beyondbrics

Food price inflation, political stagnation and rapid population growth have fanned the fires of discontent among the enormous numbers of young people in the Middle East and north Africa who are unemployed and progressively better-educated .

As this week’s beyondbrics chart shows (below the break), the region has the highest rate of unemployment in the world and the second-slowest rate of economic growth – beating only the stagnant developed world.  In terms of youth unemployment, though, it is in a losing class all of its own.

More than 60 per cent of the region’s population are under 25 years old and their prospects are grim.

In many parts of the developing world reliable unemployment figures are hard to come by, but the International Labour Organization’s numbers are among the more credible. They point to the stubbornness of youth employment in the Middle East and north Africa.

Shortly before the outbreak of revolution, a report from the ILO referred to them as “a lost generation of unemployed young people”.

This sets them in stark contrast to their peers in south and east Asia, where general unemployment and youth unemployment are the lowest in the world and economic growth, the fastest.

There has been little or no sign of improvement over the past decade and the proportion of the population looking for work is rising more quickly than anywhere other than in sub-Saharan Africa.

The region’s oil wealth has done little to alleviate the problem. In Saudi Arabia, according to the ILO, the youth unemployment rate in 2009 was about 30 per cent, while foreign workers outnumbered local ones.

Last week King Abdullah of Saudi Arabia announced a raft of financial support measures to neutralise the threat of unrest. They failed to satisfy activists’ demands for reform. The government had previously unveiled $384bn of spending on housing, health and education. But similar previous projects – such as a five-year plan for 2005-2009 – designed to cut unemployment and “Saudi-ise” the workforce by encouraging small enterprise, have failed. Unemployment actually increased in the five years to 2009.

Nor do the high unemployment figures tell the whole story. In north Africa, the ILO writes:

many existing jobs are of low quality, underpaid, insecure and without respect for basic labour standards of representation of workers.

The outlook is far from uniform across the region and some countries, especially the smaller ones, are seeing higher rates of growth. But the Middle East remains the world’s slowest-growing region among those with rising populations.

That leaves an outlook of sluggish labour productivity growth with little scope for job creation, better pay or expanding social safety nets. The resulting social instability is exacerbated by rising food prices, putting a further burden on those parts of the population that do not benefit from oil revenues. Governments will have to look further than hand-outs to find a solution.