High youth unemployment hampers Lebanon development

High youth unemployment, estimated at 19 percent, remains a major obstacle to the development of Lebanese economy, according to study published Monday. The study, entitled “Youth Unemployment in Lebanon, Syria and Jordan,” compares unemployment trends in the three countries. The report, authored by the Consultation and Research Institute for the Freidrich Ebert Stiftung (Friedrich Ebert Foundation), criticized the Lebanese economy’s heavy reliance on the services sector and the absence of labor intensive industries – vital for job creation. It estimated that 80 percent of the Lebanese Gross Domestic Product (GDP) is accounted for by the services sector, where the vast majority of establishments are small firms that hire less than five employees. These businesses, the study suggested, have limited ability to boost employment in the country. On the supply side, the study suggests labor markets in the three countries face similar structural imbalances resulting from an ongoing demographic bulge in the youth segment. “Over half of the region’s population is below the age of 24. These demographic trends have intensified the pressures of labor supply on the economies of the region,” the study argued. On the labor market’s demand side, the study said economic growth has been falling short of creating sufficient jobs for those looking for first time. Moreover, the public sector in the three countries became incapable of growth due to significant fiscal constraints and public debt. “Today, the private sector in the MENA region accounts for less than 50 percent of the GDP,” it said. The study, which was handed out at an expert meeting co-organized by FES and the International Labor Organization, also argued that the informal sector is endemic in the region. It estimated that informal employment accounts for more than 67 percent of the labor force. Such employment, it argued, interacts with unemployment and limits decent work opportunities by locking workers into poverty. “In the absence of productive fulltime employment, a significant portion of young people wrestle with underemployment – taking bits and pieces of casual work or else engaging in the informal economy,” it stressed. During the meeting, experts debated youth employment issues and put forward ideas aimed at fostering better understanding of employment in the MENA region. Participants – who included government, worker and employer representatives, researchers, youth organizations and other relevant stakeholders – stressed the importance of stepping up job creation in the region. They highlighted that the region posts the highest youth and adult unemployment rates globally, at 25 and 7 percent respectively, adding that the figure would be higher if the GCC oil-rich economies were excluded. They said successes in improving the education system had a limited impact on unemployment reduction and increasing productivity. Despite acceleration in job creation after many countries implemented economic reforms in the 1990s, many of the new jobs were of low quality. A sizable percentage of these jobs were taken by migrant workers, especially in the GCC, as well as labor sending countries like Lebanon and Jordan. They said the situation can become worse following ripple effects of the global financial crisis in 2008, the evolving European debt crisis in 2010, and the political developments in the Arab region.