Not much on sale: the Middle East needs to create more jobs
Executive magazine
By Paul Cochrane in Beirut
How to solve the global financial crisis is naturally a hot topic, sparking innumerable talks, conferences and forums. The Middle East is no exception. But while certain countries in the region like to boast that the crisis has largely passed them by, delegates at the International Labor Organization's (ILO) Arab Employment Forum (AEF) in Beirut last month pointed out that the Middle East had a chronic employment problem way before the financial crisis rocked markets worldwide.
Growth without jobs
The forum therefore had a degree of urgency about it, given the challenges the region faces and the highest unemployment rates in the world, set to rise from an average of 9.4 percent to as high as 11 percent this year, according to the ILO. Meanwhile, aggregate growth in the region is projected to drop two percent this year, rising to four percent in 2010.
Yet growth, as Ahmad Majdalani, the Palestinian Authority's Labor Minister, suggested, doesn't always mean jobs, citing statistics of 5.4 percent growth regionally over the past three years but only 1.5 percent growth in job opportunities. Indeed, as the director general of the ILO, Juan Somavia, said in his opening address, “the unemployment rate is only the tip of the iceberg.”
Somavia went on to blast the neo-liberal model of development as a “dysfunctional financial economy” that “privileged the short-term profit objectives of financial operators. The end result was globalization without a moral compass.”
The ILO has set itself the task of rectifying the structural weaknesses of the capitalist system by being that seemingly mislaid moral compass for the workers of the world. The forum was also a platform for the ILO to plug the policy paper that came out of the International Labor Conference in Geneva in June: “Recovering from the crisis: A Global Jobs Pact.” The paper, which calls for among other things investment in the real economy, received “recognition” at the G20 summit in Pittsburgh in September, and it looks like the outcome of the AEF will also receive such coveted “recognition” by Arab governments. For while the forum had the majority of the Arab League's labor ministries in attendance, and plenty of hand-wringing in speeches, the AEF was essentially all talk.
Ministries without clout
The comments of Jordan's Labor Minister, Ghazi Shbeikat, suggested a reason why. In discussing the financial crisis he said part of the problem stemmed from the region's labor ministries not being brought into governmental discussions about the economy, and that employment was seen solely as a labor ministry issue. “The crisis is an opportunity for a change in relations, for labor ministries to make economic policies,” he added.
Shbeikat made an important point in that not enough resources are allocated to labor ministries as opposed to the ministries of economy and finance. But if the other ministries were not letting labor ministries through the door before, would they now? Perhaps the region's economy and finance ministries should have been at the forum too, as well as high-level representatives of the private sector, the very people that have influence on economic policy.
Expatriate workers
Arab trade unions were also there in force, but they have witness a prolonged erosion of their strength, their ability to rally workers and their voice to advocate labor rights. For the constructive change that the ILO wants, strong labor ministries and trade unions are essential.
Therein lies the crux of the problem: Will governments that are heavily influenced by the financial sector remove the leash that has held back labor ministries and unions? Realpolitik would suggest not, especially given union involvement in politics and the resulting strikes and demonstrations, which invariably send shivers down the spines of the more authoritarian regimes in the Middle East and North Africa.
Indeed, some of the policies that governments have implemented in response to the crisis suggest that the needed change is not afoot. For instance, Shbeikat said the Jordanian government has adopted an initiative to help expatriate workers at the Aqaba Special Economic Zone (SEZ) and Qualifying Industrial Zone (QIZ) buy apartments. While this could boost the real estate sector, what Shbeikat did not mention was that the majority of the workers at the SEZ and QIZ are expatriates, and low paid ones at that. According to a 2009 US Defense Resources Management Institute paper, the number of jobs the QIZ created from 2001 to 2004 rose by 46 percent for local workers, while expatriate workers grew 360 percent. So instead of boosting the number of local workers, which would curb unemployment, the government is advocating real estate purchases.
Measuring the crisis
Other suggestions at the forum were not so nonsensical, particularly from Talal Abu Ghazaleh, Chair of the UN Global Alliance for ICT and Development. He said the Arab world “doesn't need intellectuals, businessmen or politicians, but experts in vocational work.” Ghazaleh added that to understand the scale of the region's economic problems an Arab Statistics Agency is needed. “We cannot measure the crisis if there are no measurements.” A lot of benefit could come out of implementing these two ideas alone. As for the outcome of the forum, this will depend on whether labor ministries can punch above their weight to get the policies the ILO is advocating in place.
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