Economic Research Forum (ERF)

Artificial intelligence and the future of employment in MENA

507
Artificial intelligence offers opportunities for boosting productivity and innovation. But it also poses substantial threats to traditional employment structures, particularly in economies like those in the Middle East and North Africa that are reliant on low-skill or routine labour. This column explores how AI is likely to affect employment across the region and proposes policy directions for governments to harness AI for inclusive and sustainable economic growth.

In a nutshell

AI presents both a challenge and an opportunity for MENA countries; those that act early – investing in human capital, fostering innovation and crafting responsive labour policies – can transform the new technologies into a driver of inclusive growth.

But the automation of routine and repetitive tasks threatens jobs in sectors such as manufacturing, retail, transport and administrative services; without targeted education and retraining initiatives, many workers could find themselves unemployable.

Investments in AI research and start-ups could foster new industries in fintech, edtech, agritech and cybersecurity – sectors that can create high-skill jobs for the region's large youth population, potentially addressing chronic issues of unemployment and underemployment.

The Middle East and North Africa (MENA) stands at a critical crossroads in the global transformation driven by artificial intelligence (AI). As AI technologies – from machine learning and robotics to natural language processing – reshape economic systems worldwide, the region must prepare for significant shifts in its labour markets, education systems and public policy frameworks.

While AI offers promising opportunities for increased productivity and innovation, it also poses substantial threats to traditional employment structures, particularly in economies that are reliant on low-skill or routine labour. This article explores how AI is likely to affect employment across MENA and proposes policy directions for governments to harness AI for inclusive and sustainable economic growth.

The opportunities: productivity, new industries and economic diversification

AI has the potential to boost productivity across sectors such as healthcare, finance, logistics, agriculture and public services. In countries like the Saudi Arabia and the United Arab Emirates, AI is already being integrated into smart city initiatives, digital government platforms and advanced healthcare diagnostics (Fitch Solutions, 2024). The use of AI can reduce operational costs, streamline services and improve decision-making through data analytics.

Moreover, AI offers a chance for economic diversification – a key policy goal for oil-dependent economies in the Gulf. For example, investments in AI research and start-ups could foster new industries in fintech, edtech, agritech and cybersecurity. These sectors can create high-skill jobs for the region’s large youth population, potentially addressing chronic issues of unemployment and underemployment (World Economic Forum, 2024).

The threats: automation, skills gaps and labour displacement

Despite these opportunities, AI also presents risks that policy-makers must address urgently. The automation of routine and repetitive tasks threatens jobs in sectors such as manufacturing, retail, transport and administrative services. Countries like Egypt, Jordan and Morocco, which have large pools of low- and medium-skilled labour, are particularly vulnerable (IMF, 2024).

Another pressing issue is the growing mismatch between the skills of the labour force and the demands of an AI-driven economy. Without targeted education and retraining initiatives, many workers could find themselves unemployable. The gender gap in digital skills could also widen, further exacerbating inequalities in labour market participation (CERRE, 2024).

Policy directions: preparing for an AI-driven labour market

To manage the transition to an AI-augmented economy, MENA governments should consider a multi-pronged policy approach:

  • Educational reform: Embed digital literacy, critical thinking and STEM (science, technology, engineering, and mathematics) skills into national curricula. Promote lifelong learning to facilitate continuous upskilling and reskilling (CERRE, 2024).
  • Labour market forecasting: Establish national observatories to monitor trends in labour automation, emerging occupations and skill needs. These data can inform training programmes and workforce strategies (World Economic Forum, 2024).
  • Inclusive innovation ecosystems: Support AI start-ups and small and medium-sized enterprises through grants, tax incentives and incubators. Encourage public-private partnerships that prioritise inclusive technological development (MENA AI Observatory, 2024).
  • Social protection mechanisms: Develop adaptive social safety nets, such as unemployment insurance and conditional cash transfers, to protect displaced workers (IMF, 2024).
  • Gender-inclusive digital policies: Ensure that women have equal access to digital tools, training and job opportunities in the technology sector (Fitch Solutions, 2024).

Conclusion

The rise of AI presents both a challenge and an opportunity for MENA countries. Those that act early – investing in human capital, fostering innovation and crafting responsive labour policies – can transform AI into a driver of inclusive growth. In contrast, delay or inaction could lead to rising unemployment, social inequality and economic stagnation.

The time to prepare for an AI-driven future is now. Policy-makers must seize this moment to ensure that the benefits of AI are widely shared and equitably distributed across the region.

Further reading

CERRE (2024) ‘Navigating the Revolution: Policy Recommendations for Inclusive AI’.

Fitch Solutions (2024) ‘AI Adoption Across MENA: Different Pace, Productivity Promises and Employment Perils’.

IMF, International Monetary Fund (2024) ‘Macroeconomic Consequences of Generative AI: Regional Perspective’.

MENA AI Observatory (2024) ‘Regional AI Strategies and Employment Impacts’. World Economic Forum (2024) ‘MENA Youth, AI, and the Future of Work’.

Tags: , , , , ,

  • Kamran Yeganegi
    Kamran Yeganegi
    Assistant Professor, Department of Industrial Engineering, Islamic Azad University

Most read

Global value chains and sustainable development

What is the role of exchange rate undervaluation in promoting participation in global value chains by firms in developing countries? What is the impact of the stringency of national environmental regulations on firms’ GVC participation? And how do firms’ political connections affect their participation in GVCs? These questions will be explored for the MENA region at a special session of the ERF annual conference, which takes place in Cairo in April 2025.

Adoption of decentralised solar energy: lessons from Palestinian households

The experience of Palestinian households offers a compelling case study of behavioural adaptation to energy poverty via solar water heater adoption. This column highlights the key barriers to solar energy adoption in terms of both the socio-economic status and dwellings of potential users. Policy-makers need to address these barriers to ensure a just and equitable transition, particularly for households in conflict-affected areas across the MENA region.

Migration, human capital and labour markets in MENA

Migration is a longstanding and integral part of the MENA region’s economic and social fabric, with profound implications for labour markets and human capital development. To harness the potential of migration for promoting economic and social development, policy-makers must aim to deliver mutual benefits for origin countries, host countries and migrants. Such a triple-win strategy requires better data, investment in return migration, skill partnerships, reduced remittance costs and sustained support for host countries.

Shifting gears: how the private sector can be an engine of growth in MENA

Businesses are a key source of productivity growth, innovation and jobs. But in the Middle East and North Africa, the private sector is not dynamic and the region has a long history of low growth. This column summarises a new report explaining how a brighter future for MENA’s private sector is within reach if governments rethink their role and firms harness talent effectively.

Building net-zero futures: Asian lessons for MENA’s construction sector

Three big economies in Asia are achieving carbon neutrality in construction. This column draws lessons from Japan, Taiwan and Thailand – and explains why, given the vast solar potential and growing focus on environmental, social and governance matters in the Middle East and North Africa, governments in the region must adopt similarly ambitious policies and partnerships.

Losing the key to joy: how oil rents undermine patience and economic growth

How does reliance on oil revenues shape economic behaviour worldwide? This column reports new research showing that oil rents weaken governance, eroding patience – a key driver of economic growth and, according to the 13th century Persian poet Rumi, ‘the key to joy’. Policy measures to counter the damage include enhancing transparency in oil revenue management, strengthening independent oversight institutions and ensuring that sovereign wealth funds have robust rules of governance.

Artificial intelligence and the future of employment in MENA

Artificial intelligence offers opportunities for boosting productivity and innovation. But it also poses substantial threats to traditional employment structures, particularly in economies like those in the Middle East and North Africa that are reliant on low-skill or routine labour. This column explores how AI is likely to affect employment across the region and proposes policy directions for governments to harness AI for inclusive and sustainable economic growth.

Freedom, agency and material conditions: human development in MENA

Conventional approaches to measuring human development, which are primarily centred on income, health and education, provide an incomplete assessment of people’s opportunities to improve their lives. As this column explains, it is essential to understand how institutional and social environments influence individuals’ agency over their development outcomes. Analysis of the diverse recent experiences of Jordan, Lebanon, Morocco and Tunisia illustrates how such an approach can inform policy-making.

Fiscal limits and debt sustainability in MENA economies

Public debt is piling up across the Middle East and North Africa after years of political upheavals, economic shocks and the Covid-19 pandemic. With fiscal space shrinking, governments are under pressure to act. This column explains why for many countries in the region, the room for manoeuvre on the public finances may be smaller than policy-makers think. Urgent action is needed to restore debt sustainability.

Market integration in the Middle East and the Balkans, 1560-1914

Trade has re-emerged as a central issue in global policy debates, as governments debate not only the costs and benefits of trade, but also the underlying determinants of market integration. To inform the discussion, this column reports new research evidence on the experiences of the former Ottoman territories in the Middle East and the Balkans over nearly four centuries, tracing the evolution, drivers and consequences of trade integration across these regions.