Economic Research Forum (ERF)

Arab youth and the future of work

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The Arab region’s labour markets are undergoing a triple transformation: demographic, digital and green. As this column explains, whether these forces evolve into engines of opportunity or drivers of exclusion for young people will hinge on how swiftly and coherently policy-makers can align education, technology and employment systems to foster adaptive skills, inclusive institutions and innovation-led pathways to decent work.

In a nutshell

The future of work is not predetermined; it is being negotiated through policies, institutions and social choices; for Arab countries, the challenge is to transform disruptive change into productive inclusion.

Building ‘future-ready’ Arab labour markets requires seeing youth not as a liability but as the region’s most strategic asset.

Empowering young people with relevant skills, ensuring equitable access to digital opportunities and embedding sustainability into economic planning are not optional: they are pre-conditions for resilience and competitiveness in the decades ahead.

The future of work is a central global concern, driven by rapid advances in artificial intelligence (AI), digitalisation and the green transition. These forces are reshaping production, labour markets and the skills needed for employment.

In the Arab region, this occurs alongside structural challenges: slow job creation, high informality, weak labour market institutions, low participation of women and youth unemployment at around 30%.

Automation and digital technologies are altering both the quantity and quality of jobs. Routine, low-skill tasks are increasingly automated, while demand rises for high-skill, digital and creative roles. Globally, up to 40% of jobs could be affected by AI, though a similar number of new opportunities may emerge if education and training systems adapt effectively.

Simultaneously, the low-carbon transition is generating ‘green jobs’ in energy, agriculture and transport, requiring new technical and adaptive skills.

The latest edition of the Arab Development Report emphasises that technological, environmental and demographic shifts could either deepen inequalities or foster inclusive, knowledge-based growth, challenging policy-makers to align skills, labour regulations and innovation to prepare Arab youth for a rapidly evolving labour market (Arab Planning Institute et al, 2025).

Arab labour markets: structural fragilities meet global disruption

The report underscores that Arab labour markets already suffer from deep structural distortions. Despite moderate GDP growth – projected to be around 3.5% in 2025 – labour absorption remains weak. Youth unemployment hovers at near 26%, one of the highest global averages. Informality dominates, exceeding 60% of total employment in several economies, while women’s labour force participation remains below 20% on average.

These patterns reflect longstanding mismatches between educational outcomes and market needs, dependence on low-productivity sectors and weak institutional capacity. The digital and green transitions are thus unfolding on top of already fragile foundations, threatening to widen inequalities if unaddressed.

According to the report, Arab countries fall into two broad groups:

  • Labour-exporting economies (such as Egypt, Jordan, Morocco and Tunisia), which are characterised by demographic pressure and skill mismatches.
  • Labour-importing, high-income economies (such as the Gulf states) where labour markets are segmented between nationals in the public sector and expatriates in private employment.

This structural heterogeneity shapes how each economy experiences global trends in automation and AI.

Digital transformation and artificial intelligence: opportunity and risk

The Arab region shows uneven progress in digital transformation and AI adoption. Countries such as Egypt, Saudi Arabia and the United Arab Emirates (UAE) have developed national AI strategies and invested in digital infrastructure, while others face limited connectivity, outdated regulations and low technological readiness.

AI and automation present both opportunities and risks. They can enhance productivity, improve public service efficiency and create new employment in ICT, e-commerce and digital finance. But routine and low-skill jobs, particularly in manufacturing, clerical and service sectors, face disruption.

Globally, the World Economic Forum estimates that automation could displace 75 million jobs by 2025, while 133 million new roles may emerge requiring different skills.

In the Arab context, challenges such as high youth unemployment – 17.5 million jobseekers in 2023, a projected 9.8% regional unemployment rate in 2024 and 11 million young people outside education, training or work – underscore the need to equip workers with digital literacy, coding, data analysis and problem-solving skills to maximise AI-driven opportunities.

The green transition: towards a just and sustainable future

Alongside digitalisation, Arab countries are experiencing an accelerating environmental transition. Rising temperatures, water scarcity and climate change are already affecting key sectors such as agriculture, energy, tourism and fisheries.

The report highlights both risks and opportunities: while traditional activities may face declines, investments in renewable energy and energy efficiency can generate new employment. For example, the report emphasises that green jobs in these sectors can grow substantially if workers are reskilled and supported.

Achieving these gains requires a ‘just transition’ – one that safeguards employment in fossil-fuel-dependent industries, promotes retraining and supports small and medium-sized enterprises in adopting green technologies.

Youth at the crossroads

Young people lie at the centre of continuous economic and technological transformations in the Arab region. With a labour force of 148 million and more than one-third of it under the age of 30, the demographic structure creates both pressures and opportunities.

The report emphasises that the future of MENA youth depends less on job availability and more on the adaptability of skills systems, education and institutions. Without targeted interventions, large cohorts risk remaining in low-productivity or informal employment.

But proactive policies can enable youth to drive digital entrepreneurship, climate innovation and social enterprises. The report highlights initiatives in Egypt, Morocco, and the UAE that integrate digital literacy, entrepreneurship training and start-up support within national employment strategies, offering replicable models for other countries in the region.

Bridging the skills and policy gap

The report concludes that capturing the opportunities of the future of work requires a comprehensive policy framework based on three pillars:

  • Human capital transformation: reforming education systems to prioritise critical thinking, digital literacy, green skills and lifelong learning.
  • Institutional and regulatory adaptation: modernising labour laws to accommodate flexible and platform work while ensuring social protection for all workers.
  • Regional and international cooperation: sharing best practices, mobilising investment in digital and green infrastructure, and coordinating migration and employment policies.

Without such measures, automation and climate transition could exacerbate unemployment, inequality and social instability. Implemented effectively, they can enable the region to leverage its youth dividend for inclusive and sustainable growth.

Conclusion

The future of work is not predetermined; it is being negotiated through policies, institutions and social choices. For Arab countries, the challenge is to transform disruptive change into productive inclusion.

As the 2025 edition of the Arab Development Report argues, building ‘future-ready’ Arab labour markets requires seeing youth not as a liability but as the region’s most strategic asset. Empowering young people with relevant skills, ensuring equitable access to digital opportunities and embedding sustainability into economic planning are not optional: they are pre-conditions for resilience and competitiveness in the decades ahead.

Further reading

Arab Planning Institute, Institute of National Planning (Cairo), Arab Society for Economic Research and Tunisian Institute of Competitiveness and Quantitative Studies (2025) The Future of Arab Labor Markets amid Green Transition and Artificial Intelligence, 9th edition of the Arab Development Report.

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