THE BENEFITS VS. ISSUES OF EDUCATION ON EMPLOYMENT

BY: M A RC M A G U I R E , A L L E N S C H N E I D E R , & O L I V I A D A U G H E RT Y

ISSUES OF EDUCATION ON EMPLOYMENT

YOUTH UNEMPLOYMENT

• Youth of the MENA region (ages 15-24) facing crippling unemployment

• World Economic Forum (WEF) says this is one of the regions “greatest challenges and liabilities”

THE FACTS

25% of those under 25 in the MENA region are unemployed

Highest regional youth unemployment in the world

Youth unemployment has doubled the actual unemployment rate

Some countries reaching 30% youth unemployment Tunisia

KEY FACTORS

High labor force growth Skill mismatches Labor and product market rigidities Large public sectors High reservation wages

YOUTH UNEMPLOYMENT VS. UNEMPLOYMENT

EDUCATION: PROBLEM OR SOLUTION?

Unemployment trends in the MENA region INCREASE with schooling

15% of those with tertiary education in Egypt, Jordan, and Tunisia are unemployed

This is due to a “skill-mismatch” that has been created in the area

SKILL MISMATCHES

• The MENA labor market has been unable to create enough high-skilled jobs with respect to growing education •Average education has increases 4x from 1960-2000•More than any region in the world

• Mismatch due to a dominant public sector

PUBLIC SECTOR DOMINANCE

• Public sector employment constitutes a large share of total formal employment

• More than 70 percent of non-agricultural employment in Egypt and Libya and 40 percent in Yemen, Jordan and Iran in the 2000’s were in the public sector (World Bank).  

• Forcing overqualified Youth to take lesser jobs

PRIVATE SECTOR SHORTFALL

• Small firms that are disconnected from the public sector

• Suffer from low productivity because of the nature of the sector which requires less capital, less skilled labor and less investment

• Workers do not receive social security coverage or medical insurance

MENA LABOR FORCE

LABOR MARKET FLEXIBILITY

“Fresh graduates need to throw themselves into vocational training; they have all the academic skills without any job experience and lack the ability to apply what they have been taught.”

- Amin Alaswadi, manager at Universal, one of Yemen’s largest companies

EDUCATION BENEFITS ON

EMPLOYMENT IN THE

MIDDLE EAST

T H E S T R O N G C O R R E L A T I O N S O F E D U C A T I O N A N D J O B S

INTRO

• Unemployment in most MENA countries was actually the highest among those who had HIGHER education achievements.

• The reasoning behind this is due to the fact that most citizens in the Middle East seek public sector jobs.

SO WHY THE EMPHASIS ON EDUCATION?

• Greater international collaboration -> job flexibility in many countries (currently through technology mainly)

• Economic growth -> broadens employment opportunities

• Higher paying jobs (1)

• Good benefits (2)

• Higher job security (3)• The latter (3) being mainly held in public sector jobs

EDUCATION AND JOB INCOME (QUALITATIVE)

CLOSING THE GENDER GAP

• Significant progress

• In 1960 -> Large majority of MENA women did not have any education

• Currently – Nearly 4 out of 5 girls attend primary school

• This will allow the gender gap to shrink in employment

WHY IS FEMALE EDUCATION IMPORTANT?• Fertility, population growth, infant and

child mortality fall

• Household health increases

• Women get a better understanding of their capabilities, legal rights

• Households with educated women tend to have higher income

• Also increases national income

• Higher chance of daughters being enrolled

• Increases employment

A RAPIDLY GROWING AND INDUSTRIAL ECONOMY

• More advanced skills -> Higher job opportunity

• Private investment – Very high on higher education

• An advantage for students who complete studies such as math, science, and *economics due to high dropout rates for these subjects

*Not as huge as the dropout for math and science but a valuable area of study for MENA

LITERACY RATE

• In addition to the skills learned in Math and Science, literacy is, even today, where MENA citizens struggle. Therefore learning how to read and write will put a job applicant in an advantageous position.

• IE: White collar staff [clerks, accountants, (and few) managers]

LITERACY RATES 2007-2010

WHAT IS OUR CONCLUSION?• Still support furthering Education

• Countries not trying to improve will surely fall behind

• MENA countries need to do a better job of expanding industry

REFERENCES

Roudi-Fahimi, Farzaneh; Moghadem, Valentine; Empowering Women Developing Society: Female Education in the Middle East and North Africa; November 2003

Hoel, Arne; Education in the Middle East and North Africa, January 27, 2014

Richards Alan, Waterbury John, Cammett Melanie, Diwan Ishac; A Political Economy of the Middle East; Westview Press 2008, 2014

REFERENCES

Ahmed, Masood. "Youth Unemployment in the MENA Region: Determinants and Challenges, IMF; Dominique Guillaume, Deputy Division Chief, IMF; Davide Furceri, Economist, IMF." International Monetary Fund. Web. 27 Feb. 2015.

Ellyatt, Holly. "Youth Unemployment in Rich Middle East a 'liability': WEF." CNBC., 15 Oct. 2014. Web. 27 Feb. 2015.

Mottaghi, Lilli. "The Problem of Unemployment in the Middle East and North Africa Explained in Three Charts." Voices and Views: Middle East and North Africa. The World Bank, 25 Aug. 2014. Web. 27 Feb. 2015.