Tarik Yousef is one of the leading young economic minds in the Middle East. Dean of the Dubai School of Government, he is also affiliated with Georgetown University, Kennedy School of Government, and Brookings Institute. He specializes in developmental economics and economic history of the Middle East and has written extensively about the regional impact of the economic recession. He is also a former economist in the International Monetary Fund and World Bank and advisor to the United Nations Millennium Project. Energetic and well-humored, he spoke to The Majalla on the sidelines of a conference about the impact of the global slowdown on labor and education policies in the Middle East.
The Majalla: What will the Middle East look like after the crisis?
I worry it will look very much the same. The Middle East is unlikely to go through any kind of traumatic change.
The Majalla: Why do you say that?
Because all the forces that are underlying the crisis can only on the surface reinforce the status quo in the Middle East, which is largely pro-government, suspicious of the market and of liberal economic and political ideology. One of outcomes of the crisis is an emboldened role for the state, but this is how the Middle East is to begin with. In fact, if the crisis deepens, if the recession gets worse, there will be more calls for the state to come in and do things. And many happen to be authoritarian states, so this is a way to build their legitimacies.
The Majalla: That doesn’t sound very optimistic.
It ultimately depends on what the goal is. The liberal political and economic model has not gotten any traction in much of the Middle East and now it is under tremendous stress. It could be undermined fatally if the crisis deepens. And I would say this is a realistic reading, although that doesn’t mean there are not thing that should change, or will change.
The Majalla: And in this context, what do you expect will happen with labor market deficiencies in the Middle East?
It depends. Large structural unemployment problems require equal commitments, political and economic. The anti-market and anti-globalization model has not been able to deliver. Oil prices helped manage it, but you can no longer avoid globalization. You may not end up with high unemployment, but with people having mediocre jobs, low quality jobs, more informal activity, and some poverty.
The Majalla: Do you expect labor-driven political instability as a result?
It won’t necessarily threaten governments. It’s just less than optimal economic management.
The Majalla: How are countries in the Gulf Cooperation Council making out in this regard?
The problem is different there. These governments are doing a better job of trying to solve structural underpinning problems. With few exceptions in the GCC, governments have made education and employing every national a priority. The problem of the GCC is the lack of manpower to achieve the grand projects they have. I worry more about countries with high level of unemployment, too much government intervention, lack of a long-term vision, and populations very vulnerable to falling below poverty line, like Egypt, Algeria, and Morocco.
The Majalla: But education and unemployment are not detached. Iran, for example, has vastly improved its education system, but it still has one of the highest unemployment rates in the region.
That’s right. Iran is a state-driven economy. It is not conducive to attract capital that would allow it to complement its high human capital. It’s not easy for Iranians to be mobile either. And governments in the Gulf are not at ease with growing Iranian influence.
The Majalla: What about the GCC? It’s not exactly a free market either.
I agree with you. The GCC and the rest of the Arab world share big government. The critical and essential difference in the rest of Arab World is that they are actively intervening in the game. You have a lot intervention, a lot of laws and procedure. In the Gulf by contrast you have big states that are led by people who tend to be business-friendly. Another way of saying it is that states in the Gulf are business friendly and outside the Gulf they are predatory. Businesses fear them. In the Gulf, states are looking out for the interests of private industry, even while maintaining big public responsibilities. And I love that!
The Majalla: So how does that translate into employment?
These private sectors, if output from the educational system is of the quality necessary, are job creating machines and rely on expected labor force. The issues that need to be dealt with in the GCC are not as complicated as those in Algeria or Egypt, where the state is not here or there.
The Majalla: Is the system sustainable though, considering population growth?
Look, we cannot find enough nationals to fill the jobs in the Gulf. Everyone is competing for the nationals. Not all are qualified, but they are competing for them. If these economies continue to grow, they will create enough jobs for all nationals. And economic development is also lowering population growth in the Gulf. Education is changing things. People now want to have jobs. They no longer want to just stay home. More and more women in the Gulf are more career minded and not family focused.
The Majalla: We’ve heard about the opportunities that arise in times of crisis. Would you say any government took advantage of this severe recession to ready the future, especially in terms of job creation?
I don’t think any country took advantage. Everyone was just coping. Half measures here, stimulus package there. Nobody has put together that plan. Maybe the only exception would be Abu Dhabi, in part because it was the least exposed and it was just building its ambitions.
The Majalla: In that case, what would you advice Middle Eastern governments to do?
We can identify some broad policy reforms that all countries in the region should consider in order to ease the pressure of youth unemployment. On the broad level, needed reforms include the modernizing of education systems so that students gain relevant and adaptable skills; expanding the private sector as an engine of job creation by easy the barriers to doing business; reforming labor laws to increase employer flexibility in hiring and firing; and reducing the appeal of public sector employment.
It is not easy or often politically feasible to adopt some of the aspects of these broader reforms. Moreover, doing so will take considerable time which, given the scale of the unemployment problem among youth and the impact of the global economic downturn, we cannot afford.
The Majalla: Can you give some specific policy recommendations?
Reform public sector hiring practices, provide social protection for all workers, reform university admission policies, invest in scaled-up volunteerism and learning programs, raise the value of informal work, and carefully expand vocational training schemes.
The scale of this challenge can only be addressed by countries forging greater cooperation on youth policies and programs. This means greater youth targeted investments shaped by evidence-based knowledge and improving the institutional environment for young people at time when the Middle East is in the midst of an unpredictable global economic environment.
Interview conducted by Andres Cala - Madrid-based freelance journalist and political scientist specialising in Middle Eastern and European policy, as well as global energy issues.
