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Report : Mideast populations not benefiting from oil boom

Although Mideast stock markets are booming and oil revenues have hit record highs this year, large sections of the region's populace have not benefited economically, and labor productivity has averaged just 0.1 percent growth in the past decade.

A new report from the Geneva-based International Labor Organization, published on Tuesday and titled "Global Tends in Employment, Productivity and Poverty," says the Middle East and North Africa (MENA) region is "unique in the economic diversity of the economies covered (globally)."

GDP figures among the region's oil-producing countries are close to "three times higher than the average for non-oil-producing countries," the report says.

The report argues that the vast majority of people have not benefited from the vast oil wealth generated over decades by many of the MENA economies. In the region, 2.9 percent of those in employment live in working poverty, only earning $1 a day.

About one-third of people with jobs do not earn enough to lift themselves and their families above the $2 a day poverty line.

The distribution of poverty and working poverty is closely linked to the division of oil-producing states and non-oil-producing states, with non-producing states showing much higher incidences.

Overall, the GDP of the oil-producing economies went in parallel with employment growth in the non-oil-producing economies, leading to high GDP growth rates accompanied by stagnant productivity.

The report says this indicates that employment creation hinders productivity growth if the jobs created are not decent and productive, providing an insufficient income for the employees, and making it impossible for them to have an impact on the demand side of the economy.

The report argues that MENA should be considered a perfect example of why, in the long run, decent employment creation and productivity growth have to go hand in hand with GDP growth.

"Only then will economic growth lead to poverty reduction," the report says.

MENA's unemployment rate is one of the world's highest, hovering around 12 percent for almost a decade.

"The rate reflects a gradual increase in the total number of unemployed per year since 1996, with an average of 500,000 additional unemployed per year."

Employment has risen, but not fast enough to absorb all those seeking work, particularly in North Africa, the report says.

Youth unemployment - 25.6 percent in 2003, the highest in the world - is a major challenge, particularly as the region has a very young population. Some 37 percent of people in 2000 were younger than 15, and 58 percent were younger than 25.

Most of the increase in employment was for women, with the employment-to-population ratio rising from 20.4 in 1993 to 23.5 in 2003. This can be considered an improvement, the report states, but the region's female employment to population ratios "still remains the lowest in the world by far."

Beirut,12 13 2004
Paul Cochrane
The Daily Star
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