End reliance on public jobs, IMF tells Middle East countries

International Monetary Fund (IMF) managing director Christine Lagarde (CNN)
Updated 12 February 2018

End reliance on public jobs, IMF tells Middle East countries

DUBAI: Middle East countries must equip their youth with skills for the private-sector workplace to help curb dependence on government employment, International Monetary Fund (IMF) managing director Christine Lagarde said.

Failure to encourage a transition to the private sector would lead to “a very messy situation if there are no jobs around,” Lagarde told CNNMoney Emerging Markets EditorJohn Defterios.

“Five million (young people) per year every year (will be entering the job market) in the next five years, so there has to be a focus on helping them access the job market, making sure they’re equipped with the skills to adjust to what will be a new workplace,” she said.

The IMF chief said that youth unemployment is a particular concern in the Middle East and North Africa, with jobless rates as high as 30 percent in nine out of 21 countries in the region. The region’s population is among the youngest in the world, with over 40 percent under 20 years of age.

“More young people are coming (to the job market),” she said.

With about 5 million entering the region’s job market annually, there has been pressure on governments to absorb the new workforce through public employment, though the IMF said that this had not translated into lower overall unemployment.

In a study released last month, the IMF called on Middle East countries to reduce their bloated public wage bills at a time of heightened fiscal constraints.

“The use of public wage bill policies to influence broad socioeconomic outcomes has not achieved the desired objectives. Though other factors are also at play, countries continue to struggle with high unemployment, poverty and inadequate service delivery,” the study said.

Public wage bills in the Middle East and North Africa region, as well as Pakistan, are higher than in other emerging market and developing economies, the IMF said. In the past 10 years, these countries allocated an average 6 percent of annual GDP, or about a fifth of their total expenditure, to the government payroll.

“Wage bills are now weighing on fiscal sustainability amid slowing or declining fiscal revenue and economic growth due to lower oil prices and remittances. If left unaddressed, these tensions will intensify in the coming years due to demographic changes and technological innovation,” the IMF said.

Lagarde said that “there has to be a shift from assuming the public sector will employ everybody, as was the case in many countries in the region.

“(We should) welcome the private sector, giving it some certainty, so that investors feel comfortable, (thereby) creating activity, employing young people and avoiding what would be a very messy situation if there were no jobs around,” Lagarde said.

“(Without jobs) there would be no hope,” she said.

Saudi energy minister compares electric vehicle ‘hype’ to peak oil misconceptions

Updated 52 min 51 sec ago

Saudi energy minister compares electric vehicle ‘hype’ to peak oil misconceptions

  • Khalid Al-Falih on Monday questioned what he described as the “hype” of the electric vehicle market
  • Compared it to past misconceptions around the theory of peak oil

LONDON: Saudi Energy Minister Khalid Al-Falih on Monday questioned what he described as the “hype” of the electric vehicle market and compared it to past misconceptions around the theory of peak oil.
He told the CERAWeek energy gathering by IHS Markit in New Delhi that petrol and diesel engines would co-exist with emerging electric and hydrogen fuel cell technologies for much longer than widely expected.
Miscalculations around the pace of electrification could create “serious” risks around global energy security, he said.
“Conventional vehicles today, despite all the hype, represent 99.8 percent of the global vehicle fleet. That means electric vehicles with 0.2 percent of the fleet, only substitute about 30,000 barrels per day of oil equivalent of a total global oil demand of about 100 million barrels.
“Even if those numbers increase by a factor of 100 over the next couple of decades, they would still remain negligible in the global energy mix.”
He said: “History tells us that orderly energy transformations are a complex phenomenon involving generational time frames as opposed to quick switches that could lead to costly setbacks.”
In another broadside aimed at electric vehicles, the Saudi energy minister highlighted past misconceptions about global energy demand growth — and specifically the notion of “peak oil.”
“I remember thought leaders within the industry telling us that oil demand will peak at 95 million barrels per day. Had we listened to them and not invested . . . imagine the tight spot we would be in today.”
“Let’s also remember that in many parts of the world, roughly three fourths of the electricity, which would also power electric vehicles, is currently generated by coal, including here in India. So you could think of any electric vehicle running in the streets of Delhi as essentially being a coal-powered automobile.”
“When it comes to renewables, the fundamental challenge of battery storage remains unresolved — a factor that is essential to the intermittency issue impacting wind and solar power. Therefore the more realistic narrative and assessment is that electric vehicles and renewables will continue to make technological and economic progress and achieve greater market penetration — but at a relatively gradual rate and as a result, conventional energy will be with us for a long, long time to come.”