September 21st, 2012
01:06 PM GMT
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Almost two years on from the Arab Spring and youth unemployment remains the Middle East and North Africa (MENA) region’s biggest problem, according to Saud Masud, chief executive of consultancy group SM Advisory.

Labor force participation rates are much below the global average, he said, with Middle East and North Africa at around 46 percent versus the global average of around 66 percent.

One of the main challenges, according to Masud, is a lack of essential skills among the region’s labor markets.

“The real issue here is that you can’t generate jobs by throwing money at it and you can’t generate jobs buy just subsidising any type of on demand job generation programme. The real challenge is skills mismatch,” he told CNN’s John Defterios.

“What you have here is people graduating from schools and colleges but they don’t have the marketable or the employable skills to really compete globally or even domestically.”

Governments, particularly among the wealthy Gulf states, are still relying on foreign workers to plug their countries’ skills gap, Masud said, a situation which can hide the problem of a lack of local talent.

“Saudi Arabia for example is looking to advance its economy, to build its infrastructure, to really look at an evolution of the market itself, [but] it is really still relying on foreign talent, [and] a lot of the foreign resources, because the local talent doesn’t have the skill set as of yet,” said Masud

“We’ve had decades and decades of wealth accumulation and surpluses in economies which are characterised as high income economies but fundamentally there has been a mismatch between what the true potential of the country can be, and what the local talent is being trained to do. So that really is the key friction point as we stand today.”

Adding to the crisis of a lack of skills is overbearing governments crowding out the development of the local private sectors with higher wages, said Masud.

“IMF data suggest that the central government wages bill is about 9.8 percent for Middle East and North Africa, versus about 5.4 percent for the rest of the world average.

"What that tells you is that if you’re in the public sector, lets say in the oil sector, the private sector can’t compete in terms of wages, and that disparity has to normalise…you’ve got to allow the private sector to come in and participate and it goes beyond just giving them tax incentives or subsidies, it also comes down to having some sort of levelling out of public wages and private wages.”

However with governments across the MENA region increasingly aware or their youth unemployment problem - and putting in place schemes to address the issue –- why is there  such a lag in youth job creation?

According to Masud, security risks, part of the ongoing fallout from the Arab Spring, are adding another layer of complexity to the problem of job creation in the Mena region.

“What’s happening right now is you’ve got security risks that are layered on top of the structural issues. Women are not really part of the workforce as they should be. [Put] these structural challenges on top of the recent security risks and your just not able to tap into that local reserve immediately and that is what’s keeping the employment number fairly high right now."

“Programmes are announced and by the time they are implemented on the ground, you really are in a scramble to get the right human resources to feed into them…because really you don’t want just anybody, you want the best talent to be able to get out of this situation.”

Filed under: BusinessGlobal Exchange


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