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Close Skills Gaps and Gender Gaps to Prepare MENA for the Future of Jobs

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] T [/yt_dropcap]he Middle East and North Africa (MENA) is endowed with a young, growing and increasingly well-educated population, which, if skilled for tomorrow’s jobs and offered new and productive employment opportunities, has the potential to significantly enhance the region’s growth.

However, with 31% of young people unemployed, new and urgent action is needed to realize this potential. In addition, even when skilled talent is present – particularly educated women – it is not being deployed effectively in the workforce.

The analysis in the new report, Future of Jobs and Skills in MENA: Preparing the Region for the Fourth Industrial Revolution, released today, also finds that there is no room for complacency. Few of MENA’s economies are fully prepared for the impending disruption to jobs and skills brought about by technological change. The crucial question for the region, therefore, is how to capitalize on this short-term demographic and technological window of opportunity and prepare its working-age population as well as today’s schoolchildren for the future of work. The report aims to serve as a practical guide for business, government, civil society and education leaders.

Key findings from the report, which uses new data from LinkedIn, include:

Young people are almost five times more likely to be unemployed than their adult counterparts in the region. However, in contrast to global patterns, graduates make up nearly one-third of the total pool of unemployed in the region.

The United Arab Emirates, Egypt, Jordan and Saudi Arabia lead the way in the local availability of high-skilled jobs. Common forms of high-skilled employment in the MENA region include commercial bankers, accountants, school teachers and academics, engineers and information technology consultants, according to LinkedIn’s data. Tracking trends in the growth and decline of roles in MENA labour markets reveals a growing demand for health, education, care, personal services as well as creative, travel and tourism professionals.

As the region already faces a skills gap according to business leaders, the region will need to prepare current and future workforces for the future of jobs, particularly high-skilled roles, to remain competitive. Analysis suggests that 41% of all work activities in Kuwait are susceptible to automation, as are 46% in Bahrain and Saudi Arabia, 47% in the UAE, 49% in Egypt, 50% in Morocco and Turkey, and 52% in Qatar. Reskilling and upskilling sections of the workforce that are likely to be affected will also be critical for the region to manage the transformations underway in the labour market.

Often having higher levels of educational attainment and workplace skills, women in MENA represent significant human capital potential. However, workforce gender gaps remain wide, ranging from just over 40% in Kuwait and Qatar to nearly 80% in Algeria and Jordan. Integrating more female talent will be a key pathway for workforce planning in the region.

“The data show that, to prepare for the future of work, the region must take action to invest in talent, close skills and gender gaps and create high-value-adding jobs to unlock the potential of a young population and to equip economies to tackle the challenges of the 21st century,” said Saadia Zahidi, Head of the Education, Gender and Work System Initiative and Member of the Executive Committee at the World Economic Forum.

Action is underway to meet these jobs and skills challenges and opportunities in MENA. As part of the broader efforts of the World Economic Forum’s System Initiative on Shaping the Future of Education, Gender and Work, projects to advance skills and gender parity in the region are being scaled up and will be further developed at the World Economic Forum on the Middle East and North Africa, to be held in Jordan on 19-21 May.

To prepare workforces for the future of jobs, the New Vision for Arab Employment (NVAE) project serves as a platform providing new insight and bringing together business efforts to address future-oriented skills development. The project also supports constructive public-private dialogue for urgent and fundamental reform of education systems and labour policies.

“Our region, with its young population, stands ready to gain from its enormous human potential – but we need to do our part to make it happen. We need to do more to skill the population for jobs, now and in the future, and to provide the high-value employment this region needs to excel through the Fourth Industrial Revolution. The New Vision for Arab Employment contributes to this goal and is committed to creating a lasting impact on the MENA region,” said Omar K. Alghanim, Chief Executive Officer, Alghanim Industries and Chair of the NVAE.

The NVAE has garnered commitments from businesses across MENA to provide employability skills to 250,000 people in the region. The project is inviting businesses, in partnership with government, civil society and the education and training sectors, to scale this action and contribute to broader targets to skill, upskill or reskill 1 million people by 2018 and 5 million people by 2020 in MENA, Africa and other regions.

To help close workplace gender gaps, the Gender Parity Task Force model brings public- and private-sector leaders together to better understand the barriers to women progressing in the workplace and to take action to accelerate progress. The task force model – previously piloted in four countries and now being scaled across the world – focuses on shifting stereotypes about women in work, increasing female participation in the labour market at all levels, and closing the gender wage gap. Bahrain will be the first country in MENA to implement this enhanced model, acting as a trailblazer in the region for this collaborative action on gender parity.

“With relatively high rates of female education, Bahrain stands to make significant economic gains from integrating more women into the workforce. Progress is already underway in the country and we look forward to building on this through a new Gender Parity Task Force, working across the public and private sectors to accelerate change,” said Khalid Rumaihi, Chief Executive of the Bahrain Economic Development Board.

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Extending people’s working lives could add US$3.5 trillion to OECD GDP in long run

MD Staff

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Extending people’s working lives to reflect the ageing of their populations could release massive untapped value for their economies to the tune of US$3.5 trillion across the OECD as a whole in the long run.

Iceland, New Zealand and Israel are the leaders in boosting employment rates among older workers, setting a model for others to follow, according to the latest research by PwC.

Between 2015 and 2050, it’s estimated that the number of people aged 55 and above in the 35 OECD countries will increase by almost 50% to over 500 million. But how many of these half a billion people will be working?

PwC’s Golden Age Index benchmarks, ranks and analyses the performance of OECD countries in fostering older people’s participation in the workforce through employment and training data. It reveals how large potential economic gains are available if employment rates for those over 55 can be raised to those of the top performers.

Current employment rates for workers aged 55-64 vary dramatically across the OECD, from 84% in Iceland and 78% in New Zealand to 38% in Greece and 34% in Turkey.

For example, increasing the over-55 employment rate to New Zealand levels could deliver a long-run economic boost worth around US$815 billion in the US, US$406 billion in France and US$123 billion in Japan – with the total potential gain across the OECD adding up to around US$3.5 trillion. This economic uplift would be combined with significant social and health benefits from older people leading more active lives and having higher self-worth through continuing to work where they wish to do so.

John Hawksworth, Chief Economist at PwC UK, comments:

“Of course, it’s good news that we’re living longer. But an ageing population is already putting significant financial pressure on health, social care and pension systems, and this will only increase over time. To help offset these higher costs, we think older workers should be encouraged and supported to remain in the workforce for longer. This would increase GDP, consumer spending power and tax revenues, while also helping to improve the health and wellbeing of older people by keeping them mentally and physically active.”

For governments, ways to realise these benefits include reforming pension systems and providing other financial incentives to encourage later retirement – steps that several countries are already prioritising.

Significantly, the top-performing countries on the Index tend to share a number of characteristics, including a labour market that supports flexible working and the implementation of reforms targeted at older workers, such as redesigning jobs to meet physical needs. Successful policy measures include increasing the retirement age, supporting flexible working, improving the flexibility of pensions, and providing further training and support help older workers become ‘digital adopters’.

To help governments take the right actions, PwC has used this year’s update of the Golden Age Index to carry out a rigorous statistical analysis of the underlying drivers of higher employment rates for older workers across 35 OECD countries.

The findings from this analysis include that financial incentives like pension policy and family benefits can influence people’s decision to stay employed, and that longer life expectancy is associated with longer working lives. The study also shows that flexible working and partial retirement options can pay dividends for employers, as can redesign of factories, offices and roles to meet the changing needs and preferences of older workers.

A further area that the latest Golden Age Index examines concerns the implications for older workers of rising use of artificial intelligence (AI) and related automation technologies in the workplace. It finds that these technologies raise both potential opportunities and challenges for the over-55s.

Up to 20% of the existing jobs of older workers could be at risk of automation over the next decade, so retraining and lifelong learning will be critical to enable older workers to take up the many new job opportunities that AI and related technologies will create.

PwC UK Chief Economist John Hawksworth explains: “AI technology can boost economic growth, generate more labour demand and support longer working lives, for example through the use of digital platforms that allow older workers to market their skills more widely. However, our estimates suggest that older workers do face a higher risk of job automation compared to other age groups, with up to 20% of the existing jobs of over-55s at potential risk of automation over the next decade. Measures to support lifetime learning and retraining for older workers will be critical to maximising the gains from these technologies while mitigating the costs.”

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Further reforms needed for a stronger and more integrated Europe

MD Staff

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The European economy is growing robustly, helped by accommodative monetary policy, mildly expansionary fiscal policy and the global acceleration. The current economic expansion should be used to speed up implementation of reforms to the euro area architecture and EU policies that would support greater European integration and ensure stronger, more inclusive long-term growth, according to two new reports from the OECD.

The latest OECD Economic Survey of the European Union and Economic Survey of the Euro Area look at the factors behind the strong recovery, as well as the challenges facing Europe. The Surveys project growth topping 2% for the 2018-19 period, and lay out an agenda for boosting long-term growth and living standards across Europe.

The Surveys, presented in Brussels by OECD Secretary-General Angel Gurría, highlight the need for EU budget reform, more efficient cohesion policies to reduce regional divides and further efforts to deepen the single market. The OECD also discusses how completing the banking union, creating a common fiscal support scheme and simplifying fiscal rules would strengthen the euro area by making it more resilient to economic shocks.

“After years of crisis, positive economic momentum has taken hold across Europe,” Mr Gurría said. “Growth continues at a solid pace, and has broadened across sectors and countries. The conditions are right for a new wave of reforms to revive the European project and ensure that the benefits are shared by all.”

The Surveys say that macroeconomic policy must be tailored to support economic expansion while reducing imbalances. Monetary policy should remain accommodative until inflation is durably back to the objective, even as the ECB prepares for a very gradual normalisation of its policy. With an economic expansion under way, governments should reduce debt-to-GDP ratios. Simplified fiscal rules and a stronger focus on expenditure growth should help achieve this objective without derailing the recovery.

Ensuring the stability of the monetary union and enhancing the common currency’s resilience to downturns will be critical to future economic progress. More risk sharing will be necessary. The Survey calls for a European unemployment reinsurance scheme to cope with economic shocks too large to be dealt with solely by national fiscal policies or monetary policy. Reforms to develop the capital markets union along with a rapid reduction of non-performing loans are also important to allow a better functioning of the Economic and Monetary Union.

Additional reforms to complete the banking union are also necessary, in particular the setting up of a common European deposit-insurance scheme and using the European Stability Mechanism as a backstop for the Single Resolution Fund; both reforms would help prevent any future banking crisis developing into a sovereign debt crisis. The introduction of additional capital charges for banks holding high levels of government debt from their own country should occur alongside the creation of a new European safe asset. This would favour the diversification of banks’ exposure to government debt and mitigate negative feedback loops between weak banks and stressed public finances.

Reforms to the EU budget can enhance growth and make it more inclusive. There is scope to increase member states’ contributions, including by reassessing how the European budget is financed, as the current financing does not reflect countries’ ability to pay. The EU Survey suggests that resources to finance growth-enhancing spending, including R&D, be freed up by phasing out production-based payments in the Common Agricultural Policy and better targeting regional policy to lagging regions.

Improving the functioning of the Single Market would boost growth and living standards, the Surveys said. There is scope to ease regulatory burdens and address barriers to trade in services, improve cross-border cooperation in the energy sector through better power system operation and trade, and help member states boost digital skills acquisition.

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Global Migration Can Be a Potent Tool in the Fight to End Poverty Across the World

MD Staff

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Global migration has lifted millions out of poverty and boosted economic growth, a new World Bank report finds. But destination countries risk losing out in the global competition for talent and leaving large gaps in their labor markets by failing to implement policies that address labor market forces and manage short-run economic tensions.

Large and persistent differences in wages across the globe are the main drivers of economic migration from low- to high-income countries, according to Moving for Prosperity: Global Migration and Labor Markets. Migrants often triple their wages after moving to a new country, helping millions of migrants and their relatives at home escape poverty. Destination countries often benefit as migrants fill critical roles, from advancing the technological frontier in Silicon Valley to building skyscrapers in the Middle East.

Despite the lure of higher wages, rates of migrants as a share of the global population have remained mostly unchanged for more than five decades, even as global trade and investment flows have expanded exponentially during this time. Between 1960 and 2015, the share of migrants in the global population has fluctuated narrowly between 2.5 and 3.5 percent, with national borders, distance, culture, and language acting as strong deterrents.

Highlights of key findings from the report include:

-Migration flows are highly concentrated by location and occupation. Currently, the top 10 destination countries account for 60 percent of around 250 million international migrants in the world.

-Surprisingly, concentration levels increase with skill levels. The United States, the United Kingdom, Canada and Australia are home to almost two-thirds of migrants with tertiary education. At the very peak of talent, an astonishing 85 percent of all immigrant Nobel Science Prize winners are in the United States.

-Education levels of women are rapidly increasing, especially in developing countries, but opportunities for career growth remain limited. As a result, college educated women from low and middle-income countries are the fastest growing group among immigrants to high-income countries.

“The number of international migrants continues to remain fairly modest, but migrants often arrive in waves and cluster around the same locations and types of jobs,” said Shantayanan Devarajan, World Bank Senior Director for Development Economics and acting Chief Economist. “Better policies can manage these transitions in a way that guarantees long-term benefits for both citizens and migrants.”

The report recommends various policy measures to ensure the benefits of migration are shared by host and immigrant communities for generations to come. Key among them:

-Effective migration policies must work with rather than against labor market forces. For example, where there is large unmet demand for seasonal work, temporary migration programs, like those in Canada or Australia, could address labor market shortages while discouraging permanent undocumented migration.

-Quotas should be replaced with market based mechanisms to manage migration flows. Such tools can pay for the cost of government assistance to support dislocated workers. In addition, the most pressing needs of the labor market can be met by matching migrant workers with employers that need them the most.

-Creating a pathway to permanent residency for migrants with higher-skills and permanent jobs creates incentives for them to fully integrate in the labor markets and make economic and social contributions to the destination country.

“We have to implement policies to address the short term distributional impact of migration flows in order to prevent draconian migration restrictions that would end up hurting everyone,” said Asli Demirguc-Kunt, Director of Research at the World Bank.

The report argues that migration will be a fundamental feature of the world for the foreseeable future due to continued income and opportunity gaps, differences in demographic profiles, and the rising aspirations of the world’s poor and vulnerable.

“The public debate over migration would benefit from recognizing data and research,” said Caglar Ozden, Lead Economist and the lead author of the report. “What this report tries to bring to the debate is rigorous, relevant analysis to support informed policy making.”

Moving for Prosperity: Global Migration and Labor Markets is the latest in a series of Policy Research Reports that comprehensively review the latest research and data on current development issues. The new report presents the key facts, research, and data on global migration gathered from the World Bank, U.N., academia, and many other partners.

You can read the full report and accompanying datasets, based on extensive existing literature.

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