Expert Commentary

Leading commentators offer their perspectives on the key findings of the ASDA'A BCW Arab Youth Survey 2019.

COVID-19 accelerates need for a new social contract

Jihad Azour

Jihad Azour

At the time of the 2019 release of the ASDA’A BCW Arab Youth Survey, I argued for a new social contract where the state would create an environment for the youth to thrive and drive prosperity for decades to come. Since then, the world and the Arab region have been struck by the COVID-19 pandemic, and its economic and social costs continue to mount. And yet, this crisis makes the call for a new social contract even more relevant.

The findings of the 2020 ASDA’A BCW Arab Youth Survey provide a fresh glimpse at youth concerns and aspirations at the onset of the COVID-19 pandemic. Young Arabs started this decade longing for change to build a shared prosperity and a better future. The survey shows that, in search of economic and educational opportunities, nearly half of them had considered leaving their countries; 40 per cent of them would like to do so permanently. At the same time, youth in countries that had seen major

public protests recently were confident that these protests would bring about positive change. They want to see improved governance and reduced corruption, which they believe to be the main impediments to progress.

Unsurprisingly, unemployment remained a top concern. And there was evidence that more youths were holding debt, with the pandemic aggravating potential financial hardship. These concerns have doubtlessly been exacerbated by the COVID-19 crisis. On a more positive note, young Arabs were starting to look for opportunities beyond traditional jobs: seeking to create their own enterprises, lowering their expectations about public sector jobs, and embracing the digital revolution. Young men and women were also supporting and reporting greater gender equality in access to education and the labour market. These developments bode well for the future.

While the expectations of Arab youth remain high, the COVID-19 pandemic brings unprecedented uncertainty. Lockdowns have led to massive job losses and rising inequality. We are seeing a rapid deceleration in economic activity. For nearly all countries, the recession is deeper than the ones following the global financial crisis in 2008 and the oil price shock of 2015. The downturn is also expected to exacerbate the already large humanitarian and refugee challenges faced by fragile and conflict-affected countries. Many youth face the prospect of joining labour markets at a time of a deep economic recession and pervasive uncertainty; those already employed stand at a higher risk of losing their jobs because of their relatively lower skills and experience; those in school confront practical difficulties in accessing education; and international opportunities are shrinking as countries have closed their borders to tourists, students and migrants alike. At this time of crisis, women have been called upon to find work to bring additional income to their households and to take additional family responsibilities.

Immediate focus should remain on controlling the pandemic and limiting its impact on the economy. While young people have been relatively shielded from the health effects of the pandemic, the economic crisis could have a long-lasting effect on their jobs and earning prospects.

To cushion the shock, governments in the region have taken actions to support adequate social safety nets, protecting households and the most vulnerable, and providing temporary and targeted tax relief, subsidies, and transfers to business to keep them afloat while trying to control the pandemic. Additional measures could focus on developing specific programmes geared toward preserving employment linkages, providing training to facilitate telework, supporting the reallocation of human resources, and expanding support for small businesses and startups - a major source of employment for youth.

Priorities and Opportunities
Looking ahead, it will be crucial to limit the scarring effects of the pandemic and support a sustainable reopening of the economy. The COVID-19 pandemic could prove to be a decisive turning point in building systematic resilience to shocks. Arab countries must aspire to build more equitable, greener and more sustainable economies.

The pandemic invites us to rethink the way the recovery should be engineered. To succeed in this endeavour, countries need to put the youth agenda centre stage and focus on a few key priorities (i) preventing the sharp increase in inequality provoked by the crisis; (ii) supporting a resilient recovery; and (iii) harnessing the digital transformation. To achieve these goals, four key policy areas - that can rely on the region’s large population of well-educated and tech-savvy youth – are crucial:

Investing in people and nurturing their talent: Governments will need to adopt social spending policies that address new demands on health, education and social protection. The goal would be to create a system that is responsive to a more flexible labour market.

Accelerating the adoption and use of new technologies: This crisis has shown how technologies can be better leveraged, for example by permitting people to work remotely and improve their access to markets. Countries therefore need to reinforce digital links and harness new technologies. Opportunities are many, ranging from delivering more online services and reducing red-tape through e-government, to changing the approach to learning - whereby the region could become a hub for higher education at a time when travel has become difficult - or in making schools and hospitals benefit from new technologies. The crisis has scaled up global digital connections that kept some economies running. The tech-savvy young Arabs can be the anchor countries need to better integrate into the new global economic order through digitalisation and new technologies.

Strengthening governance:
The pandemic has shown that trust between citizens and states greatly facilitates effective policy implementation. Trust can be strengthened further by improving governance and tackling corruption. In this regard, greater transparency and accountability and less red tape can reduce opportunities for corruption.

Providing opportunities for all: Governments should strive to preserve and expand the gains that had been achieved before the crisis. Building on growing perceptions of gender equality and the benefits of female participation in the labour force, well-designed policies can mitigate the negative effects of the crisis on women and prevent setbacks for gender equality. Creating opportunities for women and youth is ultimately good for addressing income inequality, economic growth and resilience.

Let us act together on building stronger economies and prosperity. Despite these being compounded by the pandemic, the youth hold the key to the recovery and to rising prosperity for all. They are the strength of the region and fulfilling their hope and aspirations can only lead to a better future.

Dr. Jihad Azour is the Director of the International Monetary Fund’s Middle East and Central Asia Department (MCD). Dr. Azour served as Lebanon’s Finance Minister from 2005 to 2008, during which time he coordinated the implementation of important reforms at the national level and within the Finance Ministry. He has held a wide range of posts in the private sector, including McKinsey and Booz & Co. where he served as Vice President and Senior Executive Advisor from 2009 to 2013. Prior to joining the Fund, he was a Managing Partner at advisory and investment firm Inventis Partners. Dr. Azour holds a PhD in International Finance and a post-graduate degree in International Economics and Finance, both from the Institut d’Etudes Politiques de Paris.