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Last Updated: Friday, 19 September, 2003, 10:47 GMT 11:47 UK
Jobs 'key' to Middle East growth
Saudi goatherd
More good jobs are needed in the Arab world
Arab countries must create millions of new jobs in the next decade or face growing social unrest, the World Bank has warned.

Over the next 20 years, the countries of the Middle East and North Africa must create 100 million new jobs, more than the number of jobs created in the region the last fifty years.

The challenge is acute because of the high growth rate of the region's labour force, which is increasing at 3% each year, amid slowing economic growth.

The region already has an unemployment rate of 15%, as many of its increasingly educated young people are unable to find jobs after leaving school.

The total labour force is expected to increase from 104 million in 2000 to 146 million in 2010 and 185 million by 2020.

"The Middle East's economic future will be determined by the fate of its labour markets," said the World Bank's vice president for the Middle East, Christiaan Poortman.

Economic reform

In a series of new reports, the World Bank and IMF have been focusing on economic reform in the Middle East, as they hold their first ever annual meeting in the Arab world, in Dubai, this week.

Dubai: oil wealth has not always been used productively
In its report, the World Bank calls for urgent reform of labour markets, which it says are dominated by government provision of public sector jobs - a strategy it says is inefficient and will becoming increasingly less economically viable as oil revenues fall in real terms.

But it says more reforms are needed, including the diversification of Middle East economies to make them less dependent on oil, and an opening of markets to global competition.

A better regulatory framework is also needed to allow the private sector to flourish, and government institutions need to be strengthened.

The World Bank calls for a new "social contract" between the people and their governments, to replace the failing old order which emphasised states over markets and sought to reduce inequality through ever greater state spending.

It says that so far, economic reform has been "uneven, hesitant and incomplete".

Between 1980 and 2001, the Middle East and North Africa region grew at an annual average of 3.1%, compared with 3.4% for developing countries as a whole, and 6.4% for dynamic south-east Asia.

But taking into account population growth, the Middle East's growth rate of 1% per capita was the worst of any region except sub Saharan Africa.

Demographic boom

The World Bank says the rate of population growth is slowing in the region, from 2.5% annually to 2% - but this is still much higher than the world average of 0.5%.

In the short term, the growth of the economically active population - those between 15 and 64 - will continue to accelerate, faster than any other region in the world.

According to the World Bank's Tariq Yousef, this "demographic gift" offers the Middle East "an opportunity to accelerate economic growth" if it can reach near-full employment.

But the challenge of the demographic transition is the need to tackle youth unemployment, the report says.

Half of the young people in the region are without work, ranging from 37% in Morocco to 73% in Syria.

This provides a fertile ground for recruitment by extremist groups.

The World Bank emphasises the need for reform of the education system, which does give people the practical skills needed to function in the global economy, and calls for the greater inclusion of women in the labour force.

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