MENA

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Arab Population Growth Causing "Chronic" Unemployment Problem

The United Nations Economic and Social Commission for Western Asia (ESCWA) is warning of hard times for the people and governments of the Middle East. The new Survey of Economic and Social Developments in the ESCWA Region 1998-1999 says that urgent policies are needed to check worsening unemployment due partly to high population growth. The total population of the ESCWA member countries (comprising all the Arab countries not in Africa plus Egypt) has almost doubled in the last 20 years, growing from 87.8mn in 1978 to 157.6mn in 1998, an average annual increase of 2.9%. It is projected to reach 210mn by the year 2010, accounting for 5% of the population in Asia and 3.1% of the world.

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The boom has resulted in a young population, 41% of which is below 15 years of age. This is causing a "rapid" increase in the number of people entering the labor market, and, according to the report, economic growth has been insufficient to generate employment opportunities to absorb the new wave of workers, posing a "threat to social stability." The report warns that the situation will get worse: "With the disproportionately high percentage of young people reaching child-bearing age, the growth momentum will increase the regionםs population rapidly."

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Dr. Muhammad Fawar, professor of sociology and demography at the American University of Beirut (AUB) and a consultant for the population section of ESCWA, told MEES that political stability might be threatened. "When you have a large percentage of unemployed people, you have more grievances and more discomfort with the situation, and that could lead to upheavals and disturbances." He also warns of social problems. "You will have a higher percentage of permanently single men and women," he said. "You could also see problems within the family. If you have parents supporting offspring who are 30 years of age, this is not common and is bound to cause problems." He believes that the situation is worst in Palestine and Yemen. "They will be hit hard because their economies are not growing at a high rate, while their populations are growing very rapidly," he said.

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The rapidly increasing indigenous labor force in the GCC countries, which is growing by an average annual rate of 5%, in addition to a combined population growth rate, estimated at 3.3% annually, have forced these countries to investigate policies that will create adequate employment opportunities for their own nationals.

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ESCWA expects the GCC countries and Jordan to apply more forcefully the policy of "indigenizing" their work forces and expelling illegal workers. "Such enforcement will, in turn, add to the difficulties within Egypt, Lebanon, Syria and Yemen, which have traditionally been the labor-sending countries in the region," the report said. Dr Faour adds that it is not just illegal workers who are expelled. "If there are expatriates who are unemployed, they just kick them out," he said. "They lose their residency permits and they have to go back to their home countries."

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The report says that efforts intensified in 1998 to have GCC nationals replace expatriate workers whenever possible, by giving incentives to private companies to employ nationals or levying penalties on companies that do not meet a recommended quota of GCC nationals in their workforce.

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Such indigenization policies are being enforced with varying degrees of success. According to the report, Bahrain has been the most successful. Its public sector has the highest level of local employees among the GCC countries, estimated at 90%, while in the private sector Bahrainis account for 66% in banking and finance, 38% in manufacturing and 14% in construction. "Oman has also achieved some success, to a limited degree, in its Omanization endeavor in the banking and finance sector," the report said.

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However, in what can be viewed as a sharp reaction to indigenization, hundreds of unskilled Egyptian workers clashed with Kuwaiti police in October in what Reuters described as "the worst rioting in [Kuwaitםs] history." The disturbances followed a scuffle between Bangladeshi and Egyptian expatriates frustrated by lack of job security and cash shortages. Egyptians make up some 250,000 of Kuwaitםs 1.4mn foreign labor force, in a country of 2.2mn people.

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The rioting in Kuwait highlights the severe social problems and possible security threat posed by the sizeable expatriate populations in the GCC countries. According to the International Institute for Strategic Studies, foreign workers form the majority of the populations of the UAE, Qatar and Kuwait (76%, 75% and 65% respectively) and are a large minority in Bahrain, Oman and Saudi Arabia (37%, 27% and 27% respectively).

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The Gulf Daily News, a Bahraini newspaper, reported on 8 November that Filipinos in Bahrain, numbering about 30,000 in a country of only around 625,000, are to be given identity cards to help monitor their numbers. Deutsche Bank, in its 1998 Economic Report and Directory, warns of the consequences of Bahrainםs "chronic" unemployment problem (estimated at 15-25%): "Social tensions, which have previously resulted in outbreaks of violence, could flare up once again."

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Yemen and Jordan were estimated to have the highest unemployment rates in 1998 in the ESCWA region at 27% and 21% respectively, and Yemenםs Planning and Development Minister, Mr. Ahmad Muhammad Sufan, said in October that Yemenםs population had reached 17.58mn and was expected to double in 20 years. This does not bode well for one of the poorest Arab countries, where the number of people under the poverty line is on the rise, according to the government itself. Last month, the Central Bureau of Statisticsם report said surveys conducted last year showed the number of families under the poverty line in terms of food consumption reached 12.9% in urban areas and 18.8% in rural areas. The report also said that the upper poverty line, measured by deprivation of services such as housing, health, education and transportation, reached 25.3% in urban areas and 33.4% in rural areas.

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ESCWA says that Jordan has suffered from the decline in employment opportunities in the GCC countries. With its high labor force growth rate of approximately 5% coupled with a large number of foreign workers in the country, Jordan has started cracking down on around 300,000 foreign workers who do not have valid work permits. In the face of an annual population growth rate of over 3% and a growing water shortage worsened by severe drought, King 'Abd Allah stressed this summer that new multi-million dollar donor financed projects to find new water resources had to be speeded up. Addressing parliament last month, the king also pledged to create jobs by attracting more foreign investment.

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The Egyptian Government estimated its unemployment rate in 1998 to be slightly below 10%, although other sources, including the International Labor Organization, estimated it at 17%. ESCWA estimates that the Egyptian economy would need to grow by 7% annually for at least five years in order to accommodate the 450,000 new workers that enter the job market every year and still reduce the overall unemployment rate by 5%.

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"In Egypt, the traditional labor-absorbing mechanisms of government employment, public enterprises and, to a lesser extent, external migration, are no longer effective," the report said. "At the same time, job creation in the private and manufacturing sectors has been slow and unable to absorb the excesses in the public sector. Most new jobs are in the low-productive, low-wage service and agricultural sectors, thus resulting in the continued deterioration of labor productivity."

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Unemployment in Palestine declined from 20.9% in 1997 to 15.6% in 1998 and 11.8% in the third quarter of 1999. According to the Palestinian Central Bureau of Statistics (PCBS), unemployment has been easing since 1995, after the Palestinian Authority (PA) was set up in parts of the West Bank and Gaza and public and private sectors were expanded. "Economic conditions have recently been improving, and there are new jobs for Palestinian workers both in Israel and in Palestinian areas, therefore weםve seen a drop in the unemployment rate," Mr. Salih al-Kafri, a labor expert at the PCBS, told Reuters last month. He added, however, that unemployment in Gaza is higher because border closures and movement restrictions to Israel are more strictly enforced on Gaza than the West Bank.

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The PCBS predicts that the resident Palestinian population will exceed 3mn by the turn of the century, with an annual population growth rate of 5.4%, and estimates the labor force at 585,000 in 1998, an increase of 5.9% from 1997. However the PA will be hard-pressed to keep job creation in line with population growth. According to a report published in August by the UN Conference on Trade and Development (UNCTAD), the Palestinian population in the West Bank and Gaza was estimated at 2,858,000 in 1998, a 6.4% increase from the previous year and more than double the average population growth rate for the ESCWA region.

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On the Syrian front, the ESCWA report suggests that "the relatively high Syrian population growthײat a time of economic slow-down in the country must have significantly increased the unemployment rate or at least under-employment." Unemployment in Syria was officially put at 5% in 1998, but according to the US Energy Information Administration (EIA), foreign diplomats say the rate is possibly three times as high. Furthermore, the EIA claims that Syria has one of the highest population growth rates in the region (about 4% per year). "It is quite clear that population growth average exceeds the rate of economic growth in Syria," said the on-line news source ArabicNews.Com.

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"The Syrian population growth rate is affecting unemployment greatly because the growth rate is not matched by similar growth in the base of capital," a source at the EU representative office in Damascus told MEES, adding that under-employment and double employment were also problems. "One of the things we fear, if nothing changes, is a major unemployment shock within a number of years," he said.

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Dr. Fawar says that efforts are being made in the ESCWA region to address population growth, such as family planning and reproductive health programs in various countries. "Even countries that do not have official population policies allow NGOs to do a lot of work," he said. "Many government agencies have programs aimed at curbing population growth, although they may not be declaring it openly." He added that in GCC countries, fertility has gone down due to the provision of contraceptives and increasing awareness and education among women. He cited Egypt and Yemen as countries that have deliberate population policies.

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He believes that curbing population growth is not enough. "There should be provision of education for particular sectors of the population, development programs such as rehabilitating certain sectors of the economy, and retraining the unemployed so they can be absorbed into the economy, because unemployment could be related to the nature of skills that these people have." He also says that social and economic development programs should be provided in under-privileged and rural parts of ESCWA countries.

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The ESCWA report suggests that the region should upgrade the quality of education to meet the technical requirements of the 21st century, with emphasis on cognitive and technically advanced skills. This will "require a re-evaluation of government budget allocations to reflect the increases in the number of institutes of higher education and the expansion of vocational training programs. The role of the private sector should also be restructured to become complementary to the public sector."

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