High unemployment rates to worsen despite optimistic economic outlook in Arab States

BEIRUT (ILO News) – The region's unemployment rate is expected to remain high at 9.8 per cent in 2024, above pre-pandemic levels, reflecting various factors that affect the region's labour markets such as segmentation, political instability, conflict, economic crises, a weak private sector and demographic pressures, a new report published by the ILO Regional Office for Arab States has found.

The report, titled Arab States Employment and Social Outlook - Trends 2024: Promoting social justice through a just transition, also projects that GDP in the region is expected to grow by 3.5 per cent in 2024, with faster growth in Gulf Cooperation Council (GCC) countries than in non-GCC countries (3.7 per cent versus 2.6 per cent).

Yet post-pandemic labour market recovery is lagging behind economic recovery, and decent jobs for the growing workforce remain scarce, maintains the report. In the GCC, there is a segmentation between nationals and migrants, and between public and private sectors. In the non-GCC states, there are issues of instability, conflict, crisis, a weak private sector and demographic pressures. In 2023, the ILO estimated that 17.5 million people in the region wanted to work but could not find a job, resulting in a jobs gap rate of 23.7 per cent.

As the world marks World Day of Social Justice, we launch this analysis of employment and labour market trends in the region and identify ways to promote decent work and social justice in our region, especially through addressing inequalities and protecting workers."

Ruba Jaradat, ILO Regional Director for Arab States

“As the world marks World Day of Social Justice, we launch this analysis of employment and labour market trends in the region and identify ways to promote decent work and social justice in our region, especially through addressing inequalities and protecting workers,” said ILO Regional Director for Arab States Ruba Jaradat.

“The labour market situation in the Arab States is complex and needs urgent action. We hope this report can help identify solutions to promote not only thriving and fair labour markets, but also peace and stability across our region,” Jaradat said.

With Arab States facing the dual challenge of boosting economic growth and creating more decent jobs for their growing labour force, the report identified a need to intensify attempts to diversify the economy, especially in oil-producing countries exposed to oil price fluctuations, and to create jobs in more resilient sectors, especially in countries affected by conflict and instability.

Aya Jaafar, ILO Labour Economist 

Labour market challenges

The report noted that many employment challenges in the region are rooted in the struggle of economies to generate enough high-quality jobs for those seeking employment. Consequently, more than half of the workers are in informal and insecure jobs, without social protection or other benefits. Working poverty affected 7.1 million workers, or 12.6 per cent of the total employment, in 2023. There are also significant challenges on the supply side. Inadequate education and skills development systems have resulted in a mismatch between the skills employers need and those that workers can offer. This has contributed to the region’s high unemployment rates, even among those with higher education levels. Women, youth and migrant workers remain particularly disadvantaged in the labour market.

The report also spotlighted the region’s refugee crises, which pose significant challenges to labour markets. While Syria is the largest source of refugees in the world, Lebanon and Jordan are major recipients, hosting the highest numbers of refugees per capita in the world. Refugees face difficulties finding jobs in their host countries, where they compete with locals for work, many resorting to working informally.

Equally concerning is the upsurge in internal displacement arising from conflict, violence and natural disasters. Syria, Yemen, Iraq and the Occupied Palestinian Territory face significant internal displacement crises, imposing tremendous strains on their resources and infrastructure.

The region also faces both the challenges and opportunities of environmental and climate change. The report found that, with the right green policies, the region could increase its GDP by US$200 billion and create 2 million more jobs by 2050. However, this requires implementing appropriate policies and measures to ensure a just transition that supports all affected individuals and leaves no one behind.

The way forward

“Promoting decent work, including in the green economy, plays a central role in advancing social justice, eliminating discrimination and ensuring that no one, irrespective of their age, sex, nationality or religion, is left behind,” said ILO Senior Employment Policy Specialist and Head of the Regional Economic and Social Analysis Unit, Tariq Haq, who led development of the report. “Concerted efforts and integrated measures need to consider both the supply and demand sides of the labour market, as well as the intermediation between them, and the report presents a set of policy recommendations to achieve this,” Haq said.

The recommendations include designing and implementing pro-employment and inclusive macroeconomic and sectoral policies, enabling factors for manufacturing and higher value-added services growth, improving the skills and education system and promoting lifelong learning. Further recommendations pertain to promoting the transition from the informal to the formal economy, bridging the gender gap, improving labour market information, addressing inequalities and protecting workers’ rights. The report also proposes an array of specific measures to encourage a just transition.