How can governments create a fertile environment for employment?

In recent decades, rising living standards and literacy rates, as well as the increased availability of higher education, have resulted in an improved human development index in Arab countries. At the same time, technology and media have been revolutionized and the Arab citizen empowered with information access. These trends were not coupled with sustainable economic development, or political reform and inclusion. The result has been a natural tension between rising aspirations, needs and knowledge, and a lack of economic opportunities and political participation. Hence, the Arab Spring in 2011, and beyond.

For those of us from the Arab world (who grew up living with this tension), the main surprise was how long it took for the tipping point to be reached. It was never a matter of it actually happening, rather how and when the untenable status quo would give way.

In trying to understand the reasons behind these revolutions, many point to high unemployment as a key driver (the Arab regions have the world’s highest youth unemployment in the world), a primary indicator of the loss of hope and frustration driving young people to revolt.

So where would a nation start to address this? In addition to ineffective and overinflated government institutions, there is no shortage of challenges impairing Arab economies, such as ineffective subsidies, the over-use of regulations, a mismatch between education and the workplace, youth unemployment, a weak entrepreneurial base, mushrooming deficits and a deficit of meritocracy.

These developmental challenges were a failure of public policy thinking and execution (i.e. a failure of governance structures and government performance). They do not arise from a lack of information about what needs to be done.

Yet, the will and ability to tackle the issues at stake remained missing. Today, we face a crisis of leadership. The inconvenient truth is that it will take a decade (if not decades) to rebuild the state institutions, to develop the civil service capabilities and to regain public trust. There are no “silver bullets”, but what is clear is that the governments cannot go on running “business as usual”, subsidizing welfare, controlling the media, and simply creating more civil service jobs.

What is needed now is a shift in thinking about job creation. Governments should stop speaking of their plans for job creation and should start implementing policies for enabling job creation. This is not a simple academic argument or a semantic one. Governments – and citizens – have to accept that they cannot do it by themselves anymore. The days of paternal state are behind us (and so is blind loyalty to the state).

What governments should do is to develop policies that create the enabling environment for the private sector and civil society to ensure that jobs are created and transparent decisions are taken and upheld. Moreover, they need to expedite freeing up their markets and improve competition by breaking up decades of monopoly and “elite” control of the economic sectors. Steps should be taken to cut red tape and simplify the process for starting a business.

In parallel, governments also need to remove limitations on freedom of expression. They must accept the change started by the Internet and the rise of social media and not try to censor it, an expensive and losing battle.

Most importantly, governments need to “walk the talk” on fighting corruption. The easiest way to demonstrate how sincere these attempts are is to adopt open-government data policies and share transparent information on performance and public finances. Open-government data enables the citizens and media to scrutinize, and weed out, improper financial and regulatory behaviour. It empowers business with hard-to-find data for growth and development; and enables new start-ups in innovative public and private services.

All of these elements could combine to create a dynamic of change and an environment conducive to job creation or more, importantly, opportunity creation. However, the crucial factor is the change in mindset to allow the success of any or all of the above policy suggestions to unleash the talent of young entrepreneurs – business entrepreneurs and social entrepreneurs – and infuse the entrepreneurship in the public sector for innovations in creating public value.

Author: Yasar Jarrar is a Partner at Bain & Company; Young Global Leader, 2009, and a member of the World Economic Forum’s Global Agenda Council on the Future of Government

 Image: Job seekers stand in line to attend a jobs fair held by the New York State department of Labor in New York REUTERS/Lucas Jackson