GCC countries need to absorb growing young population into future labor market.
The King Fahd highway in Riyadh, Saudi Arabia. Image used for illustrative purpose Getty Images
The International Monetary Fund’s (IMF) recent report noting that GCC states could see their financial wealth depleted in the next 15 years is an important call to action for the region, a senior officer at the Abu Dhabi state fund said.
“The quest for economic diversification and the bridge that hydrocarbon has given us is something that we’ll continue to be looking at and focus on for the next 20 to 40 years,” Waleed Al Mokarrab Al Muhairi, Deputy Group CEO, Mubadala, told delegates at the Milken Institute Summit held in Abu Dhabi.
On whether the 15 years’ time horizon for the Gulf states is too aggressive, Al Muhairi said: “Whatever the number is, it is an important call for action. Everybody in the GCC is thinking about diversifying, but not everybody is at the same level of diversification.”
While the UAE’s hydrocarbon wealth was transformed over the last 45 years into world-class infrastructure, great education, and good healthcare, Mubadala’s Al Muhairi said, this would still not be enough.
“If you want to maintain relevance as an economic hub and to ensure the best quality of life for your citizens and the people who live in one of the most open economies in the region, we need to keep growing. To keep growing, we need to ensure that the economy is innovation-led, to become a technology developer and exporter, and to continue to look for ways to address some of the big issues of the day,” he said.
“We have one of the youngest populations on Earth, and while we don’t necessarily have an employment problem today, it is really important that we think about how we absorb all those young people and make sure they have productive ways to contribute to the overall wellbeing of society,” he said.
A recent report by Fitch Solutions said that Arab Gulf countries are expected to advance labour force nationalisation policies, yet some countries of the bloc will go in for stricter policy implementation than others.
Countries like the UAE and Qatar that are relatively wealthier, have more fiscal flexibility and smaller youth populations are under less pressure to implement labour force nationalisation than other GCC countries such as Oman and Saudi Arabia. Read more here.
(Reporting by Nada Al Rifai, editing by Seban Scaria)
Egypt is working on formulating a strategy for artificial intelligence (AI) which will include the establishment of the country’s first faculty of artificial intelligence and artificial intelligence academy in the coming academic year, in a bid to produce the scientific workforces needed to develop a sustainable knowledge-based economy.
This AI strategy was highlighted by Egyptian Minister of Higher Education and Scientific Research Khaled Abdel Ghaffar during his opening speech at the three-day Global Forum for Higher Education and Scientific Research, held under the theme “Between the present and the future” in the Egyptian new administrative capital from 4-6 April.
Located at Kafr El-Sheikh University in Egypt’s north Delta, the faculty of artificial intelligence (FAI) aims to build the knowledge economy in line with the vision of Egypt 2030’s sustainable development strategy.
The FAI will start student enrolment in the next academic year, 2019-20, as a centre of excellence for artificial intelligence research, education, teaching and training.
Besides establishing an artificial intelligence academy specialising in innovation and new thinking in artificial intelligence, several AI departments will also be set up at higher education institutions to develop capacity and boost innovations.
AI is the science of developing computer systems capable of carrying out human tasks.
Economic impact
According to a 2017 PricewaterhouseCoopers (PwC) report entitled The Potential Impact of AI in the Middle East, it is estimated that 7.7% of Egypt’s gross domestic product could come from the AI sector by 2030.
“We estimate that the Middle East is expected to accrue 2% of the total global benefits of AI in 2030. This is equivalent to US$320 billion,” the report stated.
“In the wake of the fourth industrial revolution, governments and businesses across the Middle East are beginning to realise the shift globally towards AI and advanced technologies.
“They are faced with a choice between being a part of the technological disruption, or being left behind. When we look at the economic impact for the region, being left behind is not an option.”
The biggest opportunity for AI in the Middle East and Africa region is in the financial sector where it is estimated that 25% of all AI investment in the region predicted for 2021, or US$28.3 million, will be spent on developing AI solutions. This is followed by the public services, including education among other sectors, according to the PwC report.
‘Pioneering initiative’
Samir Khalaf Abd-El-Aal, a science expert at the National Research Centre in Cairo, welcomed news of the FAI as a “pioneering initiative” that will have an impact on Egypt as well as North Africa.
“It is a good step forward for raising awareness of the potential of AI for sustainable development as well as contributing in facing regional challenges to fully harness the deployment of AI, including infrastructure, skills, knowledge gaps, research capacities and availability of local data,” Abd-El-Aal told University World News.
“The FAI is an important initiative in training students in AI, which will become one of the tools of future jobs, as well as building AI applications in Arabic, which can easily go to all Arabic-speaking countries including North African states.”
“The FAI could also act as a regional focal point for carrying out mapping for local artificial intelligence start-ups, research centres and civil society organisations as well as serving as an incubator for skills development and promoting AI entrepreneurship oriented towards solving North African problems,” Abd-El-Aal said.
Virtual science hub
The Egypt government also announced the launch of a virtual science hub at the Forum. The hub, affiliated to the Academy of Scientific Research and Technology at the Ministry of Higher Education and Scientific Research, aims to enable integration, management and planning of Egyptian technological resources, work on the international information network, and includes an integrated database for all Egyptian technological resources.
It also includes all scientific and technical resources as well as material assets and academic research contributions, which will make it possible to measure the degree of technological readiness of all Egyptian academic and research institutions. The general objective of the system is to provide the necessary information to support decision-makers in research projects and to facilitate the follow-up of research activities.
Tunisia looks to be recovering the tourist numbers it lost following the 2015 terrorist attacks in Sousse, while jobs and FDI are also rebounding thanks to a batch of reforms. Sebastian Shehadi reports.
Three years after the 2015 terrorist attack in Sousse, Tunisia is on track to achieve 8 million tourist arrivals in 2018, which would be higher than the figure in 2014. Correspondingly, FDI figures in the first half of 2018 have also increased.
Around 3.2 million tourists travelled to Tunisia between January and June 2018, a 26% rise on the same period in 2017 thanks to a 60% increase in European visitors, according to Reuters.
The return of tourism, a key pillar of Tunisia’s economy, is also reflected in a spending spree by luxury hotel chains in the past nine months. In late 2017, when Four Seasons Hotel Tunis first opened its doors, the Ritz-Carlton announced plans to construct a $129m hotel in the country, while the Movenpick Hotel du Lac Tunis announced a project in early 2018, and Anantara Tozeur Resort is due to open later in 2018.
Investment up
As well as tourism, foreign investment into Tunisia climbed by 16% in the first five months of 2018 compared with the same period in 2017, according to a report published by Tunisia’s Foreign Investment Promotion Agency (FIPA).
“The increase in FDI is principally due to security stability improvements and the new investment law, effective since April 2017,” says Khalil Laabidi, general manager of FIPA. He adds that this has stimulated investment by simplifying procedures for investors, offering better legal protection and directing FDI into priority areas such as hi-tech industries and projects that create jobs for young people, especially in the interior regions.
Jobs created from greenfield FDI have surged during the first half of 2018, with 3431 new positions in Tunisia, marking almost double the annual figure since 2014, thanks to several large investments in hi-tech industries, according to greenfield investment monitor fDi Markets.
In May, Algeria-based Condor Electronics invested in a television assembly plant that will create 1000 jobs, while Germany-based cable manufacturer Leoni expanded its plant in Messadine by creating 1200 new jobs. In the automotive OEM sector, China-based Dongfeng Motor Corporation plans to establish a new assembly plant in a joint venture that will create 864 jobs.
“FDI in Tunisia is very substantial in the manufacturing sector, especially in electronics, automotives and aerospace. However, FDI is also strong in the service sector and ICT,” says Mr Laabidi.
Business centre
The main source of greenfield FDI into Tunisia since 2003 has been in the business and finance sector, which has attracted 82 projects in that timeframe, followed by 40 projects in IT services, 29 in fossils fuels, 24 in electrical components, and 24 in hotels and tourism.
Tunisia is aiming to become a regional technological leader for its industrial sector. In November 2017, the Tunisia Investment Forum showcased the progress being made in implementing new technologies in automotives, mechatronics, agri-business and pharmaceuticals.
Meanwhile, progress in the renewable energy sector is being made. Most of 2017’s greenfield FDI went into renewables, following major investments from Belgium-based WindVision and China’s Sinoma Energy Conservation, according to fDi Markets.
This wave of investment could be attributed to a new Tunisian law on the development of renewable energy, effective since May 2015, which permits the export of electricity made from renewables. The Tunisian government is aiming to increase the share of renewable electricity generation to 30% by 2030.
Rated highly
Most FDI into Tunisia comes from France, which has invested in 128 greenfield projects since 2003, followed by 37 projects from Germany, according to fDi Markets. France’s prestigious Insead Business School ranked Tunisia first in north Africa in terms of talent competitiveness, according to its 2017 Global Talent Competitiveness Index.
“Currently, our will is to diversify our partners [when it comes to] FDI origin. For instance, one of our major objectives is to [do more business with] Asia and the Far East,” says Mr Laabidi.
Tunisia’s business leaders are relatively optimistic, with 77% of chief executives having either positive or very positive expectations of local business conditions, according to Oxford Business Group’s ‘Business Barometer – Tunisia’, which surveyed more than 100 CEOs in Tunisia in early 2018.
Zawya #CONSTRUCTION of August 13th, 2018, posted this article by Anoop Menon, Thomson Reuters Projects News about an omnipresent side of the MENA region’s construction disputes in its diverse markets since the advent of oil and its ensuing building and infrastructure development dynamics. Like everyone knows this market has unlike preceding times become characterised by a high volume of claims and disputes mainly since market conditions that were booming up to the sudden crash of June 2014 oil prices have altered to the point where the MENA region’s Construction Disputes at $91 million in 2017 seem to continue into this year unabated. Meanwhile, the report says in its Executive Summary:
Since then, the region is feeling the pinch, and in such an environment, cents are cherished and counted. Many contractors are struggling and are naturally looking to squeeze as much as they can from contracts. This includes pursuing any payments that they’re owed through claims and formal disputes if necessary.
The value of construction disputes in the Middle East last year was double the global average and reached its highest level since 2011, although the time is taken to resolve them reduced marginally, according to a new report by building consultancy Arcadis.
Average value of construction disputes in the Middle East touched $91 million in 2017, says Arcadis Getty Images/PhotoAlto/getty images
Average value of construction disputes in the region touched $91 million in 2017, says Arcadis report.
Arcadis’s annual 2018 Global Construction Disputes Report said the average length of time needed to resolve a dispute in the Middle East in 2017 declined 1.5 percent year-on-year to 13.5 months. The global average increased by 6.5 percent to 14.8 months.
However, the average value of disputes in the region in 2017 increased by a whopping 62 percent year-on-year to $91 million, despite the volume of disputes being about the same as in the previous year, the report said. In comparison, the global average dispute value increased by 33.5 percent year-on-year to $43.4 million.
The report’s findings are based on an assessment of the construction disputes handled by the Netherlands-based firm’s contract solutions team over the previous 12 months.
According to the report, the 2017 dispute value is the region’s highest since 2011, when the average dispute value was $112.5 million. However, 2011 also saw the region reporting the lowest average length of disputes at nine days, before moving to double digits in subsequent years, where it has remained.
A press statement that accompanied the report attributed the steep rise in value to “a small number of high-value disputes and a flow of ‘mid-value’ final account claims.”
The report pointed out that the economic backdrop for 2017 remained similar to 2016, when liquidity issues “due to a comparatively low oil price” squeezed cash flow across the supply chain and saw contractors taking a tougher approach to entitlements.
Recurring factors
The most common reasons cited for disputes saw two new entrants in 2017. A failure to make interim awards on extensions of time and compensation was the top cause of disputes, while owner-directed changes took the third. Failure to properly administer the terms of a contract, a recurring issue for the past three years, took the second spot.
The report pointed out that both the first and third causes are related to “client responsibility”.
“When the project manager or engineer is the material influence for the dispute, the most common causes include a failure to be impartial to the employer’s interests, a lack of understanding of the procedural aspects of the contract, or a lack of authority that is limited by levels of authority issued by the employer (i.e. not allowed to issue variation orders over a certain value),” it said.
Rob Nelson-Williams, regional head of contract solutions for Arcadis Middle East, said in the press statement that the firm continues to see “a lot of the same issues” crop up in its analysis of construction disputes in the Middle East.
“This underlines the need to get the basics right, and the importance of seasoned technical and commercial advice when it comes to contract or claims strategy,” he said.
According to the report, as regional construction-related events loom closer and as pressure increases to meet fixed deadlines, “a sharper focus on removing ambiguity from within a contract at the very outset and better training on how to prepare a robust and credible claim are two relatively simple steps that would make a significant difference.”
On the dispute resolution front, as in previous years, party-to-party negotiation and arbitration were the two most common methods of resolving construction disputes in the region in 2017, the report said, with a Dispute Adjudication Board taking the third spot.
(Reporting by Anoop Menon, Editing by Michael Fahy)
Nader Habibi and Gholamreza Keshavarz Haddad in the University World News of June 8, 2018, Issue No:509 elaborate on the lack of employment for university graduates after completing their degrees in Iran. Unlike all its peer countries in the MENA region, and despite all the difficulties, Iran has managed to sustain as normal a life as it could muster, but being no exception, Iran’s labour market failing to generate adequate employment could be looked from a different angle; that of normality. As a matter of fact, all MENA countries, monarchies and republics alike are to a certain degree, going through the same trauma: that of unemployment. In any case, here is that article.
In recent years Iran’s labour market has failed to generate adequate employment for the growing number of university graduates. As a result, not only has the unemployment rate among university graduates sharply increased, but a growing number of university graduates who have found employment are working in occupations that do not require university skills.
In the past three decades Iran has experienced a sharp increase in the annual enrolment of university students. The annual admission to institutions of higher education rose from 146,115 in the 1991-92 academic year to 1,174,897 in 2015-16, while the total number of students in higher education institutions rose from 588,228 in 1991-92 to 4,348,383 in the 2015-16 academic year.
This sharp increase was a result of a strong social demand for university education. Policy-makers reacted positively to this growing demand by rapidly expanding the admissions capacity of universities. Moreover, the government was able to limit the fiscal burden of this policy by allowing for the creation and expansion of private and non-profit universities such as the Islamic Azad University.
As a result of these developments the number of university graduates has sharply increased, but the quantity of new job vacancies has not kept pace with this growing supply. The impact of this labour market imbalance is visible, reflected in a high unemployment rate for university graduates. While overall unemployment has oscillated between 10% and 12% in the past decade, the unemployment rate for young university graduates has been between 15% and 20%.
This situation has received considerable attention in the domestic media and it is often referred to as a graduate unemployment crisis. The 2016 labour market statistics indicate that there were 1.185 million unemployed university graduates – some 36% of the total number of unemployed people. They included 797,000 graduates with four-year (bachelor) degrees and 224,000 with two-year (associate) degrees. The remaining 163,000 had masters and doctoral degrees.
This condition represents a substantial waste of higher education resources and human capital for the Iranian economy.
Overeducation
The high unemployment rate among university graduates, however, is not the only adverse consequence of the excess supply of university graduates in Iran. A growing number of university graduates who manage to find a job are employed in jobs that do not require university skills or do not match their university skills. As a result they are securing these jobs at the expense of less educated workers. In other words, a growing percentage of employees in low-skilled and semi-skilled jobs are university graduates who are overeducated for these positions.
A domestic online news site attracted attention to the plight of these university graduates by posting several photos in a July 2016 article.
For a more accurate investigation of the growing number of overeducated persons who are active in Iran’s labour market, we have calculated the share of employees in various occupations who hold at least a two-year associate degree from a higher education institution. The data for our analysis comes from the annual Households Income and Expenditure Survey database that is produced by the Statistical Center of Iran.
In this annual survey the level of education and job categories of wage-earning workers and self-employed individuals are available and allow us to calculate the share of overeducated workers in each occupation category. Our findings show that the share of economically active individuals in low- and unskilled jobs who have a university degree is on the rise.
We observe that in all of these occupational categories the share of employees with at least a two-year degree has consistently increased. Occupations in the service and retail sector have experienced the largest replacement of less educated workers with university graduates.
We observe that by 2015 nearly 57% of employees in office work and customer service occupations had at least an associate degree. For sales-related occupations, the share of workers with university degrees grew from 4.3% in 2001 to 17.3% in 2015.
As for lower skill categories, such as vehicle drivers, or unskilled workers, the share of employees with university degrees is relatively small, but an upward trend is noticeable.
Among unskilled service sector workers, for example, the share of university graduates increased from 0.7% in 2001 to 7.1% in 2015. These are mainly manual and routine tasks for which no university degree is required and a university graduate will rarely work in these occupations if a more skilled job is available.
We have calculated that the share of workers with at least an undergraduate degree in semi-skilled and unskilled categories is substantial in several categories, such as office and retail workers.
Furthermore, in all unskilled occupations that do not require even a high school diploma, we observe that the share of workers with undergraduate degrees ranged between 1% and 4% in 2015. While these university graduates must have felt fortunate to be employed, they are clearly not using their university skills in these occupations.
Self-employment
As for the self-employed in semi-skilled and unskilled economic activities, the number who have completed at least a two-year university degree is also rising in Iran. This growth is particularly noticeable in agriculture, industry and construction, rising from under 1% in 2001 to more than 6.5% in 2015. Furthermore, at least 5% of the self-employed working in unskilled industrial and agricultural activities hold four-year degrees.
One of the undesirable consequences of the trends that we have observed is that the trickle down of higher-educated jobseekers into low-skilled jobs is crowding out the less educated workers from low-skilled positions. This process pushes a share of high school graduates from employment in low-skilled jobs into unemployment.
The reduction of job opportunities and the higher risk of unemployment for high school graduates might compel them to enrol in a university degree programme in order to improve their chances of employment, even in occupations that do not require university degrees.
This adverse incentive will lead to a high rate of participation in higher education without any direct connection to a labour market demand for university skills.
The employment data presented in this article are available in this online file.
Nader Habibi is Henry J Leir Professor of Practice in Economics of the Middle East at the Crown Center for Middle East Studies and senior lecturer in the department of economics, Brandeis University, United States. Gholamreza Keshavarz Haddad is visiting faculty at the Crown Center for Middle East Studies at Brandeis University and is associate professor at the Graduate School of Management and Economics, Sharif University of Technology, Iran.
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