In the coming decade, the Arab World will need to create a staggering 75 million jobs - an increase of 40 per cent more than currently exist - to keep pace with the young and fast-growing population set to enter the workforce. However, with the substantial jobs-skills mismatch currently plaguing the region, this much-needed rise in employment may not be achievable. Management consulting firm Booz & Company along with the World Economic Forum and Saudi Basic Industries Corporation (SABIC) have identified various ways in which large employers can significantly bridge this widening skills gap, by adequately leveraging their "ecosystem" - which refers to the collaboration network that large employers nurture with strategic partners, clients, suppliers, educational bodies and government institutions. The region's recent political uprisings require an imminent and urgent response to employment challenges as the revolutions which unraveled have demonstrated that widespread economic inequality can stir social turmoil. These transitions have, effectively, accelerated changes in public sentiment, raised levels of engagement and heightened expectations region-wide. For such reasons, innovative thinking and responses, framed within a shifting socio-political context are quickly needed to dent unemployment in this part of the world. In addition to this, more than half of the region's population is under 25 years of age - a high proportion which generates significant pressure on job creation. "These young people complete their formal education and then seek to enter the labour force, which poses the challenge of providing them with meaningful jobs so as to truly reap the benefits of this economic potential," said Chadi Moujaes, partner with Booz & Company. In fact, according to World Bank data, the six GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) have some of the highest youth unemployment rates in the world, as high as 40 per cent among certain age groups. A key factor behind this level of unemployment is the mismatch between the skills garnered through educational systems and providers and those actually required by the private sector. Enterprises in the region regularly identify a shortage of appropriate skills as the greatest impediment to hiring employees: The World Economic Forum's "Global Competitiveness Survey" identified "inadequately-educated force" as the fourth most problematic factor in the Arab World, after access to financing, restrictive labour regulations and inefficient government bureaucracy. It is important to note that "inadequately educated" does not signify "uneducated". Indeed, unemployment across the Arab World is also high amongst the most educated: over 43 per cent of those with tertiary education are unemployed in Saudi Arabia, 22 per cent are unemployed in Morocco and the United Arab Emirates, 14 per cent in Tunisia and over 11 per cent in Algeria. The solution to the youth unemployment challenge in the region is therefore not simply better education. Based on the World Economic Forum and Booz & Company's study on The Role of Large Employers in Driving Job Creation in the Arab World, the labour force across the Arab World lacks both the job-specific and general employability skills that would allow them to be productive and motivated members of the workforce. A new paradigm: While the changes in public sentiment and the level of channels for youth engagement may be relatively new for the region, the employment challenge itself is not. "Governments in the GCC have attempted to alleviate their unemployment crisis in recent years through two main initiatives - mandating quotas for hiring nationals and contributing to the cost of employing them," explained Samer Bohsali, partner with Booz & Company. "While these policies have had some success, they have not met the objectives that they set out to achieve." A new paradigm is needed to tackle the climbing unemployment rate in the Middle East. In this model, potential jobs need to be identified, followed by specifically-tailored training programs designed to deliver the required skills. Key stakeholders in this paradigm include government, business, and academia - all of whom must combine their efforts to align skills with national economic needs, thereby maximizing the impact of the new approach. "It is only by working together in a new paradigm of multi-stakeholder partnership that regional stakeholders can hope to have a significant, positive impact on job creation across the Arab World," said Moujaes. The contribution of large employers to job creation: It is large employers, rather than governments, that can play an increasingly important role in job creation, by fostering the development of skilled national work forces. These employers - whether state-owned enterprises (SOEs) or private family-owned conglomerates - dominate the national economies and they can, in the short term, best understand what the labor market needs and spearhead a number of job-creation opportunities accordingly. "They have the levers to influence decisions within their organizations as well as within their suppliers, and thus have the ability to develop national talent for the required jobs," added Bohsali.
