Unemployment is a particular concern in the Middle East. It peaked at 12.6 percent in 2003 and trended downward to 9.9 percent in 2010. However, it reversed its downward trend in 2011, rising to 10.2 percent. It is forecast to rise slightly higher to 10.3 percent in 2012. Around 2 million new jobs will need to be created in 2012 to keep unemployment at the same level.
According to QNB Capital, high unemployment is of particular concern given that despite strong growth forecasts in the Middle East of 4.9 percent in 2011 and 4.0 percent in 2012, current job creation mechanisms are not sufficient to combat unemployment. Consequently, more effective labor market reform is required to reverse the upward trend in unemployment.
The unemployment rate within the youth demographic of 26.2 percent in the Middle East is particularly high compared with 6.6 percent for adults. Also, the participation of women in the labor force is extremely low at 18.4 percent. Failing to employ particular segments of the population is unproductive as part of the work force will be underutilized. This restricts economic potential within the region.
According to QNB Capital, high unemployment is most likely caused by a combination of two factors. Firstly, a lack of relevant labor market skills, despite high and improving levels of educational qualifications. Secondly, the bulk of new jobs require specialized and expert skills that are being covered by expatriate workers at a professional and salary level beneath the expectations of local workforces.
In the GCC, there were 5 million employed nationals in 2010 and 4 million were expected to enter the work force in the next five years. The IMF estimates that unemployment amongst GCC nationals could increase by between 2 million and 3 million in the next five years, based on the continuation of current trends. Around 7 million jobs were created in the GCC in the last decade with less than 2 million of these going to nationals. This illustrates that unemployment is not a consequence of a lack of job creation.
Unemployment amongst nationals within the GCC is difficult to compare owing to a lack of data and differing definitions. Official estimates put unemployment of nationals in 2010 in Saudi Arabia at 10 percent, in the UAE 6.3 percent, in Bahrain less than 4 percent and in Kuwait 3 percent.
Unemployment in Qatar is lower than in any other country in the Middle East at 0.6 percent, including expatriates. This is mainly a consequence of extremely low unemployment amongst expatriates. As expatriate residence permits are linked to their employment, very few unemployed expatriates remain in the country.
Amongst Qatari nationals, the unemployment rate was 3.9 percent in March 2011. This is slightly lower than a year earlier when it was 4.1 percent. Unemployment amongst Qatari nationals is low as there are numerous opportunities available in the public sector and the private sector. This provides an increasing number of jobs and training opportunities to nationals.
A central tenet of government policy is to improve the education of the Qatari work force to ensure that nationals have the skills to meet the requirements of the labor market. The Qatar National Vision 2030, in which Qatar sets out its long-term goals and aspirations, states that the country will strive to increase the effective labor force participation of its citizens and to build a modern world-class educational system. The National Development Strategy 2011-16 proposes a range of programs to improve education, especially through technical education and vocational programs and their alignment with the needs of the labor market.
Huge investments have gone into education and developing Qatar University. QNB Capital estimates that spending on education reached 3.2% in 2011, one of the highest levels in the GCC. Qatar Foundation's Education City has attracted internationally renowned universities to Qatar to provide their strongest programs. This has made progressive education and cutting-edge research accessible to the future workforce.
The National Development Strategy also states that the participation of Qataris in the private sector should be promoted along with incentives to promote on-the-job training. The public sector plans to increase, and communicate more broadly, its available training options and scholarships. Strong investment and reform of education and the labor market will contribute to reducing future unemployment in Qatar.
