Abstract
In the next 10 years or so, the infrastructure sector has the potential to generate significant employment. This paper estimates annual job creation of about 2.0 million in direct jobs and 2.5 million in direct, indirect and induced infrastructure-related jobs just by meeting the infrastructure investment needs of about 6.9 percent of gross domestic product (about US$106 billion) for the Middle East and North Africa region on average. The breakdown in expected needs is 11 percent in developing oil exporters, 6 percent in oil importing countries, and 5 percent in the Gulf Cooperation Council oil exporters. Needs are particularly high in electricity and roads. While important, infrastructure job creation will not resolve the region's unemployment problem alone and its job creation potential varies greatly across countries. Moreover, the current ability to finance and hence meet the infrastructure needs varies significantly across countries. Oil importers are likely to fall short under business as usual scenarios. In a region in which the public sector is the main source of infrastructure financing, fiscal choices will thus matter to job creation through infrastructure. But there are more challenges, including the governance of job creation, and the proper targeting and costing of subsidies for job creation and the (re)training programs needed. Managing expectations will also matter, as infrastructure jobs will help but will not solve the region's unemployment and underemployment problems.
Highlights
Lack of job opportunities, especially for young people, is a well known, major issue in the Middle East and North Africa (MENA).2 The region’s labor force has been growing at a rapid pace – a consequence of relatively high population growth and rising female labor force participation, but job creation has been lagging behind
Oil importing countries are assumed to grow at 3.5% per year, while developing oil exporters and Gulf Cooperation Council (GCC) countries are assumed to grow at 4.6% and 4.5%, respectively
The construction category encompasses housing and building construction. These two activities are likely to be the main drivers of job creation, but other infrastructure investments are still likely to account for a significant share of employment creation
Summary
Especially for young people, is a well known, major issue in the Middle East and North Africa (MENA). The region’s labor force has been growing at a rapid pace – a consequence of relatively high population growth and rising female labor force participation, but job creation has been lagging behind. For the last 25 years, public investment spending in MENA was higher than in most developing regions (except East Asia) and twice as large as the OECD average, largely because of robust spending in the oil exporting countries which benefited from rising fuel prices. Spending on infrastructure boosted employment in the construction sector, which was a major source of job growth in the 2000s relative to both other sectors and other countries. The paper shows that maintaining and spreading the momentum in infrastructure will be important to support growth and job creation in the Middle East and North Africa.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
