Inequality, unemployment drive conflict, prevent growth: Creative expert

By Jillian Slutzker

November 17, 2014

Economic inequality and unemployment, common in many Middle Eastern countries, drive conflict. Companies, governments and development practitioners should tackle these sources of fragility to stimulate sustainable growth, said J.W. Wright of Creative Associates International during a speech in Washington, D.C.

To attract foreign investment and jumpstart growth, however, countries must first attain a threshold level of stability and resilience, said Wright, who leads the Economic Growth Division.

Wright spoke to business leaders and diplomats at the National Council on U.S.-Arab Relations’ 23rd Annual Arab-U.S. Policymakers Conference on Oct. 29, which had discussions about how to spur economic growth, investment and human capital in the Arab Gulf countries and throughout the Middle East.

Examining growth, grievance and conflict

Citing the results of recent study by Creative called “Exploring the Correlates of Economic Growth and Inequality in Conflict Affected Environments: Fault Lines and Routes of Recovery,” Wright said that “inequity was considered more a driver of conflict than the level of poverty. And class inequity in employment was a larger driver of conflict than unemployment itself.”

Creative is exploring these concepts and issues of global economic policy and investment in two research series—Trends in Global Development and Economic Growth, Fragility and Resilience.

Speaking on a panel with experts and dignitaries including former U.S. Ambassador to Qatar Patrick Theros, Wright said the international community must dig deeper than basic economic indicators to address inequities that perpetuate group grievance and preclude growth.

Youth unemployment and instability

As a case study to highlight the inequality-conflict relationship, Wright referenced Egypt, where unemployment has shot up to nearly 13 percent since the January 2011 revolution, according to the International Labour Organization.

A surge of employment in Egypt’s informal sector in the last three years has done little to abate the crisis.

“Jobs in the informal sector aren’t permanent, aren’t protected by labor laws and don’t get formal investment,” Wright said.

Causing further instability is the fact those most affected by swells in unemployment are largely youth—particularly the college-educated— and the middle class, “groups that once provided stability,” Wright explained.

In the Middle East, more than 30 percent of the population is from 15 to 29 years old, or over 100 million people, according to the Brookings Institution. More than 29 percent of these young people are unemployed, data from the International Labour Organization shows.

In Egypt, the trend is even more pronounced with almost half of the population under age 25, which means a flood of new job-seekers entering steep competition for very few jobs each year. Nearly 87 percent of Egypt’s unemployed are from 15 to 29 years old, with college-educated youth being the most adversely affected, a recent Brookings Institution paper noted.

Investing in the local workforce

Exacerbating this economic instability, Wright cited findings in Creative’s recent study that economic inequality and the availability of jobs directly affects citizens’ perceptions of government legitimacy.

Solving this problem is not as easy as creating new jobs alone, Wright explained. Private sector jobs must be transparent and seen as legitimate by the population.

“Less than one in six private sector workers has either a formal contract or social insurance,” writes Pauline Baker, President Emeritus of the Fund for Peace, in “Fragility in Revolutionary Egypt,” a research endeavor supported by Creative.

“If youth—and it is the educated youth who are the most disaffected— if they want jobs but they don’t trust the private sector, then we’ve got a real problem,” Wright told fellow panelists and the audience.

Remedying these economic sources of fragility and drivers of conflict will not be quick nor easy. But Wright does have a suggestion on where companies and investors can begin.

“When your companies make investments, let’s think a little bit more,” said Wright. “Let’s think about putting workforce development for the local population into the programs and operations.”

By providing relevant skills and job opportunities for the unemployed classes and youth in the Middle East, companies and international development implementers can help reduce the inequalities that drive conflict and support national and regional economies to truly thrive.

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