How can we tackle youth unemployment in the Middle East?

This article is published in collaboration with GE Look Ahead.

Landing a job is often a source of frustration and a top concern for millennials in the Middle East and North Africa. In a recent survey by Bayt.com, a leading career site for the region, 83% of those aged 18-34 agreed that finding a job was a major challenge in their country.

Unemployment statistics released earlier this month by the International Labour Organisation (ILO) support their concerns. As reported by the ILO, the 2014 unemployment rate for 15-24-year-olds was 28.2% in the Middle East and 30.5% for North Africa, the highest in the world and more than double the global average of 13%. Gender differences were also strongest in the region, with unemployment rates among women higher by some 20 percentage points, on average, than those for men.

Excess youth labour has long been a challenge for MENA, where youth unemployment rates have exceeded 25% since 1991. High fertility rates combined with a rapid decline in infant mortality over the past 50 years have meant not only more children in absolute terms, but an ever-larger cohort of young people within the population as well. By the early 2000s, for every job that was created, four jobseekers entered the labour market. To employ those currently out of work, along with those expected to graduate over the next several years, consultancy firm PWC projects that 80m new jobs will have to be created by 2020.

Achieving such rapid employment growth will require structural reforms and a coordination of public and private efforts. This is particularly important given the current mismatch between the education system and the job market—those with tertiary education are three times more likely to be unemployed than those without. The expected rise of enrollment in higher education only adds to the urgency.

Private-sector development will be another critical part of the solution. “Globally, and especially in MENA, entrepreneurship is a buzzword,” says AMIDEAST’s CEO and president, Ambassador Theodore Kattouf, “but to succeed, you have to create the conditions that will nurture young talent.”

One such condition is adequate levels of investment. “Overall, the region has not been getting the foreign direct investment that it needs,” says Dr William Lawrence of George Washington University in Washington, DC. Nearly two in three small or medium-sized enterprises (SMEs) in the region, for instance, do not have access to finance, according to the International Monetary Fund, resulting in a regional funding gap of between $210bn and $240bn.

One promising development is the rise of connectivity across the region that, coupled with a high interest among youth in digital technology, has brought crowdfunding and peer-to-peer investing to the region’s SMEs. Some, like Lebanese crowdfunding platform Zoomal, are open to the general public, while others, like Shekra, an Egyptian crowd-investing network, pre-select investors and start-ups. Shekra also provides training to start-ups.

Meanwhile,the online work platform Nabbesh.com, based in Dubai but available across the region, has emerged as a go-to site for freelancers and the unemployed. With more than 81,000 members, Nabbesh connects workers and employers online, creating flexible work opportunities in areas ranging from web development to design and photography. The company recently partnered with Qatari company Silatech to provide online work opportunities to Palestinian youth, whose unemployment rate is around 40%.

Access to finance or online work means little, of course, if the transaction costs of doing business are too high. This is an area where Middle Eastern countries need to improve if they want to unleash entrepreneurship: Only one country in the region—the UAE—ranked in the top 25 in the World Bank’s “Ease of Doing Business” global ranking. Connectivity can help, but it is no substitute for policy and business reforms.

Publication does not imply endorsement of views by the World Economic Forum.

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Author: Jennifer Silvi writes for GE Look Ahead.

Image: Job seekers wait for employers seeking casual labour. REUTERS/Mike Hutchings.