Arab youth: the challenge of tomorrow

Middle East, The, August-Sept, 2008 by Pat Lancaster, Pamela Ann Smith, Thomas Land

Given the high levels of unemployment in the Arab world as a whole, the biggest challenge is creating jobs, Oman's minister of commerce and industry, Maqbool Ali Sultan, told a conference on the Middle East's economic future: "The requirements are huge. We need to create jobs for 60m people in the next 10 years."

Whatever the estimates or recommended remedies, most of the experts appear to agree that action needs to start now. Saudi Arabia has already taken a lead by launching a determined drive to combine industrial development with job creation in the government's Vision 2020 programme. "The perennial challenge for the kingdom is to go beyond oil," John Sfakianakis, chief economist at SABB (formerly the Saudi British Bank) in Riyadh, said. "The oil and oil-related sectors no longer provide sufficient jobs." Government policy now seeks to move from creating new capital-intensive industries to those that are more labour intensive and which will create jobs to satisfy local and regional labour markets in the country.

"The social and demographic importance of the kingdom's industrial development is fundamental," Leroy Levy, a partner in the UK-based legal firm, Trowers & Hamlins, who is working on the development of three of the huge economic cities due to be built in the country, noted. "One of the key ideas is to effect a demographic change by building new infrastructure and providing jobs in remoter areas, so there is less need for people to migrate to the larger industrial and commercial cities." Given the kingdom's official unemployment rate of 12%--a figure that can rise to as high as 25% in some areas--diversifying development geographically is seen as a top priority.

Promoting greater private sector involvement in the economy is also a priority. New economic liberalisation measures have been announced in several sectors, including insurance, petrochemicals and tourism. "The government has realised that insurance can play a big part in employing Saudi nationals, so the sector is beginning to liberalise," comments Amgad Husein, a partner at the UK-based law firm Denton Wilde Sapte.

"Petrochemicals and industrial development offer a good opportunity to tackle unemployment," says Nouf Al Sharif, a research analyst at Riyad Bank. In line with many regional and international consultants, Al Sharif stresses the importance of finding new investment in the hydrocarbon industry's more labour-intensive "downstream" sectors, which also include refining, distribution and marketing, as well as the "upstream" sectors, i.e. exploration and production, where, according to Sfakianakis, "$1bn worth of investment creates only about 140 jobs".

"An investment of $1bn in the tourism industry would create many more jobs than in the oil and gas industries," adds Sfakianakis.

Even if it is just concentrating on developing Saudi Arabia as a destination for religious tourism, tourism could create about 1m jobs, estimates Dr. Essam Fakhro, head of the GCC's Federation of Chambers of Commerce and Industry. In a report for the Council last year, Fakhro emphasised the importance of GCC governments laying down a common strategy to develop tourism in the region in partnership with the Gulf's own entrepreneurs and private sectors.