Labor and Employment

The diversity of the socio-economic conditions of the Arab region is greatly reflected in the dynamics of its labor market. Demographic parameters and natural resources affect labor force, employment opportunities and income levels of residents. Moreover, this region includes states affected by violent crises and conflicts, such as Iraq, Syria, Yemen, Libya, Somalia and Palestine. Despite these differences, the Arab countries share common labor market features and face similar challenges. 


First, the labor force participation rate in the region is the lowest worldwide at 49.8% in 2015 [1], mostly due to the low participation rates of women. This rate is the lowest in conflict-inflicted countries such as Palestine (43.7%), Iraq (42.4%), and Syria (41.7 %) in addition to Jordan at 40%. The labor force participation rate is the highest in the GCC countries, reaching 84.6%, 80.1% in Qatar and United Arab Emirates respectively and 69.2% in Bahrain and Kuwait in 2015.2] This is explained by the fact that these countries are labor importers, so labor force participation rates include the foreign labor force that participates in the labor market.


Second, there is a wide mismatch between labor supply and labor demand resulting in high unemployment rates in many countries, especially among young men and women. And this mismatch is largely the result of the structure of the economy in most countries, whereby it’s locked into low value-added activities. Djibouti, Mauritania, and Palestine suffer from high unemployment rates estimated at 53.9%, 31.1% and 25.9%, respectively, in 2015. On the other hand, GCC countries have very low unemployment rates, with the highest rate in Oman at 6.3% and the lowest in Qatar at 0.2%. [2] A high population growth rate of 2.03% in 2015[3] in the region created what is referred to as a “youth bulge”, where a large part of the population in the Arab region consists of young people under the age of 30. The lack of job creation and the mismatch between the highly educated new entrants into the labor market and the market needs has led to high youth unemployment especially among women and the more educated. Youth unemployment rate in the region registered 28.6% in 2015, [4] reaching the highest in Libya (50%) and Mauritania (47.3%) and the lowest in Qatar (0.8%). [2] 


Third, women in the Arab region face a higher risk of unemployment and they still face high barriers to entry into the labor market. The women unemployment rate has decreased over the last 15 years from 22.4% in 2000 to 19.96% in 2015 but is still very high compared to men’s unemployment rate of 8.96% [4] and to a world average of 6.2% [2]. Female youth unemployment rate registered a high 42.7% in 2015 up from 39% in 2000. [4] Cultural and social norms, as well as, structural obstacles limit women’s participation in the labor market. One example is married women who face employer discrimination since social benefits like maternity leave and child care are considered costly and thus reduce their chances of being accepted for a job.


Lastly, the public sector is still the major employer in the Arab region, offering public employees attractive financial benefits and stability. In the GCC countries, this sector continues to absorb most of the nationals’ employment despite some reforms and policies to encourage privatization and to support private sector development and employment among the nationals. In Kuwait, for example, 246 thousand Kuwaitis were employed by the governmental sector compared to 92 thousand non-Kuwaitis in 2013. [5] In addition, the role of the informal sector in the economy has been a persistent feature of the Arab economies. This is especially prevailing in Egypt where the share of informal employment accounted for 32 % in 2005. [6]

 

This overview has been drafted by the ADP team based on most available data as of 30 September 2016. 

 


  1. ADP calculations based on data extracted from KILM – International Labour Organization (ILO), on November 21, 2016,
  2. KILM – International Labour Organization (ILO)
  3. World Development Indicators, The World Bank
  4. ADP calculations based on data extracted from KILM – International Labour Organization (ILO), on November 21, 2016, [Djibouti is excluded from the calculation]
  5. Central Statistical Bureau (CSB), Kuwait
  6. Chaaban. J. 2010.”Job Creation in the Arab Economies: Navigating Through Difficult Waters”. Research paper series. United Nations Development Programme, RBAS.


Labor and Employment Statistical Snapshot 2016
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Data Highlighted

  • Labor force participation rate in the region is the lowest worldwide at 49.8% in 2015, mostly due to the low participation rates of women. This rate is the lowest in conflict-inflicted countries such as Palestine (43.7%), Iraq (42.4%), and Syria (41.7%).

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