The influence of demographic change on developments in the Middle East and North Africa, and what this means for Europe (2016)


By Ruth Müller, Stephan Sievert and Reiner Klingholz

Full study (German)

The key points in brief


The Middle East and North Africa, generally known by the acronym MENA, is one of the most crisis-stricken regions in the world. Eight of the nineteen MENA states are among the fifty most instable countries globally. Four of them – Syria, Libya, Iraq and Yemen – can be described as “failed states”.

 Poor governance, corruption and religious and ethnic conflicts have contributed to these crises over a period of many years. At the heart of many problems, however, is the fact that the working-age population has long been growing faster than the number of jobs available. The MENA region already has the second-highest unemployment rate across the globe (after Sub-Saharan Africa), and between now and 2030 almost five million additional people will be entering the labour market annually.

Geographic proximity and longstanding political and economic ties mean that the MENA region is of great importance for Europe. Increasing destabilisation in the region would further hinder the process of constructive exchange. The rise in refugee numbers from MENA countries would also increase the danger of terrorist attacks and relocate the region’s conflicts to Europe. Conversely, stabilising the region would create key markets for the European economy and a reservoir of skilled workers who are urgently needed here in Germany.


A special development case


As in other emerging economies and developing countries, in MENA states the birth rate has declined sharply in recent years. As a consequence, the proportion of the working-age population has risen, which is potentially advantageous for the economy. At the same time, more children are attending school and educational standards have improved. Yet while these processes of social modernisation have led to economic upturn, the creation of jobs and more political stability elsewhere in the world, the same effects have not been observed in MENA states. In fact, the opposite is the case: as the proportion of more highly educated people in the job market increases, so does the risk of political instability. Education, which elsewhere is a means of enabling countries to start generating added-value, tends to lead instead to conflicts in MENA countries, because the potential of the many young people of working-age is not being utilised.


What are the deficits?


There are three key reasons for the developmental paradox in the MENA region:

Firstly educational standards may have risen in formal terms, but the quality of education seldom conforms to the requirements of the twenty-first century. Schoolchildren acquire too little competence in mathematics, reading or problem-solving. Natural sciences and foreign languages, which would make countries more competitive at an international level, play a lesser role. Vocational training is virtually unknown in all MENA countries apart from Israel and Iran. Although the proportion of graduates is increasing, there are too few skilled specialists with business-related qualifications, as most students choose courses which would enable them to become civil servants.

Secondly, there is very little innovative private entrepreneurship in MENA countries. The region needs the successful small and medium-sized enterprises (SMEs) that drive growth and jobs in economies throughout the world. Instead, there are countless micro-enterprises with few employees and low productivity, offering simple goods and services. The rate of start-ups in MENA countries is lower than in any other world region except Sub-Saharan Africa. It is, moreover, extremely difficult for start-ups to succeed in the face of competition from state-run companies and the few large private companies with close contacts to the state.

Thirdly, although women are frequently well qualified they remain marginalised in the labour market. Less than one in three women between 25 and 34 is employed or looking for work. Israel is the only country in the region where the rate of women and men in work is approximately the same. What is more, very few women are entrepreneurs, which means an enormous loss of potential for the region: according to estimates, the MENA gross domestic product in 2025 would be approximately three billion dollars over the predicted level if the current gender inequalities were eradicated.


Regional differences


The differences between the nineteen MENA states are in some cases considerable. The spectrum ranges from an extremely high standard of living in Qatar or the United Arab Emirates to widespread poverty in Yemen, with a medium standard in Iran, and from politically stable to unstable.

Among the more stable MENA countries are Bahrain, Israel, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. With a combined total of 58 million inhabitants they comprise 14 percent of the MENA population. In 2030 this figure may well have increased to 72 million.

The group of more unstable countries consists of Algeria, Iran, Iraq, Jordan, Lebanon, Libya, Morocco, Oman, Palestine, Syria, Tunisia, Egypt and Yemen. Around 363 million people live in these countries, and by 2030 this is expected to grow to 458 million.

The population growth presents significant problems for the more unstable states in particular, mainly because unemployment is continuing to spread. Yet the stable countries, most of which have amassed their great wealth from the income generated by natural resources, also have an employment problem. The state administration has hitherto provided many well-paid jobs, but the increase in the working-age population, exorbitantly high military expenditure and low oil prices at present mean that the social model in these states is increasingly under threat.


What is to be done?


All MENA states should thus be addressing more or less the same issues in order to offer their citizens long-term prospects and facilitate the process of peace and development in the region. To do this they must raise the educational level of their populations, introduce modern curricula and teaching methods and prepare young people throughout their education for the demands of the private economy. They must create the conditions for successful and competitive entrepreneurship, which in turn generates adequately paid jobs. And they must enable equality for women at all levels of public and professional life.

Taking measures in these three areas would allow MENA countries to create the key prerequisites for economic growth and political stability. These are the tasks lying ahead for the governments of each country, the local economy, foreign investors, NGOs and official international cooperation.

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