Wednesday, 13 April 2011

Living young- Population trends in the Middle East

What are the characteristics of population in the Middle East and North Africa region (MENA)?

What are the implications of population growth on labour market in the MENA region?

The most noteworthy characteristics that define demography in MENA are the extremely high fertility rate and the resultant overwhelmingly young population. Nearly a half of the MENA population is under twenty (Richards, A Political Economy of the Middle East, 2008), which has drastic effects on the political economy. There is no single agreed theory on what determines fertility rates, as a large number of factors are likely responsible for parents’ decision to have children. The fall in mortality rate and improvements in health are major contributors. Nevertheless the Middle East has the highest fertility rate after Sub-Saharan Africa although it has fallen dramatically and continues to do so. All in all, a high fertility rate is considered a negative phenomenon by most analysts because of the economic pressures associated with it.

The obvious strains associated with a fast-growing young population are related to high numbers of school attendees and large numbers entering the labour force. At the same time, the working population percentage is low, meaning a limited output for the economy in terms of the whole population.  For example, the working population Oman in 2000 was only 53.6% compared to 70% in Norway and Denmark (Onn Winckler). Despite high spending on education as a proportion of GDP in some countries (i.e. 32.8% in Yemen), universal enrolment has not been attained and the rate of illiteracy is unjustifiably high, particularly for women. The high pupil enrolment means budget allocations per pupil are low, despite high spending on education in many MENA countries overall.

The major economic consequence of the Arab population boom is unemployment. Until the 1990’s, unemployment was low due to the oil booms and labour shortages in many countries even led to imports of foreign labour. Unemployment now stands at 15-20% in many countries (official figures are often lower than data suggests), including those with oil reserves (Onn Winckler 2005). In countries undergoing a construction boom, Arabs are not found in the construction sector as foreign labour is cheaper, which exacerbates unemployment.

The high natural fertility rates of the 20th century have 

led to what is described as 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 sustained 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 apparent in that the relationship between fertility and economics suggests that as per capita income rises, the fertility rate declines. The two Arab states that have succeeded in reducing fertility substantially (namely, Tunisia and Lebanon) have one of the highest per capita incomes in the region.

 Available resources in the Arab states are often spent on creating enough jobs for the population entering the work force, which means fewer funds are available for investment in higher productivity jobs that would increase per capita income and thereby reduce fertility. The ‘vicious circle’ nature of this overpopulation trap has produced severe socioeconomic problems in the Arab world.

The resultant dilemma of these statistics is that the Arab states need to secure high GDP growth rates to ensure enough jobs for the labour force growth. For example, 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, which means unemployment will continue to rise steadily in such MENA states for at least 50-60 years because of the large numbers of the population 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. Additionally, the increasing number of frustrated unemployed youths poses one of the biggest security issues to the region and may manifest, as has been seen in the recent uprisings in Tunisia, Egypt, Libya and Yemen etc., in increased political tensions.

see also- Tunisian joblessness riots highlight Middle East 'overpopulation trap' woe
Sources- A political economy of the middle east- Alan Richards, John Waterbury, third edition 2008 –chapters 4,5

-Arab Political Demography-vol. 1 Population growth and naturalist polices- chapter 3

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