As the ASDA’A BCW Arab Youth Survey turns 15, many Generation Z Arabs – who grew up with regional upheaval, the COVID-19 pandemic, and the existential threat of climate change – are coming of age in a world of exceptional technological acceleration and increasing global fragmentation.

This is a generation who has lived their whole lives facing challenging job prospects, with an unemployment rate broadly unchanged since the Arab Uprisings. The post Covid-19 conjuncture has made these challenges worse, with a persistently high inflation, adding to cost of living pressures.

Today, governments have much tighter policy space to address these challenges than before the pandemic, especially given the higher global interest rates that makes borrowing to address public demands more costly. In addition, increasing global fragmentation could lead to lower long-term growth prospects for the region.

In Search of Opportunities
The survey shows that the attitudes of Arab youth are indeed changing. While youth in the region largely remain unsatisfied with their governments’ approach to tackle jobs and inflation, they are seeking new opportunities to chart their own path through jobs and entrepreneurship, especially in the fast-growing technology field.

For years, government jobs were preferred for their perceived high salaries, benefits, and security. Not so much anymore. Less than one-third of respondents in the 2023 survey want to work for the government, a sharp fall from nearly half in 2019 and nearly a 10-point drop in one year from the last survey.

At the same time, there is an increase of 13 percentage points compared to 2022 in the share of young people who would prefer private sector jobs. The entrepreneurial spirit in the region also remains strong, with one-quarter saying that they want to work for themselves or their family. Remarkably, over 40% of respondents indicated their intention to start their own business in the next five years.

The Arab youth’s favorable views towards private sector activity are refreshing and positive because there is increasing buy-in for a new growth model that is fueled by a dynamic private sector, instead of state interventionism.

Considering the region’s high levels of digital penetration, it should not be surprising that the tech sector is seen as the top preference for youths who want to start a business (15%). This is followed by e-commerce (13%), with creative industries, manufacturing, and real estate following at around 10% each.

Arab youth are asking for a “New Deal”
Arab youth do not ask for handouts or jobs for life. Instead, they ask for tools so they can act themselves. They demand education, financial access, and more efficient markets. In particular, young Arabs have identified lowering costs for startups, enhancing training and education, as key ‘asks’ to help improve opportunities. Also highlighted were less red tape and stability in government and policies, among others.

As the survey shows, the youth are ready for a paradigm shift where the private sector takes the driving seat for economic activity and job creation while the public sector plays an enabling role. Fostering a more dynamic private sector will be key for job creation, especially since over 90% of jobs in developing countries are created in the private sector.

In a more challenging global environment where financing has become significantly more costly, many governments in the region (particularly oil importers with higher post Covid-19 debt) do not have any longer the fiscal space to be the main engine for growth and job creation.

Yet, we have seen a continuing trend among the youth that ‘kitchen table’ concerns – rising living costs, unemployment, state of the economy, corruption, and inequality – figure prominently in their lives. The results of the 2023 Arab Youth Survey, show that despite stark disparities in income and wealth, livelihood concerns remain a priority.

Dialogue to build Trust
Experience in the last decade has shown that a two-way dialogue – where governments clearly define, choose, and if needed, adapt priorities in response to feedback – is essential to build social consensus. This will also allow for populations to feel that they have the power to influence outcomes and not be subject to policies which only benefit the few.

In the region, GCC governments have, in recent years, prioritized and devoted resources to addressing the aspirations of their youth and this shows: three-quarters of respondents in the GCC felt their voice matters to their country’s leadership compared to just a third of youth in North Africa and the Levant.
A striking result of this year’s survey is that the Arab youth is becoming less confident that their aspirations are being heard. Only 46% of the Arab youth surveyed says that their voice matters to their country’s leadership. This is a clear decline relative to the 2022 survey, which indicated that roughly two-thirds of Arab youth believed their voice matters.

What should policymakers do in response?
With more than 100 million young people expected to reach working age in the next ten years, now is the time to change the region’s engine of growth to navigate the challenges and opportunities of a quickly evolving world. Given the exceptionally high uncertainty and global economic headwinds, policymakers should continue to address the cost-of-living crisis while regaining policy space by tackling high debt and credibly taming inflation. Macroeconomic stability will be a key foundation as the public sector refocuses on improving public good provision such as health, education, and social safety nets.

Governments should therefore prioritise creating a supportive environment for the private sector to boost investment, productivity, competitiveness – and to create jobs, including training the workforce to take advantage of a rapidly-evolving technological world.

Legal barriers and discriminatory practices against the private sector activity should be limited, while financial inclusion and deepening can provide much-needed capital for private sector investment. Enhanced participation will safeguard accountability and strengthen social cohesion and trust. Transparent institutions with strong accountability will help ensure that the rules of the game are fair and clear for everyone and can improve private sector confidence so that long-term investments take place.

The International Monetary Fund (IMF) stands ready to support policymakers and the Arab youth by providing policy advice, financing, and capacity development to governments as they face the challenges ahead. We intend to use the 2023 IMF/WB Annual Meetings that are taking place in Marrakesh to discuss ways to promote inclusive growth in the region.

I encourage you to read the specific policy recommendations and the summary of our work on these issues on our [website], www.imf.org. In addition, the Fund’s research on financial inclusion, the importance of governance reforms, and strong and well-targeted social safety nets can help promote dialogue on how to navigate an ever-shifting world.

We are also helping governments in the region improve their operations and promote sound policy making in line with international best practices. But most importantly, the IMF stands ready to continue listening to the Arab youth as they grow into tomorrow’s leaders and continue to shape the policy discussion.