Wednesday, 29 December 2010

Tunisian joblessness riots highlight Middle East 'overpopulation trap' woe

What is remarkable about the recent protests in Tunisia is not the frustration felt by education youths armed with degrees but no job prospects,- those sentiments are shared by graduates across the world,  but rather the fact that the riots are happening at all in Tunisia- described as a ‘police state’ in recent Wikileaks cables. Events are so tightly controlled that the only pictures of the riots are filmed on mobile phones. What started as one young man's frustration has spread from the provinces to the capital Tunis. Mohammed Bouazizi set himself on fire after local police prevented him from selling vegetables claiming he didn't have correct documentation. It is bad enough not being able to find decent employment after years of university study, but to be publicly humiliated and stripped of the last means you have of trying to make a living degrades one's humanity. The riots struck me as peculiar considering how much Tunisia is touted as an economic success story. So what was all the fuss about? In a country that cracks down heavily on social unrest, what drove thousands of young men and women to take to the streets?

The Tunisian economy has expanded phenomenally in the last two decades. It ranks first for competitiveness in Africa, and is well ahead of Italy, Greece and Portugal on the world scale. 

The United Nations Development Programme lists Tunisia as 7th in the world's ten leading countries that have made the greatest progress in recent decades in education and public health.

Gulf states flush with cash are splashing it on high profile developments like Sama Dubai’s ‘Mediterranean Gate’ which will cost $14 billion and host 2,500 international firms. The Bahrain based investment bank Gulf Finance House is building Tunis Financial Harbour which will create 16,000 jobs and make the country a world class financial hub for North Africa. 

Tunisia is touted as an economic success story. Tourism and manufacturing are among its biggest growth sectors. Many international companies have taken advantage of Tunisia’s Trade Agreement with the EU and its close proximity to European markets. In terms of the Middle East and North Africa region as a whole, Tunisia is seen as extremely stable. What has been absent though, is progress in the political domain.

But why has a sustained average annual growth rate of 5% since 1987 not been sufficient enough to provide jobs for Tunisians?

what Tunis Financial Harbour will look like
30 % of the Tunisian population is under 15. The figure across the Arab world is similar. The working population percentage in Arab states is low; meaning a limited output for the economy in terms of the whole population. The stark reality of this is that economic growth is severely lower than its potential.  For example, the working population Oman in 2000 was only 53.6% compared to 70% in Norway and Denmark (Onn Winckler).

Extremely high birth rates in the past few decades means a disproportionately large amount of Arabs are entering, or shortly will enter the job market. That entails that despite impressive economic growth in countries like Tunisia, it will not be enough to provide sufficient  jobs to decrease the already high unemployment rates. This phenomenon is called the ‘overpopulation trap’ in which the population is increasing faster than the available economic resources (i.e. GDP growth rate). All the Arab countries except the smaller GCC states suffer this phenomenon. The result is a decline in living standards as income per capita declines. 

In countries with high fertility rates, the ability of most people to save is limited due to low per capita income, which is caused by very low productivity levels. This is in turn a reflection of low investment due to the low saving rates, which then leads to high fertility since per capita income remains low. This is because the relationship between fertility and economics delineates that as per capita income rises, the fertility rate declines.  The positive side though, is that if the Arab states successfully manage to reduce the birth rate, the proportion of those of working age will become extremely high thanks to the numbers that have entered the job market from the previous couple of generations, resulting in huge economic benefits from higher tax revenues and less expenditure on education and health and other services for the young.

Tunisia and Lebanon have been the most successful Arab states in dealing with the overpopulation trap. The wealthy Gulf States have sufficient funds to prevent poverty and social unrest without even needing to tackle unemployment.  Jordan requires at least 6% GDP growth just to stabilize unemployment, let alone reduce unemployment and adding more productive, high value jobs. Economic data shows this to be an unlikely scenario unless high numbers emigrate, which means unemployment will continue to rise steadily in there and in other states for at least 50-60 years because of the large numbers entering child-bearing age in the short term. There is a lag of about 2 generations in demographic change when measures to reduce fertility are implemented. Hence there is no short term solution to the Arab demographic issue except mass emigration of the labour force to areas with labour capacity such as the Gulf.

Politically,the increasing number of frustrated unemployed youths poses the biggest security issue to the region and will likely increase the spread of extremist ideologies. Before that though, we can expect to see more riots like those currently happening in Tunisia.


  1. Great article, so, overpopulation leads to extremist ideologies, which leads to even more population growth.

    A malthusian trap, indeed, but oh, I forgot, Malthus was wrong about population, so it can´t be this, must be something else...

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