Youth Unemployment: North Africa’s Ticking Time Bomb

“Aish, karama, hurriya” (Bread, dignity, freedom) was one of the most popular slogans during the 2011 rolling protests which became labelled the “Arab Spring”. This simple hymn, with its colloquial variations, captures the socio-economic character of the protests and people’s desire for sweeping economic, political, and social reforms. Access to quality jobs was undoubtedly a central demand and a key driver of these protests. However, almost a decade after, growth in North African economies has remained sluggish and reforms have failed to create the millions of jobs needed to absorb North Africa’s young population.

Chronic Unemployment

High levels of unemployment represent a severe challenge for North Africa. Although significant differences exist between the political and economic structures of North African countries, unemployment, under-employment, precarious and informal work are all dominant characteristics describing the North African labour markets. According to 2018 World Bank Data, youth unemployment in Tunisia averages 36.27 per cent, in Egypt, it is estimated to be around 34.33 per cent. With 24.4 and 17.4 per cent of youth out of the official labour market, Algeria and Morocco respectively score below the Arab word’s average, estimated at 26 per cent. The situation of joblessness is particularly intractable for young women with an unemployment rate of above 40 per cent.

North African economies are yet to go through a process of structural transformation and create large scale formal employment. The region remains specialised in low added value sectors and primary-commodity exports. Tunisia’s economy is marked with low productivity and structural vulnerabilities. The manufacturing and agricultural sectors do not yield enough income to provide jobs for most of the people. The country relies on the low-wage, low-skilled tourist sector for much of its national employment. Morocco has capitalised on its proximity to Europe to attract investment and tourists. It has positioned itself as a prime destination for the automotive industry in the region. However, growth has remained modest, and it has not translated into mass employment. Algeria’s economy is heavily reliant on hydrocarbons and is at high risk of external shocks. The government has failed to use oil rents to create jobs in productive sectors. Egypt’s economy suffers from severe imbalances, a declining industrial sector with low competitiveness, as well as significant levels of foreign indebtedness. Recent reforms have led to a sharp devaluation of the Egyptian pound and soaring inflation.

Unlike most regions, unemployment rates in North Africa are highest amongst the more educated youth with university graduates making up 30% of the region’s unemployed. This situation reflects the mismatch between education and training systems and business requirements. University curriculums are often inconsistent with reality or are obsolete. As a result, they do not prepare graduates with the necessary skills to join the labour market. Youth unemployment in North Africa will continue to rise if governments fail to find and implement adequate solutions.  Worse, if the issue is not promptly and efficiently tackled, it may be a source of future unrest.

Youth Unemployment and Conflict

Research has suggested that a large rate of youth unemployment can make countries more unstable and more prone to conflict. On theoretical grounds, relative deprivation theory and opportunity-cost approach associate high unemployment rates with uprisings. Empirical studies have demonstrated a strong correlation between unemployment and conflict. A 2013 research led by the African Development Bank explored data from 24 developing countries and revealed that significant youth unemployment rates make countries more prone to political instability.

In the late 1980s, economic crisis and weak employment prospects fueled radicalisation in Algeria, strengthening the ranks of the extremist FIS (Front Islamique du Salut/Islamic salvation front). This wave of radicalisation cost the country a decade of violence and an estimated 150.000 lives. Similarly, the incapacity of the Tunisian job market to absorb the large youth population in the aftermath of the Jasmine revolution in 2011, contributed to the radicalisation of thousands of young people. This resulted in a series of terror attacks in the country and led significant numbers of Tunisians to join ISIL. According to the US House Homeland Security Committee, out of the 25,000 fighters thought to have joined ISIL in Iraq and Syria in 2015, 5,000 were Tunisian.

However, while high youth unemployment is worrying, it is not on its own a cause of conflict. The relationship between youth unemployment and conflict is complex, and some variables can temper or exacerbate the risk of instability. First, demographic growth is a critical factor determining the outburst of conflict. According to the demographer Gunnar Heinsohn, there is a causal link between a rapidly growing population and political instability. The theory holds that in countries with a youth bulge, young men are more likely to engage in aggressive wars until a balance is reached between their ambitions and the number of acceptable positions available in their society. Heinsohn cites the Algerian civil war in the 1990s as an example of the effect of a large youth bulge on conflict. In Egypt, several studies have pointed to the intersection of Egypt’s demographic youth bulge and unemployment in driving the 2011 anti-government protests. As the population in the wider MENA region is expected  to reach 450 million by 2020, the shortage of quality jobs can be a source of social unrest in the coming years. Nonetheless, demographic growth has been slowing down in the past five years across North Africa, which will reduce tensions on the labour market in the longer run.

Second, the level of education lowers the risk of violent unrest. Countries with a high rate of educated people are less prone to violence despite high rates of unemployment. The opportunity cost for an unemployed young person with low levels of education to be involved in a violent rebellion is higher than for an unemployed young person with higher levels of education. Notwithstanding a few violent terrorist attacks, Tunisia stands as an exception in the region for having peacefully completed its democratic electoral process. This is partly due to the high level of education of the Tunisian population, with a rate of secondary enrollment over 85 per cent in 2011. As the rate of secondary and tertiary enrollment continues to increase across North Africa, the likelihood of violent conflict weakens. However, this does not imply a diminished risk of an uprising .

Finally, inequality is a critical predictor of conflict. Aggregated unemployment data neglects nuances on wealth distribution and geographic disparities. Large gaps between people’s expected and actual economic and living conditions can fuel tensions and lead to political instability. For instance, Morocco’s 2016 Hirak movement is a representation of how regional marginalisation and economic deprivation feeds unrest. Similarly, the disparity in job prospects between Tunisia’s coastal and inner cities is likely to generate future turmoil. Moreover, satisfaction with public services, access to affordable housing and low inflation rates are also significant indicators of stability. In Algeria, oil rents have allowed the government to buy social peace for several years through universal education and health care, as well as, government subsidies on a vast array of goods.  However, the wave of peaceful protests which started on February 22nd, 2019 across Algeria to contest president Bouteflika’s bid for a 5th term, signals the fragmentation of the ‘rent-redistribution for political survival’ social contract.

Stalk Economic Reforms

If high youth unemployment is not the sole predictor of social unrest, it still creates unsustainable social, economic and political issues both domestically and in neighbouring counties. Addressing the unemployment challenge was always considered a top priority in the national development plans of North African governments. But reforms have failed to meet the needs of an increasing labour force.

Beyond widespread corruption, weak state institutions and the lack of a developmental vision in North Africa, part of the reason behind the failure of reforms lies in the unwarranted assumptions made by international financial institutions. IMF and World Bank policy recommendations for reducing unemployment in the region are based on a ‘one shoe fits all’ approach, focusing on concepts such as “fighting corruption”, “improving governance”, “diversifying the economy” and “promoting the private sector”. These recommendations assume that the nature of the problem is technical rather than political. However, the chronic mismanagement in North African countries is not due to a lack of knowledge of sound economic policies; instead, it is more the reflection of entrenched interests by dominant groups in the status quo, and the consequent lack of will to adopt reform. Designing context-specific policy recommendations are key to ensure the success of future reforms.

Moreover, the economic premise of the policy recommendations made by international financial institutions to reduce unemployment has proven inefficient. The IMF’s market-oriented policies hold that stimulating economic growth requires privatising State-Owned Enterprises, devaluing  currencies and opening up markets to free trade. This approach has failed to boost growth and create large-scale quality jobs. For instance, the free trade agreements between the four North African countries and the EU has resulted in a significant trade deficit. For example, as of 2016, Egypt’s trade deficit with the EU was around €18.8 billion; however, the rate of foreign direct investment from the EU in Egypt remained low.

A Path Forward

Fighting the challenge of youth unemployment in North Africa requires rethinking critically about new development models and their political feasibility. Over the next decade, the demands for change from the millions of young people lacking job opportunities in the region will grow if no comprehensive reforms are adopted.  As the young unemployed suffer from a lack of opportunities, they will interrogate the economic and political systems that have repeatedly promised solutions yet failed to deliver satisfactory standards of living. It is predictable that the absence of reforms will fuel protests. With no substantial change, revolution might become the youth’s biggest employer in the coming years.

In an increasingly competitive international environment, it is not only important to ask how new jobs can be created, but also to think about what type of employment is relevant and sustainable in the age of the knowledge economy. North African governments need to think strategically about how to increase their competitiveness through knowledge, innovation and technology. Stimulating productivity by bridging the technology gap and building the basis of an innovation ecosystem is crucial if North African economies are to move up the development ladder and respond to the employment needs of future generations.

Tin Hinane El Kadi is a researcher in the International Development department at the London School of Economics and an associate fellow in the Middle East and North Africa Programme at Chatham House.

Photo. CC BY 2.0 scossargilbert


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