Stakeholders acknowledge that youth unemployment is a complex phenomenon emanating from a multitude of converging factors. There is wide agreement among stakeholders that retracing the evolution of the problem requires delving deeply into structural issues.

Nine main perceptions of the major cause of youth unemployment in GCC countries emerged from the stakeholder consultations. While perceptions reflect stakeholders’ views of the situation in the Gulf in general, they might not necessarily apply equally to individual countries. Uncovering the divergences between stakeholder views is essential, as these notions form the basis for the proposed solutions and provide insight into why perceptions differ across stakeholders.

Perception 1: There is a skills mismatch inhibiting nationals from being employed in the private sector.

Youth unemployment is an issue of employability. The education system does not provide young people with the skills needed in the private sector. The mismatch relates to basic skills, such as creative and independent thinking, problem-solving skills and soft skills, as well as to sector-specific and functional skills, such as vocational skills, technical abilities and management.

Quotes from stakeholders

• “The system produces graduates disconnected from market demands and needs.”
• “Even if on paper graduates have the credentials, what they lack the most are social and soft skills.”
• “Education is designed to employ people for the public sector.”
• “The skills shortage is particularly problematic for vocational employment.”
• “There is a deterioration of skills due to the certainty that people will get a job.”

Perception 2: Young nationals are not taking enough responsibility for their lives.

The welfare state in GCC countries, materialized by large public spending, generous subsidies, low-cost or free public services and the provision of public sector jobs, creates dependency on the government as well as expectations of it. Incentive schemes do not encourage young nationals to take sufficient responsibility for their own lives. In turn, this limited self-reliance shapes mindsets and attitudes towards the private sector, entrepreneurial risk-taking and work in general, which are at the core of the youth unemployment problem.

Quotes from stakeholders

• “The dependence on government is a problem. This is not a self-reliant culture.”
• “Young people are not responsible for their lives; they blame it on the government, and they expect the government to give them health insurance, education and unemployment compensation.”
• “It is a society that is expecting a dividend. It is a culture of dependence. It is assumed that it is your right as someone from this country that the government has to take care of you.”

Perception 3: There is cultural resistance to doing certain jobs, for example sales and vocational work.

The attitude towards certain functions is at the core of youth unemployment, as there is a gap between the positions that young nationals are willing to take and the ones available in the labour market.

Quotes from stakeholders

• “There are cultural limitations to be ‘out on the streets’.”
• “In Arabic, ‘saleswoman’ is a lady who sells on the streets. There are neither role models, nor success stories for saleswomen having made a career.”
• “There is a mental block against vocational work.”
• “Being paid to serve someone is not in the culture.”
• “Nationals prefer to work in operations, behind the scene.”
• “There is a mindset issue; they only want to work as managers.”

Perception 4: Public sector employment incentives render private sector employment unattractive.

Secure, comfortable and well-remunerated public sector jobs – both in public administration and state-owned enterprises – shape young nationals’ educational choices, heighten their expectations of salary and working conditions, and limit their taste for risk. Public sector employment conditions reduce the attractiveness of the private sector for young nationals and hamper entrepreneurship.

Quotes from stakeholders

• “The problem is that the public sector pays 30% more than the private sector and provides secure jobs. It would have the same effect on people’s choices everywhere. It has negative implications for productivity of the economy at large and for entrepreneurship.”
• “The public sector attracts national talents because it is seen as prestigious, and it offers comfortable working conditions (e.g. working hours) and generous packages.”
• “The incentives given in the public sector generate expectations that make nationals unwilling to work in the private sector.”

Perception 5: Labour regulations are too rigid for national employees.

Labour laws are more protective of nationals than of non-nationals and thereby reduce the relative attractiveness of national hires compared to non-national hires for private sector employers. For example, it is much more difficult to terminate work contracts with nationals than with non-nationals.

Quotes from stakeholders

• “Labour rights of nationals are extreme; it is impossible to fire them.”
• “Private employers prefer to hire non-nationals because of the labour laws protecting nationals.”
• “Companies are hesitant to hire because the labour law is prohibitive; you need to commit to hire for life.”

Perception 6: The business environment is non-conducive for entrepreneurship and small and medium-sized enterprises (SMEs).

The legal frameworks for starting and maintaining a business prevent the creation of start-ups and the development of SMEs. Overbearing bureaucracy, inadequate access to smart finance and especially bankruptcy regimes¹¹ all serve as significant hindrances. In addition, the non-competitive market structure of certain sectors adds further drag on start-up initiatives, preventing them from growing and thereby contributing to job creation.

Quotes from stakeholders

• “The biggest challenge is to create an environment for medium-sized enterprises in order to have more companies operating within the economy.”
• “Bankruptcy laws can lead to jail punishment for entrepreneurs.”
• “There is a lack of SME financing. GCC countries have the lowest share of loans globally.”
• “With a few exceptions, the culture in the region is not entrepreneurial and entrepreneurs are not respected.”
• “This is a commercial culture, but not an investment culture oriented towards risk.”
• “The system makes it difficult to be an entrepreneur, because the government has historically played a paternal role.”

Perception 7: The economy is not sufficiently diversified.

The economy is not sufficiently diversified away from the oil and gas sector. It needs to move into knowledge-based industries, which employ more people than the oil and gas sector. Knowledge-based industries are also more attractive to national citizens than predominant non-oil sectors, such as construction, which provide mainly low-skilled, low-paying jobs.

Quotes from stakeholders

• “There is a lack of non-oil growth.”
• “Looking internationally at other resource-rich countries, economies have diversified. But here, the non-oil sector is financed by oil and its size is minimal once oil-related sectors are taken out. There is no digital economy, no knowledge economy, etc. That’s the problem.”
• “These countries are trapped in a mono-industry economy instead of rethinking the building blocks of their industries and supply chains, for all sectors and not only for petrochemicals.”
• “Citizens who were sent abroad to do an MBA cannot find jobs, because the open positions are in the low- to middle-skill segment, such as construction, logistics and nursing.”

Perception 8: There is a lack of private sector consultation in public decision-making.

There is a lack of mechanisms for systematically engaging the private sector in the public sphere of decision-making, notably in the areas of labour market regulations and the education system. This situation could be attributed in part to the absence of a comprehensive corporate tax system, which limits the translation of private sector growth into increased government revenues, and thus minimizes private sector leverage over government. Low taxation also harms the private sector’s social standing, as it leads to the private sector receiving less recognition for being an important contributor to the overall welfare of society.

As a result of this low engagement, education is not aligned with labour market needs, and young nationals are often unaware of the career opportunities in the private sector. In essence, there is no common ownership of the unemployment problem between the public and private sectors and, therefore, little joint responsibility to solve it.

Quotes from stakeholders

• “There is a lack of cooperation between the private sector and educational institutions.”
• “There is a lack of cooperation and partnership between the private and public sectors to change labour laws and make them more flexible.”
• “National young people have no awareness of rights, obligations and opportunities in the private sector.”
• “Nationals do not even think of the private sector, as they believe it is for non-nationals only.”
• “Without taxation, there is no representation.”

Perception 9: The private sector is not investing enough in young nationals.

With some exceptions, private sector engagement in the education and training of nationals is seen as low. Companies often limit their operations in the GCC to commercial and sales offices, preferring to keep their higher value-added business lines at other locations, and invest little in training young nationals to support their activities. Companies are perceived as predominantly interested in interacting with nationals as consumers rather than workers. Even once employed, it seems that young nationals are often regarded as less productive than their non-national peers, and thus are not adequately trained nor well integrated into the company.

Quotes from stakeholders

• “The private sector has been quite unwilling to properly train the national workforce.”
• “The private sector needs to assume its role and become part of the solution when it comes to employment creation.”
• “There is a lack of trust of the private sector in nationals.”