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This is Saudi Arabia's 'Achilles' heel'

saudi arabia student youth millennial
saudi arabia student youth millennial

(Fahad Shadeed/Reuters)
A secondary-school student sits for an exam.

In the aftermath of the 2003 terrorist attacks carried out by nationals in Riyadh, Saudi Arabia, then Crown Prince Abdullah argued that youth unemployment was the kingdom's biggest challenge.

Fast-forward 13 years, and the problem remains a pressing issue for the Arab state.

"Abdullah singled out youth unemployment as Saudi Arabia's No. 1 security challenge — and it is," Helima Croft, head of commodity strategy at RBC Capital Markets, told Business Insider in an interview on Tuesday. "That's the Achilles' heel of Saudi Arabia — the question of how to deal with its young population."

Approximately two-thirds of the Saudi population is under 30, but about 30% of the population 15 to 24 is unemployed, according to a 2014 estimate from the International Labour Organization. Plus, about 27% of the population is under 14, which implies that Saudi Arabia's going to need to create a lot more jobs in the near future.

Screen Shot 2016 05 26 at 1.13.44 PM
Screen Shot 2016 05 26 at 1.13.44 PM

The number of higher-education graduates in Saudi Arabia is rising.

And so, in this labor market, the big question is how do these large numbers of unemployed young people occupy their time if they don't have jobs?

"It's the problem of young, unemployed men who are idle. They can't marry; they have no jobs," Croft said. "In the Middle East, it takes the form of young, idle men getting swept up in extremist groups."

"It's a small fraction of that unemployed population that joined groups like ISIS, [but] you only have to have a small fraction join these groups for tremendous damage to be caused," she continued.

Notably, Saudis make up the second-largest group of foreign-fighter nationalities in ISIS, according to a December 2015 report by The Soufan Group.

Croft continued:

I look at Saudi Arabia and think, "Well, we do have those periodic ISIS attacks in the country ... these low-level attacks in the eastern provinces where the Shiites live or on the Yemen-border security outposts." But what if there is something more serious in Saudi Arabia? That's what worries me the most about Saudi. A real security incident there.

ISIS Islamic State Raqqa Syria Member
ISIS Islamic State Raqqa Syria Member

A member loyal to ISIS waves an ISIS flag in Raqqa on June 29, 2014.

But the youth-unemployment issue is not limited to Saudi Arabia. It's actually a big obstacle for various countries in the Middle East and North Africa.

A 2015 report from the ILO estimates that youth unemployment rates in those regions have been trending up since the global financial crisis, and are now around 30% in both.

And if 30% does not sound like a very high number, the ILO thinks there are up to 75 million young jobless people in the Arab world — a number roughly equal to the populations of France and Greece combined.

Screen Shot 2016 05 26 at 12.41.39 PM
Screen Shot 2016 05 26 at 12.41.39 PM

(International Labor Organization)
Youth unemployment rates in the Middle East and North Africa are around 30% and have been trending upward — unlike other regions, where rates have dropped since the global financial crisis.

Education and other labor-assisting programs have been implemented in many North African and Middle Eastern states, and young people in the region are "doing well in terms of near universal education" — even for women. Even so, youth unemployment rates in the region have risen since the global financial crisis.

This contrasts with other regions around the world, which have seen youth-unemployment rates either decrease or at least remain relatively stable in the same time frame.

"The persistent high unemployment among both youth and adults in the [MENA] regions denotes the deep-rooted structural elements that cannot be resolved by supply-side policies alone," the ILO report said.

yemen unemployment
yemen unemployment

(Reuters/Mohamed al-Sayaghi)
Men wait to be hired for their labor along a main street in Sanaa, Yemen.

Notably, the correlation between unemployment rates and lack of job opportunities and joining militant groups is evident in some of these MENA countries.

The 2016 Asda'a Burson-Marsteller Arab Youth Survey, which surveyed 3,500 Arab men and women 18 to 24 in face-to-face interviews, found that young Arabs believe that the lack of jobs and opportunities is the primary reason why people join ISIS — aka the Islamic State, ISIL, or Daesh.

The poll also found that concern about lack of job opportunities is still a huge issue across all 16 countries surveyed, with less than half of respondents (44%) agreeing with the statement "there are good job opportunities in the area I live in."

And the most striking thing about the latter finding is that this concern is particularly high in countries where ISIS has actively recruited young people, according to the Arab Youth Survey. Only 2% of young Yemenis, 7% of Libyans, 21% of Lebanese, 28% of Tunisians, and 39% of Iraqis believe that they have good job opportunities available in their countries.

Croft told Business Insider:

It's one of the central challenges in many countries. It's the "lost boys." These young men have nothing to do. The alienated, isolated young men who are open to recruitment — whether it be by militant group in Nigeria or whether it be an online ISIS recruiter. It gives them a sense of belonging, gives them a sense of community.

abu dhabi
abu dhabi

(Ben Job/Reuters)
A screen displaying the worldwide locations of the National Bank of Abu Dhabi, at the bank's headquarters in Abu Dhabi.

Another interesting detail from the Arab Youth Survey was that, for the fifth year in a row, young Arabs viewed the United Arab Emirates as the top country in which to live and the top country for their home nations to emulate — ahead of the US, Germany, Saudi Arabia, Canada, France, and the UK.

Plus, respondents noted that the top associations with the UAE were "safe and secure," "has a growing economy," "wide range of work opportunities," and "generous salary package."

"The UAE's popularity is likely a reflection of its status as a model country and regional political and economic safe haven," the survey noted. "The Gulf state has developed a reputation for its robust and diversified economy, which encourages a 'can do' attitude among its residents and is respectful of religious and cultural diversity."

Croft told Business Insider:

The Emirates is what the young people admire because the Emirates have seem to have found a way to diversification — with a hospitality sector, transportation sector, in addition to having the oil produced in Abu Dhabi. It is the model — it's what the young people through the Arab world look to and say, "God, this is our dream — to have the Emirates model."

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