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Youth unemployment in rich Middle East a 'liability': WEF

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Youth unemployment across the wealthy Middle East is one of the region's greatest challenges and liabilities, according to a report by the World Economic Forum (WEF).

The Middle East and North Africa (MENA) might have abundant wealth as a result of natural resources such as oil and gas but the region has the highest regional youth unemployment rate in the world with 27.2 percent of under-25s unemployed in the Middle East. More than 29 percent are out of work in North Africa -- more than double the global average, according to WEF's report.

With more than half of its population under 25 years old the MENA region now "stands at a critical juncture," according to the report. It warns the youthful populace could turn into a "liability" rather than a "youth dividend" if an environment in which youth aspirations can be fulfilled is not created soon.

"The demographic 'youth bulge' represents one of the greatest opportunities, as well as one of the greatest challenges, faced by the Arab World, " the report, released in October, warns. "Solutions to date show little progress in confronting the challenge of youth unemployment in a structural manner, in spite of existing financial means, " the report which was compiled from a range of consultations with business, government and civil society leaders and academics in the region said.

Read more: YouthUnemployment Could 'Scar' an Entire Generation: ILO

Countries belonging to the Gulf Cooperation Council (GCC), including Kuwait, Qatar, Saudi Arabia and the United Arab Emirates have persistently high youth unemployment rates, with the highest found in oil-rich Saudi Arabia where the rate hovers around 30 percent, data from the G20 organization showed this year.

Despite the economic support of a spectacular rise in oil prices (the WEF estimates that today oil revenues account for at least 80 percent of total government revenues in all GCC countries), the fast economic expansion of the GCC during the past decades has not translated into jobs for the under-25s "suggesting that economic expansion is not enough to solve the youth unemployment challenge in the region," WEF said.

The report follows a tumultuous period in the MENA region, with economically disenfranchised young people largely responsible for the Arab Spring civil uprisings which led to the overthrowing of governments in countries like Egypt, Tunisia and Libya.

Although the GCC countries cited in the report are comparatively richer, the WEF's report remarks that as well as not being sufficiently diversified, rigid labor laws for nationals and a reliance on foreign workers in the oil and gas industries are not only barriers to youth employment but could lead to economic and more social instability in future.

Read more: Global employment prospects bleak until 2018: ILO

"Perpetuating the current employment system implies exposure to current pressures, such as budgetary and public productivity constraints [and] potential future pressures, such as declining oil and gas prices, political pressures, rising tensions between national and non-national workforces, stagnant low productivity in the private sector, and a lack of non-national labor supply."

- By CNBC's Holly Ellyatt, follow her on Twitter @hollyellyatt

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