following graduation, because they tutions, when first established, served important social consider such work to be valuable for resume-building objectives, today, in a much more competitive global and a source of experience and skills acquisition. These economy, they provide the wrong incentives and hinder activities can serve as a means for generating future economic development. income because they help young men and women gain admission into universities and bank on their experience For policy makers, a vital lesson of the oil boom years is that when competing for better jobs. improvements in the macro environment alone will not erase the deep inequities that define the older and younger Yet, despite the growing number of non-governmental generations. Institutional arrangements—especially in programs oriented towards youth volunteerism in the the form of labor market protection—have strong distri- region, and the greater levels of unemployment (and butional effects; in the Middle East they protect mature therefore the lower opportunity cost of time) that Middle workers and exclude younger ones. Without a sound Eastern youth face, they show less interest in volunteer- microeconomic foundation—one in which institutions ing and engaging in extracurricular activities than their generate the right signals and incentives—the benefits of counterparts in developed countries.24 For instance, a macroeconomic and trade reforms, as has been demon- Gallup poll in 2006/2007 revealed that only 11 percent strated during these last few years, are limited. of Middle Eastern youth had volunteered any time to an organization in the past month.25
This contrast in behavior is a result of differences in the incentive structure that youth in developed nations and the Middle East face in regard to the labor market. When desirable jobs and positions in university are rationed solely by test scores and credentials, volunteer- ism and extracurricular activities are not considered a sign of productivity and skills acquisition. In turn, Middle Eastern youth are discouraged from investing their time in voluntary work because neither universi- Save the Children — Naseej, “Masar (School-to-Career) Program” April 2008. Amman, Jordan. © Photo: Samantha Constant New Economic Crisis, New Risks for Young People 21 Y LE P O E P G N U YO R O F S K S I R W E N , S I S I R C C I M O N O C E W E N he economic slump that began in the housing and force pressures are at their highest: regional labor force financial markets of the United States is likely to growth over the next five years will average nearly 2.7 per- Tresult in a renewed jobs crisis for the Middle East. cent, while the increasing number of young new entrants GDP growth in the region is expected to slow to 3.3 will be more educated and have higher expectations in percent in 2009, compared to an estimated 5.8 percent in terms of job quality. In light of these severe labor supply 2007 and 5.5 percent in 2008.27 While countries vary in pressures, policy makers should not only be concerned their relative positions in coping with the crisis (See Box 7), about how young people fare in today’s labor market but for many of them the downturn coincides with a peaking also ensure that policies forged during the downturn sup- youth bulge (See Figure 5 on page 22). As a result, labor port their future human capital development.
Box 7: Savers, Spenders and Strugglers: A Typology of Middle East Economies in The Global Downturn
he Savers are oil-exporting countries with high levels prices by cutting spending in order to balance external and Tof foreign exchange reserves, including most countries internal deficits. Iran is forecasted to have a budget deficit in the Gulf Cooperation Council (GCC). Due to their large of 5 percent of GDP and a current account balance of -3.8 financial capacities and the reserves that were built up dur- percent of GDP in 2009. Iran and other spender economies ing the oil boom, they are in the best position to weather the face the immediate challenges of adjustment to finance economic shock of the downturn. In Saudi Arabia, despite these imbalances. expectations of a current account deficit in 2009 (-7.9 per- The Strugglers are countries that are more integrated cent of GDP) foreign exchange reserves will remain at about into the global economy and are thus highly exposed to $21 billion. Kuwait’s foreign exchange reserves are expected the risks of the downturn in global demand. Countries like to slightly decline from $17 billion in 2008 to $16 billion in Jordan, Egypt and Morocco may face decreases in foreign 2009, but the country is expected to maintain a positive cur- direct investment (FDI), exports, workers’ remittances, and rent account balance of 5.5 percent of GDP. foreign aid. In Egypt, for example, FDI is expected to decline The Spenders are countries that have used their from 6.2 percent of GDP in 2008 to 2.8 percent of GDP in oil-exporting revenues in recent years to implement costly 2009. The country is forecast to have a budget deficit of 7.1 populist policies. Countries like Iran, Iraq and Algeria have percent of GDP in 2009 and a current account balance of -1.0 larger populations and greater social needs than the GCC percent of GDP. Between 2008 and 2009, exports from Egypt countries, but they have not built up high levels of reserves, are expected to decline from $30 billion to $22 billion. The and are therefore more vulnerable to decreasing oil prices. high exposure of these struggling economies will have a For example, with less than four months of imports in its Oil significant impact on both their firms and households, with Stabilization Fund, Iran will be forced to adjust to lower oil the pressure felt by their whole populations.
Source: Data from Economist Intelligence Unit (EIU) Country Reports, April 2009. 22 MIDDLE EAST YOUTH INITIATIVE International Monetary Fund,Source: InternationalMonetary UnitedNations Population Prospects, 2008. in 2009. in million 3 by increase to estimated is Africa North and East Middle Labor the in unemployment (ILO), Organization International the from forecasts to According underway. already are employment and demand labor in adjustments lag, a with place take will markets labor region’s the on slowdown the of effects full the While nities decline and firms downsize, young people are more opportu - growth as thus and workers established protect laws labor sectors, private formal East’s Middle the In on youngpeoplecouldbeevengreater. impact differential the rigidities, market labor and lation points. percentage 1.8 to 1.1 by youth of rate employment the reduces point percentage one by unemployment total in increase an that shown has countries developed in tions condi market labor on Research conditions. economic in fluctuations to sensitive highly is employment youth Percent -4 -3 -2 -1 29 0 2 3 4 5 6 1 In the Middle East, given the large youth popu- 28 Young people are particularly vulnerable, as as vulnerable, particularly are people Young Figure 5: The Youth Population andEconomicGrowth intheMiddleEast,1980–2008 1980–1985 GDP growth (leftaxis) GDP per capita growth (leftaxis) 1985–1990 1990–1995 - not only delay the transition to adulthood further, but but further, adulthood to transition the outcomes delay only these not turn, In employment. quality low or unemployment of periods long enduring people young for earnings lifetime lower and skills of depreciation the as such East, Middle the across societies on costs new riorating. Weakened labor market outcomes may impose dete- risks people young to available jobs of quality the also but quantity the only not Thus, wages. low already uge for young people during the downturn, compressing ref- a become to likely is sector sector,this informal the in up end entrants new of majority the since Moreover, tection mechanismsorunemploymentinsurance. pro- social formal to access have not do most net, safety people can fall back on their families as an informal social young Though markets. labor domestic on strain added ing countries like Egypt, Morocco and Yemen, placing an export- labor to home return will who workers, migrant young for true especially is This jobs. their lose to likely 1995–2000 Youth share ofpopulation (rightaxis) 2000–2005 2005–2008 20 22 24 26 28 30 32
Percent 23 Y LE P O E P G N U YO R O F S K S I R W E N , S I S I R C C I M O N O C E W E N also heighten the sense of discontent and frustration To contain the crisis and ensure recovery, the Middle among youth. In some countries like Yemen and Egypt, East, like everywhere, will also face competing argu- labor reallocation or internal reverse migration back to ments for what kind of economic system can best serve agriculture and subsistence activities could increase the its people. Mounting social and political pressures could incidence of poverty. weaken the reform agenda designed to promote private sector growth and increased integration into the global Responses in the region must conform to existing reform economy. Rather than a reversal of open market policies, goals to improve the welfare of young people. During the crisis should serve as an opportunity for increasing tough times, governments might be tempted to increase competitiveness, promoting job creation, and develop- government jobs and public sector wages as a quick fix to ing a better skilled workforce to take advantage of a new growing public dissatisfaction with high unemployment global economy. rates. Similarly, efforts to protect jobs through increasing labor market regulations may safeguard workers from job losses in the short-term, but may decrease firm competi- tiveness and create disincentives for future hiring among the private sector (See Box 8). Most importantly, these policies have distributional effects, extending the benefits to mature workers while placing the cost of adjustment on young workers.
Box 8: Recent Job Protection Policies in the United Arab Emirates (UAE)
he labor market in the UAE, as in most Gulf countries, run by providing strong disincentives for worker productivity Thas long been defined by labor market segmentation and for firms to hire Emirati nationals in the first place. between the public sector, which employs most nationals, In the future, firms will be more hesitant to hire young and the private sector, which largely employs expatriates. In nationals because of new restrictions on dismissing Emi- recent years, private firms have increasingly hired nationals rati workers. Instead, they will hire foreign nationals (whom into their workforces. they can dismiss) or older Emiratis with a proven record of In February 2009, the UAE government issued a experience rather than take a risk on hiring a young Emirati decree that prohibits private sector employers from laying with unknown skills or qualifications. Thus, imposing a per- off national workers for any reason, unless the worker engaged manent solution to a temporary problem might actually do in serious misconduct.30 While this policy is designed to more harm, proving to be counterproductive to the country’s protect the jobs of workers during tough economic times, overall goal of increasing employment of Emirati nationals in the policy could actually have the opposite effect in the long the private sector. Jamila Hassoune’s “Caravane du Livre Annual Workshop” April 2007. Amizmiz, Atlas Mountains, Morocco. © Photo: Samantha Constant A New Policy Agenda 25 DA N E G A Y C I L O P W E N A s regional economies adjust to new and uncertain • Understand the role of institutions and incentives: economic terrain, the following principles should Recognition of the role of institutions and incentives A guide the actions and interventions of various that shape the behavior of youth and their families stakeholders: when making choices about education, employ- ment, and family formation should be integrated • Do no harm: The first goal of policy should be to do into policy and program formulation. By reforming no harm. At a time when policy makers are rushing institutions, new incentives can be created for skill to solve urgent youth problems, quick fix solutions formation, productive job search, changing mindsets can do harm to the long-term goals of economic and empowering young people to make better deci- development. In regard to employment generation, sions about their future. the best-designed policies are those that strike a bal- ance between short-term solutions for immediate • Formulate integrated policy responses: Policy reforms problems, such as the rising ranks of unemployed should constitute a holistic, integrated response to the graduates, without jeopardizing long-term goals, challenges of waithood. Policy should be designed to such as encouraging those still in school to seek a take into account the interconnectedness between out- more balanced portfolio of skills. Job creation for comes in education, employment, access to credit and skilled workers might be urgent, and even politically housing, and family formation so that improvements desirable, but basing eligibility for such job creation in one area do not impinge on incentives in others. programs on credentials has the unintended effect of Further, recognition of this interconnectedness implies bolstering existing distorted incentives for diplomas that interventions in some areas may be more effective and degrees and worsening the mismatch of skills for and easier to implement than in others. future job market entrants. • Invest in monitoring and evaluation: Effective • Adopt a long-term perspective: Policies should be monitoring and evaluation must be streamlined into long-term and treat the youth bulge as a window policy and program formulation and implementa- for reform that benefits the whole of society. These tion in the region. Rigorous, independent impact reforms should be geared toward using the region’s evaluations are critical to achieving real progress in large youth population to prepare Middle Eastern addressing the major challenges facing young people. economies for the competitive global economy. Sound evidence promotes better understanding about As the youth bulge will begin to decrease in some what works, enhances cross-country sharing of best countries in the future, the region has a closing practices, boosts capacity in the region, and improves opportunity to maximize gains from its demographic policymaking and spending toward more effective gift and to foster a more effective use of its human youth development. To date, few projects aimed at capital investments. young people have (or can be) evaluated in terms of 26 MIDDLE EAST YOUTH INITIATIVE 1 equity in the future. This can be achieved through a through number ofinterventions: achieved be can This future. the in equity intergenerational greater ensure to also but young, the only is this vital for improving labor market prospects for ments and already face high rates of unemployment. Not adjust- economic to vulnerable most are they as people, young toward geared development capital human and creation job for provide packages these that critical is It unemployment. revive rising of threat the contain to and demand order in packages stimulus fiscal to substantial committed have countries Eastern Middle Several the long-term goals of human capital development. addressbothshort-termtotheaim crisis supportjoband recommendationsThese level. local and national the on icyrecommendations to be considered for implementation Based on the principles outlined above, we propose ten pol Policy Proposals • tives but scaling up and replicating interventions interventions promise. show replicating which and up scaling but initia new tives creating only not at Investments targeted be youth. should of sub-groups specific sup to and port outreach, information, of terms in model distinct a offers and programs these of sector Each society. civil private the by initiated those programs, especially and policy youth-oriented for and strategies models successful potentially of range growing Scale expenditures. as well as to evaluate the efficiency and effectiveness of corrections, mid-course facilitate and feedback time” “real provide to order in interventions and programs of design the in integrated be must therefore, ation, evalu impact and Monitoring programs. ineffective on investments of squandering a to led has region the across evaluation and monitoring of lack The impact.
should target jobsforyoung people. Countries committingtofiscalstimulus
up
promising
initiatives: The region offers a offers region The - - - - • • • line with long term development goals. development term long with line in are which programs works public intensive labor Public Support be competitiveglobally. people for new emerging industries and allows them to young prepares it as employment such of value the ing ronmentally friendly construction techniques, enhanc- envi- specialized in workers can young to training provide programs works public new countries; many in creation job of source traditional a is construction ing large numbers in infrastructure maintenance and hous- employing example, For industries. emerging support bolster their future income generating potential and c) to development capital human and formation skill of components integrate b) people; young vulnerable for employment wage temporary provide a) would grams Schemes challenges andopportunities. market of entrepreneurs small inform better to ogy technol communications and information and credit to them, access have SMEs that ensure support Toshould governments services. and goods for demand domestic serve and consumers local to more cater can sector SME the time, same the At enterprises. sector formal larger in jobs losing be will who those of ber num- large a absorbing SMEs the in result likely will Moreover,sectors. informal crisis economic global the and formal the both in East Middle the across ment employ- total of share significant a for account SMEs retain workers with reduced hours. hours. reduced with workers retain to encouraged are publicly employers a wherein scheme the funded through in supported workers be off should lay to downturn likely are as who such tourism, industries, in Employers seekers. job time first- recruit and workers young retain to large) and (small businesses sector financial private other formal to and incentives young relief for tax providing creation by job people foster can makers Policy works small-
for
programs: Governments should establish hiring and medium-size
or
retaining enterprises
young 31
Such pro Such employees: (SMEs): - - 27 DA N E G A Y C I L O P W E N A • Engage in a national dialogue: Governments should Policy Proposals engage in open dialogue involving private sector, civil society, and citizens to provide transparent informa- We propose ten policy recommendations to be consid- tion on the economic crisis, risks and opportunities, ered for implementation on the national and local level. as well as roles and responsibilities. This is critical to These recommendations aim to both address the short- bolstering confidence and resetting expectations of term job crisis and support the long-term goals of human young people toward a private sector driven economy. capital development.
Promote access to secondary and university PROPOSAL ONE: Countries committing to fiscal stimulus education for marginalized groups. 2 should target jobs for young people. Youth from poor socioeconomic backgrounds have reduced access to education, especially at the secondary PROPOSAL TWO: Promote access to secondary and and tertiary level. Their transition from education to the university education for marginalized groups. labor market often involves dropping out of school early and starting work in the informal sector or being inactive PROPOSAL THREE: Reform university admission policies (neither in school nor in employment). In this regard, the to promote better skills development. provision of targeted monetary incentives for students from low-income backgrounds to continue on to second- PROPOSAL FOUR: Reform public sector hiring practices. ary and university education should be considered. PROPOSAL FIVE: Invest in scaled-up volunteerism and Reform university admission policies to promote service learning programs for young people. 3 better skills development. How universities select students influences how and what PROPOSAL SIX: Expand training schemes targeting students learn at lower levels of education. Thus, the lure of young people carefully. university education in the region suggests using university admission policies to change learning incentives for students PROPOSAL SEVEN: Raise the value of informal jobs at the primary and secondary levels. Future firm competitive- through investments in skills development. ness will depend on a supply of labor with a range of skills such as teamwork, critical thinking, leadership capability, and PROPOSAL EIGHT: Invest in the social services sector for problem-solving. University admissions policies that place job creation and human capital development. a high value on such skills can provide students and parents with the incentives to acquire them. In this regard, university PROPOSAL NINE: Invest in technology to provide better admission criteria should be changed to give more weight job information, matching and career counseling. to past work experience and volunteerism that promote the development of life skills at younger ages. By expanding the PROPOSAL TEN: Provide social protection for all workers. assessment of applicants to these areas, regional universities would send strong signals about the importance of life skills, leading students and their parents to invest more in these areas. In addition, university admission exams should be reformed to test a broader range of skills beyond rote memo- rization, such as writing and critical thinking. 28 MIDDLE EAST YOUTH INITIATIVE 5 4 establish a Youth Corps, a publicly funded program that program funded Youthpublicly a a establish Corps, to together work should society civil and sector private the government, gap, this To resolve societies. their to programs focusedongetting youngpeopletocontribute ing is under-developed and there are no credible national build and social skills capital. However, new in the Middle East, service learn- develop to people can young enable positions Volunteer employment. and education between bridge a as act can learning service jobs, first their finding in face people young waits long the Given ment onskillformationintheregion. begin to reduce would the negative grip of government efforts employ- reform Such skills. of little evaluation and proper credentials educational on based are which methods, current from away hiring government direct to begin would employers and teachers from letters tion prospective recommenda- of use judicious and entrants market labor for exams Written numeracy. functional and abilities language records, academic traits, personal evaluate that process hiring the to interviews and ments assess introducing include sector public the by signals these transmit to taken be can that steps Intermediate better signals to young people, their parents and schools. motion measures that stress productivity, in turn sending pro- and pay merit-based introduce could the sector public but slump, a during especially not are feasible, code politically service civil the in changes Deep ment. employ sector public of to effects distortion guarantees, the job remove lifetime to respect with especially run, long the governments should change their employment practices, In insecurity. economic of time a at so more become may and desired highly still are jobs these smaller numbers of high school and university graduates, hiring are region the in employers sector public While
learning programs foryoung people. Invest inscaled-upvolunteerism andservice hiring practices. Reform publicsector - - 6 8 7 pects and earnings. pros- job improved on programs such of impact limited the to points countries developed Middle from the evidence in East, interventions training of effectiveness the of evaluations rigorous few are there While be critical. will people young training in investments emerge, creation job of sectors new and changes economy the As volunteer positions foroneortwoyears. undertake to people young to stipends and projects) housing clinics, hospitals, schools, (e.g., tions institu- non-profit local to guidance and grants provides capital, and fulfilling the long-term needs of citizens in citizens of needs long-term the fulfilling and capital, opportunitiescreation,jobfor developmentthe humanof sectaround theprovision socialof services, provides great Thesocial sector, where public andprivate interests inter profit) intheinformalsector. for- and non-profit (both providers training private of use the encourage vouchers—to or funds training e.g. incentives— new with experiment should Governments workers. young their for development skills and training medium-size in invest to likely and less are enterprises These enterprises. small-, micro, informal in careers their starting are people young of numbers Significant youth. for so experiences jobs work valuable provide informal they that of raise enhancement that skill and policies value to the given be should priority High ers tomeasuretheimpactoftheseprograms. implementing evaluation schemes that allow policy mak- while success, some shown have that programs training of expansion temporary and careful a in engage should
investments inskillsdevelopment. Raise thevalue ofinformaljobsthrough and humancapitaldevelopment. sector forjobcreation Invest inthesocialservices young peoplecarefully. E xpand training schemestargeting 32 Thus, Middle Eastern governments - 29 DA N E G A Y C I L O P W E N A various domains. There are three main goals with regard of mechanisms such as unemployment insurance, in to investing and supporting the social service sector. First, the context of greater institutional flexibility for private there should be policy efforts to develop young people’s sector employers, helps eliminate the institutional rigidi- skills in key social services and to increase incentives for ties that protect established workers at the cost of job young people to take on professions in this sector. Particular creation for youth. Many countries in the region, such focus should be on services that are currently underserved, as Egypt and Syria, are exploring such social protection including health care and education. Second, increased policies for workers. Despite—or perhaps especially professionalization and rewards should be developed to because of—the current economic downturn, these poli- increase young people’s interest in these occupations. cies should be developed to have broad coverage, offer Finally, the ‘infrastructure’ of the social sector should be real protection, and be financially sustainable. supported to foster the emergence of social entrepreneurs and innovation in service provision. This can include relax- ing legislation for the formation of social ventures, increas- ing access to credit for initiating and scaling up of successful service delivery programs, and providing technical support and capacity building to existing programs.
Invest in technology to provide better job 9 information, matching and career counseling. Young people need better information, advice, and career counseling on the changing realities of the labor market. The Middle East has an underdeveloped infrastructure— limited career centers at schools and universities, short- ages of well trained career counselors, and limited use of modern technology and virtual social networking—to provide timely and relevant information to young job seekers. Information flows can be enhanced by public- private partnerships that invest in career centers, training of counselors, and the adoption of innovative solutions to reach youth (e.g., mobile phone text messaging for job alerts).
Provide social protection 10 for all workers. The heart of this new strategy involves replacing old job protection rules and regulations with social protection and social insurance policies. Eliminating job protec- tion rules and regulations is politically difficult, if not impossible, and may exacerbate existing negative feelings toward competitive markets. But the implementation Jamila Hassoune’s “Caravane du Livre Annual Workshop” April 2007. Tahanout, Atlas Mountains, Morocco. © Photo: Samantha Constant Emerging Stronger After the Downturn: The Imperative of Regional Cooperation 31 ONGER AFTER N R U T N W O D E H T R E T F A R E G N RO T S G N I G R E M E iven the scale of the economic crisis and the com- lack of timely information on youth conditions and those monalities of long-term challenges facing young innovations apt for scaling up. Gpeople across the Middle East, progress hinges upon greater cooperation between countries. The best Exploiting the benefits of regional cooperation means solutions can be found within the region: the variety of building stronger linkages between these three domains— experiences in the region provides localized ideas—a policy, knowledge, and investment. By bolstering and pooling source of strength that is largely untapped in the quest efforts in research and knowledge, countries can generate for improving the welfare of the young generation. best practices and evidence on what works and what does not in the area of youth policy and programs. By forging In recent years, several countries, including Egypt, greater cooperation on policy development, policy makers Jordan and Yemen, have launched youth-oriented, multi- can create a process for exchange that will provide support sector strategies that seek to align reforms across educa- in their pursuit for long-term reforms. Investments in poli- tion, employment, and other related areas. We have also cies and programs can have a better return and prove more seen the rise of several regionally-oriented funds and effective when informed by evidence based knowledge and organizations that are focusing on promoting better lessons from across the region (See Box 9). outcomes for young people, such as the Mohammed bin Rashid Al Maktoum Foundation (Dubai, UAE) and The inclusion of young people is the most critical 21st Silatech (Qatar).33 However, capitalizing on these efforts century economic development challenge facing the requires overcoming the divide between the processes Middle East. Solving this challenge has long been critical of policy development, knowledge creation, and investment in to the prosperity and stability of the Middle East. Now in youth programs. Across borders, governments, the private a downturn, it is set to become more complex and urgent. sector and civil society organizations operate largely in The time is now for forging greater regional cooperation to isolation from each other. At the regional level, there is build more effective policies, knowledge and investments insufficient learning on the effectiveness of policies and a toward a better future for the young generation.
Box 9: Benefits of Regional Cooperation
• Maximize the benefits of ongoing economic and social • Develop new instruments for aligning policy and program reform through sustained and collective action on youth action. development. • Create public-private partnerships to scale up innovations • Generate knowledge and good practices to support policy in youth service provision across borders. makers in weathering the global economic slowdown, as • Enhance country capacities for developing and imple- well as fostering positive long-term impact. menting policies and programs. 32 Endnotes
1. World Bank, The Road Not Traveled: Education Reform in the 11. Dhillon and Yousef, ed., (forthcoming 2009). Middle East and North Africa (Washington, D.C.: World Bank, 2008). 12. Ragui Assaad and May Gadallah, “Pathways from School to Work for Egyptian Youth,” Middle East Youth Initiative 2. Taher Kanaan and May Hanania, “Youth Exclusion in Working Paper (Washington, D.C.: Wolfensohn Center Jordan,” in A Generation in Waiting, ed. Navtej Dhillon and for Development at the Brookings Institution and the Tarik Yousef (Washington, D.C.: Brookings Institution Dubai School of Government, forthcoming 2009). Press, forthcoming 2009). 13. Assaad and Gadallah, (forthcoming 2009). Assaad and 3. Navtej Dhillon and Tarik Yousef, ed., A Generation in Gadallah categorize wealth quintiles using a measure that Waiting (Washington, D.C.: Brookings Institution Press, takes into account ownership of household durable assets
MIDDLE EAST YOUTH INITIATIVE forthcoming 2009). and housing conditions. The monthly wages range for the “middle income” group referenced here is from LE 4. Susan Razzaz and Farrukh Iqbal, “Job Growth without 168/month (approx. $30/month; 5th percentile) to LE Unemployment Reduction: The Experience of Jordan,” 1560/month (approx. $277/month; 95th percentile); the (Washington, D.C.: World Bank, 2008). mean is LE 710/month (approx. $126/month); and the median wage for this quintile is LE 475/month (approx. 5. Nader Kabbani and Noura Kamel, “Tapping into the $84/month). Economic Potential of Young Syrians: Ensuring Economic Inclusion During a Time of Transition,” in Dhillon and 14. Assaad and Barsoum, (2007). Yousef, ed., (forthcoming 2009). 15. Assaad and Gadallah, (forthcoming 2009). 6. Jay Squalli, “The UAE: An Examination of Recent Trends,” Middle East Youth Initiative Background Paper, 16. International Labor Organization (ILO), Global (Washington, D.C.: Wolfensohn Center for Development Employment Trends for Women (Geneva: International at the Brookings Institution and the Dubai School of Labor Organization, 2007). Government, forthcoming 2009). 17. Assaad and Barsoum, (2007); Salehi-Isfahani and Egel, (2007). 7. Djavad Salehi-Isfahani and Daniel Egel, “Youth Exclusion in Iran: The State of Education, Employment and Family 18. Daniel Egel and Djavad Salehi-Isfahani, “Youth Education, Formation,” Middle East Youth Initiative Working Employment and Marriage Transitions: Evidence from the Paper 3 (Washington, D.C.: Wolfensohn Center for School to Work Transition Survey,” Middle East Youth Development at the Brookings Institution and the Dubai Initiative Working Paper (Washington, D.C.: Wolfensohn School of Government, 2007). Center for Development at the Brookings Institution and the Dubai School of Government, forthcoming 2009). 8. Ragui Assaad and Ghada Barsoum, “Youth Exclusion in Egypt: In Search of ‘Second Chances,’” Middle East 19. Christine Binzel and Ragui Assaad, “Pathways to Marriage Youth Initiative Working Paper 2 (Washington, D.C.: in Egypt: How the Timing of Marriage for Young Men Wolfensohn Center for Development at the Brookings is Affected by their Labor Market Trajectory,” Middle Institution and the Dubai School of Government, 2007). East Youth Initiative Working Paper (Washington, D.C.: Wolfensohn Center for Development at the Brookings 9. World Bank, (2008). Institution and the Dubai School of Government, forth- coming 2009). 10. Ibid. ENDNOTES 3333 For Protection and Promotion: World Development World Report 2007: Development Simeon Kerr and Andrew England, “UAE to Safeguard February 18, 2009. Jobs of Nationals,” Financial Times, Margaret Grosh et al., The Design and Implementation Bank, 2008). World D.C.: (Washington, of Effective Safety Nets Bank, World and the Next Generation D.C.: (Washington, Bank, World 2006). For more information see: http://www.mbrfoundation. Silatech.com. com.ae/English and http://www. 30. 31. 32. 33. Youth Youth Global Employment (Geneva: International Labor Global Economic Prospects 2009: Forecast World Bank, “The PerformanceMacroeconomic of Housing Supply andMENAPolicies Countries: Sectoralin Selected A ComparativeEgypt, Iran,analysis. Jordan, Algeria,Lebanon, Bank, 2005). Morocco, D.C.: World (Washington, Yemen,” Tunisia, and Youth “Stalled Dhillon, Navtej and Salehi-Isfahani Djavad inTransitions the Middle East: A Framework for Policy Reform,” Middle East InitiativeYouth Working Paper 8 Development for Center Wolfensohn D.C.: (Washington, at the Brookings Institution and theGovernment, 2008). Dubai School of Salehi-Isfahani and Dhillon, (2008). European Training Foundation and in Education the and theTraining Vocational Reforming Technical World Bank, Middle East and North Africa: Experiences and Challenges(Luxembourg: Office for Official European Communities, 2005). Publications of the Salehi-Isfahani and Dhillon, (2008). Ahmed Younis, “ArabDisillusionment: Youth Toward a NewBetween U.S. MiddleStrategy East,”(presented Hopein the atand the BrookingsWashington, Institution, D.C., November 8, brookings.edu/~/media/Files/events/2008/1110_2008). http://www. meyi/20081110_presentation.pdf. Salehi-Isfahani and Dhillon, (2008). World Bank, Bank, 2009). D.C.: World Update (Washington, International Labor Organization, Trends, January 2009 Organization, 2009). ed., Freeman, B. Richard and Blanchflower G. David Employment and Joblessness in Advanced Countries (Chicago: University of Chicago Press, 2000). 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. Middle East Youth Initiative Visit us at: http://www.shababinclusion.org
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