The MENA region reported the world’s highest unemployment rates in 2013 with 12.2% in North Africa and 10.9% in the Middle East, virtually the same as in 2012, the International Labour Organisation (ILO) said in the latest edition of its Global Employment Trends report. Tunisia had the highest jobless rate in MENA at 17.5% in 2013 and Qatar had the lowest at 0.6%. The 2013 economic growth rate in MENA was too low to create sufficient employment opportunities for a fast growing population, and consequently unemployment remained the highest in the world, according to the ILO.

The MENA economies suffer from a “specialization in sectors that generate low employment growth and from a lack of structural transformation towards high-productive industries,” the ILO underscored.

A few commodity-exporting sectors generate the bulk of the region's output but contribute very little to employment opportunities. Such sectors do not offer sufficient employment opportunities for the skilled young people, according to the ILO. The high salaries paid in these commodity-exporting sectors, moreover, boost labour costs and wage expectations more broadly, denting stronger job creation in other, more employment-intensive sectors in industry or services, the ILO underscored.

The smaller oil-exporting countries in MENA, mainly the GCC, redistribute the wealth generated from their oil exports through generous public employment offers to nationals. This further “pushes up wage premiums for natives and limits the capacity of these countries to develop a sustainable business sector outside a few highly productive sectors, the ILO said.

Many countries in MENA also suffer from a challenging business climate characterized by poor and limited infrastructure, such as costly, unreliable and inefficient supplies of electricity and water, the ILO noted. Such parameters further dampen and limit investment opportunities and growth. The demographic change characterised by a growing young population is, thus, considered to be a burden on the economy rather than an asset, according to the ILO.

The limited job opportunities will likely fuel social unrest and instability further in MENA as a youthful population face severely limited opportunities. Youth unemployment in MENA countries remains the highest in the world, reaching 27.2% in the Middle East and more than 29% in North Africa in 2013, the ILO said. This is reportedly more than twice the global average.

The youth labour force is expected to decline over the coming years in MENA, but this will provide only a short-term relief. As of 2020, long-term demographic projections indicate a return to stronger growth of the youth population, the ILO warned. MENA countries, thus, need to develop a labour market that can utilise the new entrants and benefit from the demographic dividend, the ILO noted.