Topic: Youth unemployment and economic growth
Country: Algeria
Committee: ILO Conference
Algeria, a country with huge mineral wealth that lies in the North of Africa (neighbouring states: Morocco - West, Tunisia and Libya - East, Nigeria and Mali - South, North Sea - North) has a large GDP of 170.37 billion USD (trandingeconomics, 2018). In this case, the large GDP of Algeria is due to the abundant mineral wealth like fuel.
This country ranks 15th in the world in oil production (worldbank, 2018). Despite this fact, Algeria suffers from a huge number of people's unemployment.
Of the total population, which accounts for 43.1 million people, there is 11.1% unemployed of the total population (World Bank, 2018). If we focus on youth unemployment from 16 to 25 years of age, the unemployment rate will rise to 26.4%, which is a very high figure (worldbank, 2018). Quarter of the population lives in poverty. Another fact for Algeria is that the 30% of population is illiterate (tradingeconomics, 2018), and it also has a significant impact on unemployment, because people who cannot read, write and count, find it difficult to do, and basically can do only inferior work such as maintenance.
In the 1960s, this country focused on oil production and therefore did not put as much emphasis on other sectors as agriculture, tourism and others. Nowadays, the Algerian economy functions as one big monopoly, most of the businesses in the country is owned by the government and so government has control over it. In Algeria, so-called structural unemployment is the result of structural changes, when some sectors are shrinking and other sectors are expanding. In the case of Algeria, the expanding sector is already mentioned mining industry. Shrinking sectors release part of the staff and they can find work in expanding sectors. However, this requires them to orient themselves in the labour markets and to retrain. The second type of unemployment is cyclical unemployment, which occurs when the total demand for work is cyclically low. Total expenditures and product decline, overall unemployment is rising. This situation occurs most during periods of economic recession or crisis, workers are usually dismissed without the right to return.
As a result of this situation, other sectors in Algeria are backward and the country is dependent on fuel revenues, the price of which has been unstable. Algeria does not have enough strong agriculture mainly due to the fact that much of the country lies in the Sahara Desert, so this country does not have favourable conditions for rotten or cattle breeding. Another sector that lags behind is tourism. It is because of the political situation in the country. While the government is seen as People's Democratic Republic, it is predominantly a dictatorship (as evidenced by the aforementioned business monopoly). People in Algeria are rebelling against the government, riots, protests, and civil wars. In 2006, Bouteflika (president of Algeria) issued the Charter for Peace and National Reconciliation as part of the fight against terrorism, while a radical Salafist group for sermons and fighting allied with Al-Qaida, resulting in frequent abductions and attacks on government and pro-Western goals. Terrorism is still a real threat in Algeria, and tourists are not recommended to travel to this destination.
Another reason for unemployment is the unfavourable conditions for start-ups and start-ups. There is no state support and taxes are too high. Corporate Tax Rate - 26.00%, Social Security Rate for Employees - 9.00%, Personal Tax Rate - 35.00%, Sales Tax Rate - 19.00%, Social Security Rate - 35.00% (trandingeconomics, 2018).
Since Algeria has a large percentage of the population at a young age (under 35), youth unemployment has a major impact on overall unemployment.
Unemployment causes poverty, and, as previously was mentioned, poverty affects many people - 30% of population (tradingconomics, 2018). This means that they do not have enough finance for basic life needs such as food, health care, housing, and also education.
As a further consequence of this problem is the storm of the people - the protests and the civil wars. Not only is human lives in these cases, but for Algeria, as for a state, this means a slowdown in progress.
The first step that can be taken against this problem is to ensure a higher level of education. This would mean more qualified people to work in the third and fourth sectors that the state is developing and moving on.
The next step against this problem is "to open up more borders" and to create more favourable conditions for import and export. As a result, there will be enough goods in Algeria that are currently lacking.
The government should also make favourable business conditions for small businesses and start-ups - exemplary: tax cuts.
Then there would be no monopoly in this country and natural competition would arise.
World count: 778
References
Kouaouci, A. (2004). The Journal of North African Studies. Population transitions, youth unemployment, postponement of marriage and violence in Algeria, 9(2), 28-45. doi: https://doi.org/10.1080/1362938042000323329
World Bank (2018). Algeria's Economic Outlook. Retrieved from http://www.worldbank.org/en/country/algeria/publication/economic-outlook-april-2018
World Bank (2018). A New Economy for Middle East and North Africa Countries: Youth, Technology and Finance. Retrieved from http://www.worldbank.org/en/events/2018/03/11/a-new-economy-for-arab-countries-youth-technology-and-finance
World Bank (2018). World Bank Vice President Visits Algeria to Strengthen Partnership Around Goals of Inclusive Growth and Job Creation. Retrieved from http://www.worldbank.org/en/news/press-release/2018/09/05/world-bank-vice-president-visits-algeria-to-strengthen-partnership-around-goals-of-inclusive-growth-and-job-creation
Trandingeconomics (2018). Algeria - Economic Indicators. Retrieved from https://tradingeconomics.com/algeria/indicators
United Nations (2004). Youth in the middle east and north africa: demographic opportunity or challenge? Retrieved from https://www.researchgate.net/profile/Ragui_Assaad/publication/237636892_Youth_in_the_Middle_East_and_North_Africa_Demographic_Opportunity_or_Challenge/links/573484e208ae298602debc24.pdf
