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Multifaceted Poverty in the Arab Region amid Conflict and Displacement (December, 2016)
Union of Arab Banks Research Department

Executive Summary

Poverty eradication is currently the number one goal of both the 2015 United Nations’ Sustainable Development Goals (SDGs) and Millennium Development Goals (MDGs).
According to Escwa, the uprisings have cost Arab economies a cumulative net underperformance in GDP of $613.8 billion between 2011 and 2015, equivalent to 6% of GDP, as well as an aggregate fiscal deficit of $243.1 billion. Consequently, as the Arab region stands at a critical juncture amid lower oil prices, shifting economic landscapes, rising political instability, displacement, and armed conflicts, poverty, in its multidimensional delineation, is on the rise and has reached alarming levels in several Arab countries.
Expectedly, the Arab region is the only region in the world where poverty has increased since 2010. Despite the high diversity in terms of multidimensional poverty across the region, 53 million people, around 18.2% of the population in the region, lived in multidimensional poverty in 2015. Moreover, by shifting the poverty line from $1.25 to $2 and $2.75, the poverty rate for the Arab region increases substantially from 4% to 19% and 40%, respectively. Based on national poverty lines which portray a more realistic picture, poverty in the region rose from 22.7% in 1990 to 23.4% in 2011, as the ongoing violent conflict in Syria, Yemen, Iraq, and Libya, and the subsequent economic damage, displacement, and spillover effects on neighboring countries, remain the main drivers of poverty in the Arab region. Today, national poverty rates have reached perturbing levels at 83% in Syria, 54% in Yemen, 47% in Sudan, 41% in Djibouti, 31% in Mauritania, and 28% in Egypt.
Perceptions of exclusion and inequality and the refusal to tolerate the gross socio-economic disparity were among the main reasons that prompted the Arab uprisings in 2011. For instance, the income share held by the poorest 20% is as low as 4.3% in Djibouti, 6.4% in Mauritania, and 6.5% in Morocco. Conversely, the richest 20% hold more than 40% of income in almost all Arab countries. Similarly, comparing the income share held by the richest 10% vs. the poorest 10% of the population accentuates the inequality in Arab countries as the income share held by the poorest 10% is as low as 1.3% in Djibouti, 2.5% in Mauritania, and 2.6% in each of Tunisia, Sudan, and Morocco, while the richest 10% hold over a quarter of income in the majority of Arab countries.
Multidimensional or multifaceted poverty is made up of several factors that constitute poor people’s experience of deprivation – such as poor health services, lack of education, inadequate living standards, low income levels, and insufficient employment opportunities. Hence, this study transcends the quantitative or money-metric aspect of poverty, and sheds light on national poverty rates as well as the quality of health services, education, and unemployment in Arab countries (excluding GCC countries), and proposes policy recommendations towards poverty reduction and productive employment. By examining infant mortality, life expectancy, access to clean water and sanitation, and health expenditure, the study captures the state of health services in the Arab region. Examining primary enrollment rates, government expenditure on education, as well as adult and youth illiteracy rates portrays the state of education in Arab countries, while addressing total and youth unemployment sheds light on the pervasive unemployment in the region. The latest available data shows that unemployment soared to 55% in Syria in 2015, 30% in Yemen in 2011, 27% in Palestine in 2016, 25% in Iraq in 2015, 23% in Lebanon in 2014, 21% in Sudan in 2016, 20% in Libya in 2013, 14% in Tunisia in 2016, 13% in each of Egypt, Jordan and Mauritania, and 10% in Algeria and Morocco in 2016. Youth unemployment reached 78% in Syria in 2015, 49% in Libya, 47% in Mauritania, 43% in Palestine, 42% in Egypt, 35% in Iraq, and 32% in Tunisia in 2014. These high rates reflect the negative repercussions of armed conflicts, displacement, political instability, and lower oil prices on the overall economic activity, employment opportunities, and job creation in the Arab region, all of which exacerbate poverty.

Table of Contents
I.Overview: Multidimensional Poverty in the Arab Region……………………….. …8
II.Income Poverty in the Arab Region……………………………………………. …..10
a. Poverty Rates in Arab Countries 10
b. Income Inequality in the Arab Region .19
c. GDP per Capita and Wages 22
III.Unemployment in Arab Countries: Youth Centered and Ominous……………..25
IV.Health and Education: Prerequisites for Poverty Eradication…………………..30
a. Education and Literacy 30
1. Primary Education Enrollment Rates 30
2. Government Expenditure on Education 32
3. Youth and Adult Illiteracy 33
b. Health 35
1. Infant Mortality and Life Expectancy 35
2. Total, Public, and Private Health Expenditure 37
3. Water and Sanitation: Basic Human Rights 41
V.Recommendations: Towards Productive Employment and Poverty Reduction …44
a. Means to Combat Unemployment 44
b. Towards Poverty Reduction, Inclusiveness, Efficient Targeting, and Social Protection 46
Appendix: Progress Status for Selected MDG Indicators in Arab Countries 49
References……………………………………………………………………………..…48

List of Figures
Figure 1: The Dimensions and Indicators of Multifaceted Poverty 9
Figure 2: Incidence of Poverty Based on National Poverty Lines (% of Population) 11
Figure 3: Poverty Rates at National Poverty Lines in Arab Countries (% of Population) 11
Figure 4: Trends in Poverty Rates at National Poverty Lines in Levant Arab Countries (% of Population) 17
Figure 5: Trends in Poverty Rates at National Poverty Lines in Maghreb Arab Countries (% of Population) 18
Figure 6: Trends in Poverty Rates at National Poverty Lines in North African Arab Countries (% of Population) 18
Figure 7: GINI Index across Arab Countries 20
Figure 8: Income Share Held by the Richest Quintile vs. Poorest Quintile in Arab Countries 21
Figure 9: Income Share Held by the Richest 10% vs. Poorest 10% in Arab Countries 22
Figure 10: GDP per Capita in Arab Countries, 2015 ($) 23
Figure 11: Wages as a % of GDP, 2000 vs. 2010 24
Figure 12: Unemployment in Arab Countries that Witnessed Uprisings, % of Total Labor Force 26
Figure 13: Unemployment in Arab Countries, % of Total Labor Force 27
Figure 14: Youth Unemployment in the Arab World 29
Figure 15: Net Primary and Secondary Education Enrollment Rates (%), 2009 vs. 2013 – Regional Comparison 30
Figure 16: Net Primary Education Enrollment Rates in Arab Countries (%) 32
Figure 17: Trend in Adult and Youth Literacy Rates (%) – Regional Comparison 34
Figure 18: Total Health Expenditure in Arab Countries (% GDP) – 2009 vs. 2014 38
Figure 19: Public Health Expenditure in Arab Countries that Witnessed Uprisings – 2009 vs. 2014 39

List of Tables
Table 1: GDP per Capita in Arab Countries ($) 23
Table 2: Youth Unemployment in Arab Countries Pre and Post Uprisings, (% of Total Labor Force Ages 15-24) 28
Table 3: Government Expenditure on Education in Arab Countries 33
Table 4: Literacy Rates in Arab Countries 34
Table 5: Infant Mortality and Life Expectancy in Arab Countries 36
Table 6: Public Health Expenditure, % of Total Health Expenditure 38
Table 7: Public Health Expenditure in Selected Arab Countries – 2009 vs. 2014 40
Table 8: Out-of-pocket Health Expenditure (% of Total Health Expenditure) 41
Table 9: Access to Improved Water Source and Sanitation in Arab Countries 42
Table 10: Country Responses to the Arab Uprising by Employment Measure, post-2010 44

I.Overview: Multidimensional Poverty in the Arab Region

Poverty eradication is currently the number one goal of both the 2015 United Nations’ Sustainable Development Goals (SDGs) and Millennium Development Goals (MDGs). As the Arab region stands at a critical juncture amid lower oil prices, shifting economic landscapes, rising political instability, displacement, and armed conflicts, poverty, in its multidimensional delineation, is on the rise and has reached alarming levels in several Arab countries. Hence, in addition to promoting sustainable economic growth and productive employment, Arab countries face the exigent challenge of reducing poverty and inequality, which lie at the core of socioeconomic instability.
The concepts of poverty and inequality are multidimensional and encompass several social and monetary aspects, (see Figure 1). Multidimensional or multifaceted poverty is made up of several factors that constitute poor people’s experience of deprivation – such as poor health services, lack of education, inadequate living standards, low income levels, and insufficient employment opportunities. This study transcends the quantitative or money-metric aspect of poverty, and sheds light on national poverty rates as well as the quality of health services, education, and unemployment in Arab countries (excluding GCC countries).


Figure 1: The Dimensions and Indicators of Multifaceted Poverty


Expectedly, the Arab region is the only region in the world where poverty has increased since 2010. According to Escwa, the uprisings have cost Arab economies a cumulative net underperformance in GDP of $613.8 billion between 2011 and 2015, equivalent to 6% of GDP, as well as an aggregate fiscal deficit of $243.1 billion. Conflicts have worsened other economic and social indicators, such as debt, unemployment, corruption, and poverty (Escwa 2016b). Moreover, inequality makes it hard for economic growth to be translated to poverty reduction due to a lack of opportunity, empowerment, and security in some countries. This is further exacerbated by a number of detrimental factors including financial exclusion, poor infrastructure, insufficient access to quality health care and education, displacement, and armed conflict in some cases like Iraq, Syria, Libya and Yemen. 

II. Income Poverty in the Arab Region

 a. Poverty Rates in Arab Countries

Despite the high diversity in terms of multidimensional poverty across the region, it was recorded that 53 million people, around 18.2% of the population in the region, lived in multidimensional poverty in 2015 (Arab Development Portal 2016). Taking the proportion of people whose income is less than $1.25 a day as a threshold for extreme poverty, it can be noted that poverty in the Arab region is relatively low and has declined from 5.5% in 1990 to 4.1% in 2010. However, the Arab uprisings and the resulting political, social, and economic instability increased extreme poverty to 7.4% in 2012. This number is a highly unrealistic assessment as it fails to capture the real extent of poverty in Arab countries. According to the Arab Millennium Development Goals Report (2013), by shifting the poverty line from $1.25 to $2 and $2.75, the poverty rate for the region increases substantially from 4% to 19% and 40%, respectively. Moreover, based on national poverty lines which portray a more realistic picture, poverty in the region rose from 22.7% in 1990 to 23.4% in 2011, mainly due to increases in Yemen, Egypt, and Syria. Expectedly, the least developed Arab countries (Comoros, Djibouti, Sudan, Somalia, Mauritania, and Yemen) recorded the highest national poverty rates at 42.6% in 2012. Conversely, Maghreb countries (Tunisia, Algeria, Morocco, and Libya) recorded the lowest national poverty rates in the region at 10.2% in 2012.

 Figure 2: Incidence of Poverty Based on National Poverty Lines (% of Population)



Recent country-specific findings portray a much more dismal albeit accurate picture of poverty in the Arab region, particularly in war-inflicted countries and countries that witnessed uprisings.

The ongoing violent conflict in Syria, Yemen, Iraq, and Libya, and the subsequent economic damage and displacement, remain the main drivers of poverty in the Arab region. According to an Escwa 2016 report entitled “Syria at War: Five Years On”, in five years, the Syrian conflict obliterated 25 years of development, shrunk real GDP by 55%, incurred $260 billion in losses ($169.7 billion in GDP and $89.9 billion in housing and infrastructure), displaced around 13 million Syrians (6.5 million internally displaced and 6.1 million in neighboring countries), deprived 13.5 million of essential necessities and left them in need of humanitarian aid (12.1 million of which need access to water, sanitation and waste disposal), left 33% of Syrians food insecure (as the wholesale price of a metric ton of wheat in Damascus in 2015 was $444, nearly triple the global average), and amplified the poverty rate from 28.0% in 2010 to 68.9% in 2013 to an appalling 83.4% in 2015. Moreover, according to a joint SCPR, UNDP, and UNRWA report published in 2015, 'almost two-thirds of the population lived in extreme poverty where they were unable to secure the basic food and non-food items necessary for survival and […] almost a third of the Syrian population fell into abject poverty […] facing hunger, malnutrition and even starvation,' (SCPR 2015). Furthermore, the Regional Refugee and Resilience

Plan and Escwa estimate that around 90% of Syrian refugees in Lebanon are in debt, over 70% live below the poverty line, and 52% are classified as extremely poor as of Q1 2016. “In Jordan, 90% of registered Syrian refugees in urban areas are below the national poverty line, while over 67% of families are in debt. In Egypt, around 62,000 refugees live in poverty,” (UNHCR 2016).

Similarly, since January 2015, the political and humanitarian crisis has been deteriorating progressively in Yemen accompanied by food insecurity, water scarcity, insurgent attacks on oil fields, and large-scale armed conflict. The national poverty rate increased from 34.8% in 2005 to a considerable 54.5% in 2011, even before the conflict had started.  Since then, the conflict in Yemen exacerbated poverty and resulted in catastrophic humanitarian conditions as 13 million Yemenis live in areas directly affected by the conflict, severe food insecurity affects 7.6 million people, and an estimated 2 million are malnourished, including 1.3 million children (World Bank 2013).

Although the situation is more moderate in Egypt, the national poverty rate increased from 16.7% in 2000, to 21.6% in 2008, to 27.8% in 2015. According to official figures from the Central Agency for Public Mobilization and Statistics, 51.2% of Egypt’s youth suffer from poverty and in 2013, 9.2 million children below the ages of 17 lived in poverty, mainly residing in rural areas. Furthermore, around 13.7 million Egyptians or 17% of the population suffered from food insecurity in 2011, and according to the World Food Programme Egypt remains dependent on food imports and remains the world’s largest importer of wheat which makes it highly vulnerable to fluctuations in global commodity prices. Food insecurity in Egypt is mostly driven by rising poverty and the diminishing purchasing power of the most vulnerable segments of the population. Although the Egyptian government implements an extensive national food subsidy program that covers almost 80% of the population, about 19% of the poorest or most vulnerable segments are not included under the current system (World Food Programme 2016).

On the other hand, Tunisia managed to halve its poverty incidence in a decade, from 32.4% in 2000 to 15.5% in 2010 and 15.4% in 2012, achieved universal access to primary education enrollment, and significantly reduced maternal and infant mortality. Nevertheless, it can be noted that social development and poverty reduction achievements in Tunisia did not quell demands for civil and political liberties, and hence resulted in an uprising, driven by persistent unemployment particularly among the educated youth, in addition to inequality, exclusion, and regional disparities between coastal and interior areas.

The national poverty rate in neighboring Morocco was last recorded at a moderate 8.9% in 2007, compared to 15.3% in 2000. According to the Rural Poverty Portal, 75% of people living under the poverty line in Morocco are in rural areas. This could be a result of dependence on agriculture for livelihood, poor access to financial credit, and a low educational attainment.

The latest official figure on poverty in Algeria was 5.7% in 2005. According to some estimates, this figure soared to 23% in 2014. Moreover, the Algerian League for the Defense of Human Rights (LADDH) claims that 14 million Algerians live below the poverty line, representing over 30% of the population.

Libya, home to the largest oil reserves in Africa, is one of the richest countries in terms of natural resource endowments; however, the sterile economic structure, along with regional and tribal inequalities and the ongoing conflict, have resulted in unequal access to oil wealth. Consequently, about one-third of Libyans live beneath the poverty line. Furthermore, armed conflicts, political infighting and economic stagnation following the uprising have led to the deterioration of the living standards of Libyan citizens. The decline in government revenues, due to falling oil prices and disruptions in oil production, in addition to the breakdown of the state’s governance structure, has hindered the provision of public services such as healthcare, education, clean water and sanitation, and is expected to cause a reduction in the number of subsidized food items, further increasing national poverty rates.

Although declining over the past decade, national poverty rates remain extremely high in each of Sudan, Djibouti, and Mauritania at 46.5%, 40.8%, and 31.0%, respectively.

In Sudan, poverty has several underlying factors rooted in over two decades of internal conflict, weak governance, and high unemployment. Stark urban-rural disparities due to concentrated investment in the capital Khartoum and its surroundings and neglect of other peripheral regions and rural areas, in addition to fast population growth, inequality in education, and limited access to health care, clean water, and sanitation particularly in North Sudan are the main reasons behind the high poverty rate. Moreover, oil dependence and climate change have been negatively affecting the agricultural and livestock sector which constitute around 35%-40% of GDP, and this in turn threatens food security in Sudan, particularly in rural areas, and further exacerbates poverty. Furthermore, the 2011 secession of South Sudan resulted in a 70% decline in the government’s oil revenues, thus diminishing available funding for social services such as health and education (UNDP 2013).

In Mauritania, 31% of the population lived below the national poverty line in 2014 down from 42% in 2008, 25% live on less than $1.25 a day (extreme poverty), and around 60% live on less than $1 a day in the southern regions previously known as the ‘Triangle of Poverty’ before being renamed the ‘Triangle of Hope’ (World Food Programme 2016).  Climate change and environmental degradation, mainly desertification, hinder agricultural production and worsen the chronic food insecurity already affecting over 15% of the population. Moreover, “44% of the rural population live in poverty. Those households in which the head of household works in farming or livestock rearing have poverty rates of 59.6% and 41.8% respectively,” (OHCHR 2016).  

In 2013, around 41% of the population in Djibouti lived below the national poverty line and 23% lived in extreme poverty. Djibouti’s fragile economy is highly dependent on foreign financing in the form of foreign direct investments, rents from foreign countries’ military bases, and port services. Additionally, Djibouti is poorly endowed with natural resources and has limited arable land, rainfall and water. Moreover, it has a low literacy rate, low life expectancy, and high malnutrition, and also suffers from water and food insecurity which makes it extremely vulnerable to external shocks such as hikes in food prices and natural disasters like prolonged floods and droughts. In 2011, for instance, Djibouti was hit with its most severe drought in 60 years, resulting in over $208 million in damages and losses, with dire repercussions on poverty in the country.

According to the latest available World Bank figures, the national poverty rate in West Bank and Gaza was 25.8% in 2011, down from 35.5% in 2003 and 30.8% in 2006. However, the Gaza seige in 2014 created a humanitarian crisis which is still pushing Palestinians deeper and deeper into poverty. The numbers are eloquent. Donor support has significantly declined from $2 billion in 2008 to $700 million in 2016 (5.2% of GDP) and economic losses amounted to $1.7 billion. A third of the population was internally displaced, the middle class was eliminated, and citizens were sent into destitution as 80% of Palestinians in Gaza depend on international humanitarian aid to survive, 72% of households are food insecure, and around 40% live below the poverty line. These figures; however, still fail to depict the real extent of “suffering of Gaza’s citizens due to poor electricity and water/sewerage availability, war-related psychological trauma, limited movement, and other adverse effects of the wars and the blockade,” (World Bank 2016b). While the West Bank’s overall poverty levels are better than Gaza’s, the population in both regions remains highly vulnerable to economic volatility due to high unemployment, poor educational attainment, and lack of access to essential services and basic human rights.

According to the World Bank, the national poverty rate in Jordan declined from 21.1% in 1997 to 13.0% in 2006 and 14.4% in 2010, the lowest in the Levant region. However, a third of the population in Jordan lived below the poverty line during at least one quarter of the year, known as transient poverty (World Bank 2013). Recently, Jordan’s economy has struggled as conflicts in neighboring Iraq and Syria depressed trade, and as Syrian refugees who account for over 20% of Jordan’s population created an enormous strain on public resources, increased food prices and rents, and lowered wages due to competition; all of which exacerbate poverty among nationals.

Lebanon suffers from a poverty data gap. A study by the Central Agency of Statistics and the World Bank published in 2015 based on 2011/2012 household surveys indicates that 27% of the country’s residents lived below the poverty line. According to the study, 40% of the poor worked in the agricultural sector, while 7% worked in the financial sector. However, unofficial estimates indicate a rise in poverty from 28% in 2008 to 30%-35% in 2016. The sheer influx of over 1.5 million Syrian refugees to Lebanon has severely degraded the socioeconomic situation, diminished productive employment opportunities, and strained public services. Total losses in Lebanon due to the Syrian war have been estimated at $13.1 billion, $5.6 billion of it in 2015 alone (Escwa 2016b). The Syrian crisis is also expected to worsen poverty incidence among Lebanese as well as widen income inequality. By 2015, an estimated 170,000-200,000 Lebanese had fallen into poverty (over the 1.5 million currently living below the poverty line), unemployment had risen to around 25%, and 10% of Lebanese are classified as “extremely poor” (earning less than $2.40/day). “In 2013, the ILO calculated poverty rates of 53% in the North, 42% in the South and 30% in the Beqaa, compared with the 28% national rate,” (Escwa 2016b).

In Iraq, the decline in oil prices in addition to the ongoing security problems have worsened the standard of living for Iraqis, pushing them further into poverty. According to the Humanitarian Country Team and the Iraqi government, 23% of the population in Iraq were living below the poverty line in 2014, with rural poverty at 30.6% and urban poverty at 14.8%, and in the “ISIS-affected governorates, the direct impact of economic, social and security disruptions are estimated to have doubled poverty rates to 41.2%,” (World Bank 2016c), and 75% of Iraqis identified addressing poverty as the most pressing need. Ongoing political instability and violence, weak governance, a severe shortage of employment opportunities, and inadequate access to basic services, all pose major challenges to Iraq’s socioeconomic development. Expectedly, “the face of poverty, vulnerability and inequality in Iraq, is predominantly young and female,” (Rohwerder 2015). As poverty is sharply rising, the problem in Iraq is not that of low incomes but that of survival. According to the United Nations Humanitarian Response Plan 2016, 10 million Iraqis needed humanitarian assistance in 2015, and this number is projected to increase to 13 million by the end of 2016. Two million children do not attend school, 3 million people live under the control of ISIL, 3.4 million Iraqis were internally displaced in 2014 and 2015 over and above the 1.1 million already displaced between 2006 and 2008, 40% of displaced families require urgent shelter support, and 85% are in debt (UNICEF 2015b).

Figure 4: Trends in Poverty Rates at National Poverty Lines in Levant Arab Countries (% of Population)



Figure 5: Trends in Poverty Rates at National Poverty Lines in Maghreb Arab Countries (% of Population)


Figure 6: Trends in Poverty Rates at National Poverty Lines in North African Arab Countries (% of Population)



b. Income Inequality in the Arab Region

Inequality is intertwined with poverty in such a way that it not only determines peoples’ access and ability to exercise their rights, but it is also a cause and result of poverty. In this regard, inequality is an important element of poverty that must be understood and tackled (Kukrety, Oxfam and the American University of Beirut 2016). Deteriorating living standards, high unemployment especially among the youth, and “growing perceptions of exclusion were among the reasons that prompted people in the Arab streets to rise in early 2011 and demand, inter alia, a new socioeconomic model of economic participation and development,” (Hassine 2014). Whether income inequality had a direct causal effect on the Arab uprising is a matter of controversy; however, intuitively, it is a common fact that 'in addition to demands for more economic and political inclusion, the protests were largely sparked by a refusal to any longer tolerate the gross socio-economic inequality perpetuated by long-entrenched “elite” in power,' (Ncube 2013).

The most commonly used international indicator for inequality is the Gini index or coefficient which measures the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution (World Bank 2015). A Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality, and a value of 45 or above indicates high inequality. Consequently, the Arab region seems to exhibit relatively moderate levels of income inequality and low disparity in income distribution compared to other developing regions, as reflected by a Gini coefficient of 39.5, according to the 2014 Arab Knowledge Report. Furthermore, according to the United Nations–League of Arab States Millennium Development Goals Report (2013), the coefficient has slightly declined over the last two decades, as regional data shows a Gini index of 34.3 in the 2000s versus 34.7 in the 1990s. Notably, income inequality increased in Mashreq countries by 3.8% and in Least Developed Arab Countries by 12.1%; however, it declined in Maghreb countries by 6.1%.

On a country level, the latest available data shows that Morocco and Djibouti have the highest level of income inequality (over 40%) while Libya, Egypt, and Iraq have the lowest (less than 31%), (see Figure 7).

Figure 7: GINI Index across Arab Countries



Given the concentration of wealth and power in the hands of elites with good connections to the State; inequality and exclusion, with dimensions transcending the monetary, were indisputably at the core of the Arab uprisings. This notion is not captured by the Gini coefficient scores of Arab countries, which tend to portray a relatively moderate and even low level of income inequality which has remained relatively stable over the last two decades. The main reason for this paradox is that consumer or household expenditure surveys, from which the Gini index is derived, do not capture expenditures of the richest group by tending to exclude the 5% of people with the highest income, which leads to a significant underestimation of inequality (Arab Knowledge Report 2014). A more indicative statistic is the concentration of income at the top and bottom percentiles of the distribution, which the Gini Index fails to capture. Alvaredo and Piketty (2014) estimate that the share of total income accruing to the top 10% income recipients in the Middle East could be as high as 55% (against 48% in the United States, 36% in Western Europe, and 54% in South Africa) (Milbach-Bouche 2015). Moreover, as shown in Figure 8, the income share held by the poorest 20% is as low as 4.3% in Djibouti, 6.4% in Mauritania, and 6.5% in Morocco. Conversely, the richest 20% hold more than 40% of income in all studied countries.  Similarly, comparing the income share held by the richest 10% vs. the poorest 10% of the population accentuates the inequality in Arab countries. As shown in Figure 9, the income share held by the poorest 10% is as low as 1.3% in Djibouti, 2.5% in Mauritania, and 2.6% in each of Tunisia, Sudan, and Morocco. On the other hand, the richest 10% held over a quarter of income in the majority of Arab countries.

 Figure 8: Income Share Held by the Richest Quintile vs. Poorest Quintile in Arab Countries 


Figure 9: Income Share Held by the Richest 10% vs. Poorest 10% in Arab Countries 



c. GDP per Capita and Wages

GDP per capita and poverty rates are both indicators that can be used to measure the standards of living in a certain country. For instance, Mauritania, Yemen, Djibouti, and Sudan had the lowest GDP per capita levels in 2015 at $1,788, $1,303, $1,282, and $2,089 respectively. Simultaneously, they had the highest poverty rates at the national poverty lines in the Arab region at 46.5% in Sudan, 31.0% in Mauritania, 40.8% in Djibouti, and 54.5% in Yemen. However, the Lebanese case demonstrates that a high GDP per capita does not necessarily mean a low poverty rate, with GDP per capita at $8,051 and a poverty rate of over 25% in 2015. 

 Table 1: GDP per Capita in Arab Countries ($)

 

2009

2013

2015

Algeria

3,876

5,492

4,206

Djibouti

1,241

1,593

1,788

Egypt

2,349

3,264

3,615

Iraq

3,726

6,817

4,629

Jordan

3,801

4,656

4,940

Lebanon

8,403

8,389

8,051

Libya

10,152

10,454

4,643

Mauritania

1,146

1,580

1,282

Morocco

2,884

3,154

2,872

Sudan

1,183

1,726

2,089

Tunisia

4,163

4,249

3,873

Yemen

1,061

1,516

1,303

Palestine

1,963

2,992

2,867

Arab World

5,213

7,562

6,454

World

8,747

10,651

9,996

OECD members

34,257

37,856

35,783

Source: World Bank, 2016. Retrieved September, 2016. Note: Data for Yemen, Mauritania and Djibouti is from the International Monetary Fund World Economic Outlook Database, April 2016.

 Figure 10: GDP per Capita in Arab Countries, 2015 ($)


As shown in Figure 11, wages in the Arab region declined from 31% of GDP in 2000 to 27% of GDP in 2009. Egypt witnessed the most dramatic decline, where the wage share dropped from 29% to 25% of GDP between 2000 and 2009. Hence, economic growth benefitted employers and capital holders instead of workers, further aggravating poverty in the Arab region (Escwa 2014b).

Figure 11: Wages as a % of GDP, 2000 vs. 2010


 III. Unemployment in Arab Countries: Youth Centered and Ominous

A main contributor to poverty in the Arab region is the endemic unemployment which was one of the focal instigators of the early demonstrations acting as a prelude to the Arab uprisings. Intuitively, the principal reason behind poverty, in all its dimensions, has always been lack of adequate income or financial stability. The lack of productive employment opportunities eventually results in poverty, as lack of a regular source of income leads to a lower standard of living given the inability to afford basic needs such as food, healthcare, and education.

In addition to the sociopolitical aspect and the demands for more transparency, voice and participation, the uprisings were mainly triggered by high unemployment rates which stood in 2009 at 18.9% in Libya, 14.6% in Yemen, 13.3% in Tunisia, 9.4% in Egypt, and 8.1% in Syria.  A country’s economic situation deteriorates during a political transition and undoubtedly during times of instability and conflict, which leads to a decrease in job creation and inevitably to an increase in unemployment. As shown in Figure 12, five years and four new governments later, unemployment increased to 19.6% in Libya, 29.0% in Yemen (and over 36% according to some estimates), 14.0% in Tunisia, and 12.7% in Egypt. The Syrian case is the most appalling and tragic as the unemployment rate surged from to over 55% by the end of 2015, and the economy lost 2.1 million actual and potential jobs between 2010 and 2015 (Escwa 2016). According to the Syrian Center for Policy Research, by the end of 2014 there were 3.72 million unemployed persons, 2.96 million of which lost their jobs during the conflict, with the loss of income impacting the welfare of 12.22 million dependents.

 Figure 12: Unemployment in Arab Countries that Witnessed Uprisings, % of Total Labor Force


The major challenge facing Lebanon today is the economic and social impact of the Syrian crisis. According to the Minister of Labor, unemployment stood at 23% in 2014 compared to 6.4% in 2009, as per the World Bank. Moreover, between 220,000 and 340,000 Lebanese citizens, particularly women, the young and the unskilled, are estimated to have become unemployed since the onset of the Syrian crisis (World Bank 2016d and Escwa 2016b).

In Jordan, unemployment slightly increased from 12.9% in 2009 to 13.1% in 2015 as the Jordanian government places employment and decent work at the heart of its National Employment Strategy.

In Palestine, a marred political horizon, scant private investment inhibited by weak investor confidence, and the recent war on Gaza all led to economic and labor market instability. Unemployment in Palestine increased from 24.5% in 2009 to 26.9% in 2016. The unemployment rate reached 19% in the West Bank in 2015 while blockades, war and poor governance strangled Gaza's economy where the total unemployment rate reached 43% while youth unemployment soared to over 58%-60% (World Bank 2015c).

According to the Iraqi Minister of Labor and Social Affairs, unemployment reached 25% in Iraq in 2015, compared to 15.2% in 2009 due to the ISIS insurgency and subsequent deterioration of economic activity which diverted resources away from productive private investment, and increased poverty, vulnerability and unemployment. “Iraq has one of the lowest employment-to-population ratios in the region, even among men, and the 2014 crisis has led to an estimated reduction in employment by 800,000 people,” (World Bank 2016c).

According to the IMF, the unemployment rate in Sudan increased from 14.9% in 2009 to 20.6% in 2016, due to political instability, corruption and economic uncertainty which compromise the enabling environment for human and business development, private sector growth, and employment.

On a positive note, unemployment in Mauritania declined from 31.1% in 2009 to 12.8% in 2014; however, the economy still needs to create around 200,000 jobs by 2020 to absorb new labor market entrants (IMF 2014).

Algeria and Morocco have the lowest unemployment rates in non-GCC Arab countries at 9.90% and 10.15%, respectively in 2016. Notably, they also have the lowest poverty rates, which demonstrates the underlying association between unemployment and poverty.

 Figure 13: Unemployment in Arab Countries, % of Total Labor Force



Notably, unemployment in Arab countries has emerged as a youth-centered phenomenon, exacerbating poverty and presenting an alarming socioeconomic challenge. Youth unemployment in the Arab region is the highest globally at an estimated 29.7% in 2014, double the world average of 14.0%. The youth-led demonstrations that ignited the spark of the Arab uprising also failed to improve the high youth unemployment rates across Arab countries. In 2014, youth unemployment was significantly higher than its 2009 level as it increased from 43.7% to 48.9% in Libya, from 27.0% to 42.0% in Egypt, from 30.5% to 31.8% in Tunisia, and from 24.8% to 29.9% in Yemen (some estimates suggest that youth unemployment in Yemen has reached 60%). In Syria, youth unemployment soared to 78% in 2015 compared to 16.1% in 2009. Drastic structural changes took place “in the labor market as most young people over the age of 18 years were driven into military service. Moreover, the closure of many workplaces led to massive job losses,” (Escwa 2016a). Youth unemployment is also considerably high in Mauritania, Palestine and Iraq at 46.6%, 42.7% and 34.6%, respectively. High youth unemployment rates contribute to poverty as they diminish the productivity of Arab economies, with the opportunity costs associated with youth unemployment exceeding 3% of GDP annually (Chaaban 2008).

 Table 2: Youth Unemployment in Arab Countries Pre and Post Uprisings, (% of Total Labor Force Ages 15-24)

2009

2014

Algeria

21.7

20.0

Egypt

27.0

42.0

Iraq

32.3

34.6

Jordan

28.6

28.8

Lebanon

20.9

20.7

Libya

43.7

48.9

Mauritania

47.1

46.6

Morocco

18.1

20.2

Palestine

38.1

42.7

Sudan

22.8

23.3

Syria*

16.1

78.0 (2015)

Tunisia

30.5

31.8

Yemen

24.8

29.9

Arab Region

24.5

29.7

World

13.7

14.0

Source: World Bank, 2016. * Escwa – Syria at War: Five Years On, 2016.

 Figure 14: Youth Unemployment in the Arab World



IV. Health and Education: Prerequisites for Poverty Eradication

a.  Education and Literacy  

1. Primary Education Enrollment Rates 

Education is one of the most powerful instruments for reducing poverty and inequality in the Arab region, by equalizing opportunities and increasing income through raising productivity or enabling access to higher-paid jobs. Economists estimate that for every additional year of schooling, an individual’s potential income increases by 10% (UNICEF 2015a). In conflict-ridden Arab countries, low quality or lack of education increases the risk of unemployment and exclusion, which in turn increases vulnerability to recruitment by armed groups who offer a sense of protection and a stable income source (Ostby and Urdal 2010).

It can be noted that the primary education enrollment rate in the Arab region increased from 82.9% in 2009 to 84.5% in 2013, while the secondary enrollment rate increased from 60.0% to 63.1%. However, both rates remain lower than the world average, and expectedly the OECD average.

 Figure 15: Net Primary and Secondary Education Enrollment Rates (%), 2009 vs. 2013 – Regional Comparison 


Given that the rich and middle class usually have around 100% primary education enrollment rates, any increase in the average provides strong evidence of improving access to education among the poor. As shown in Figure 16, net primary education enrollment rates increased from their 2009 level in all studied countries except Syria and Egypt, which reflects the efforts of Arab governments in this regard. According to UNESCO, there is a regional plan that aims to ensure that all children have access to completely free, compulsory, and good quality primary education by 2030. During the Arab States Regional Conference on Education Post-2015, it was agreed upon by all parties that “education is a public good and a building block for prosperity, well-being, social cohesion and sustainable development”. The Maghreb countries of Tunisia, Morocco, and Algeria lead in this regard with primary enrollment rates at 98.9%, 98.3%, and 97.3%, respectively. On the other hand, Djibouti and Mauritania have very low primary education enrollment rates at 58.8% and 73.1%, respectively.

Armed conflicts intensify inequality, poverty, and academic exclusion and as the number of displaced children grows, many countries in the Arab region feel the dire impacts of conflicts on education. According to the 'Arab Knowledge Report 2014: Youth and Localization of Knowledge', the proportion of school children affected by armed conflicts has increased from 63% to 87%, and this number is expected to increase further if the regional turmoil persists. According to ‘Syria at War – Five Years On’ – a 2016 study by Escwa, the net primary education rate dropped significantly from 98% in 2010 to 61.5% today, as “thousands of schools have ceased to operate and an estimated 2.7 million school-age children are out of school inside and outside Syria […] and 713,000 refugee children (53% of all school-aged refugee chil­dren) are not enrolled in school in neighboring countries”. Moreover, “5,800 schools (26% of the national total) were out of action in 2015, due to destruction and inaccessibility (5,200) or because they were being used as shelters for IDPs (600)”. Similarly in Iraq, there are over 2 million school-age children who are out of school today, compared to a primary enrollment rate of 92.3% in 2007.

 Figure 16: Net Primary Education Enrollment Rates in Arab Countries (%)

2. Government Expenditure on Education

Government expenditure on education is relatively high in the Arab region, both as a percentage of GDP and total government expenditure, and close to the world and OECD averages, (see Table 3). In 2012, Tunisia spent 6.2% of GDP and 21.6% of total government expenditure on education. Morocco spent 5.4% and 17.3%, respectively in 2009. In Lebanon, public expenditure on education constituted 2.6% of GDP and 8.6% of total government expenditure in 2013, low in comparison with other Arab countries. “This low amount can be justified by the fact that public resources are channeled indirectly to education in the form of employment benefits granted to government employees, who then spend these resources on private education,” (BankMed 2014).

In Syria, government expenditure on education fell from an average of 5% of GDP in 2000-2010 to 3% since 2011 bearing in mind that GDP also contracted significantly (Escwa 2016a).

 Table 3: Government Expenditure on Education in Arab Countries

Year

Government Expenditure on Education (% GDP)

Expenditure on Education

 (% of Total Government Expenditure)

Algeria

2008

4.3

11.4

Comoros

2012

4.9

18.5

Djibouti

2010

4.5

12.3

Egypt

2015

3.5

12.0

Lebanon

2013

2.6

8.6

Mauritania

2013

3.3

11.4

Morocco

2009

5.4

17.3

Sudan

2009

2.2

10.8

Syria

2009

5.1

19.2

Tunisia

2012

6.2

21.6

Yemen

2008

4.6

12.5

Arab Region

2008

4.3

13.2

World

2011

4.5

13.5

OECD Countries

2012

5.0

12.3

Source: World Bank, 2016.

 According to the World Bank, “the poverty impact of public spending on education depends on its incidence among income groups. The benefit incidence of expenditure on education in the Arab region follows the typical pattern of being pro-poor at the basic level, and pro-rich at the tertiary level, as the poor tend to drop out of the education system earlier and the rich are likely to continue to the tertiary level of education”.

 2.      Youth and Adult Illiteracy

Along these lines, literacy is a vital foundation for a productive and sustainably developed society, one that is based on learning and opportunity. Illiteracy locks societies in a vicious cycle of poverty and unemployment. In the Arab region, it was estimated in 2012 that 51.8 million of people over the age of 15 were illiterate, out of which 66% were females. Alternatively, the number of illiterate Arab youths reached 6.9 million, of which 64% were females. Adult and youth literacy rates stood at 77.5% and 88.7% compared to a world average of 84.3% and 90.6%, respectively. According to UNESCO projections, Arab youth literacy rate is expected to increase 91.4% in 2015, which remains comparably higher than the projected adult literacy rate of 79.2%. As shown in Table 4, on a country level, Jordan leads all other Arab countries in regards to adult literacy rates, at 97.9% in 2012, followed by Palestine at 96.4% in 2014. On the other hand, Mauritania and Morocco rank last with only 58.6% and 67.1% of their adult population being literate in 2011. Youth literacy rate was highest in Libya at 99.9% in 2013, followed by Palestine at 99.4% in 2014, and Jordan at 99.1% in 2012. On the other hand, youth literacy rates were lowest in Mauritania at 69.0% in 2011, Morocco at 81.5% in 2011, and Iraq at 82.0% in 2013. The Syrian conflict also had a detrimental effect on literacy. The national youth literacy rate decreased from 94.9% in 2010 to 95.6% in 2013 to 91.2% in 2015, suggesting that around 360,000 young Syrians are illiterate (Escwa 2016a).

 Figure 17: Trend in Adult and Youth Literacy Rates (%) – Regional Comparison



Table 4: Literacy Rates in Arab Countries

Country

Year

Adult Literacy Rates

Youth Literacy Rates

Algeria

2006

72.6

91.8

Egypt

2013

75.1

92.0

Iraq

2013

79.3

82.0

Jordan

2012

97.9

99.1

Lebanon

2007

89.6

98.7

Libya

2013

90.3

99.9

Mauritania

2011

58.6

69.0

Morocco

2011

67.1

81.5

Palestine

2014

96.4

99.4

Sudan

2013

74.3

88.5

Syria

2013

85.5

95.6

Tunisia

2011

79.7

97.3

Yemen

2013

67.6

88.4

Arab World

2012

77.5

88.7

World

2012

84.3

90.6

EU

2010

99.0

100

Source: World Bank and UNESCO, 2016.

 a.     Health

1.      Infant Mortality and Life Expectancy

Poverty and poor health indicators are inextricably linked. In the Arab region, the roots of poor health conditions are rooted in political, social and economic injustices.

Access to an efficient healthcare system is an essential part of human and social development as high quality healthcare effectively reduces infant mortality rates and increases life expectancy. Arab countries have recorded some major advances concerning healthcare, as life expectancy at birth in Arab countries increased from 51 to 71 years in the period between 1960 and 2014 (The Arab Knowledge Report, 2014). According to the World Bank, infant mortality in the Arab region declined from 33 to 28 deaths per 1000 live births over the period 2009-2015, despite the prolongation of armed conflicts in a number of countries, compared to a world average of 32, and an OECD average of 6. On a country basis, Lebanon, Libya, Tunisia, and Jordan recorded the least number of infant deaths in 2015, at 7, 11, 12, and 15 deaths per 1000 live births, respectively. On the other hand, Somalia, Mauritania, and Comoros recorded the largest number in regards to infant mortality at 85, 65, and 55 deaths for every 1000 live births in 2015, (see Table 5). However, all studied Arab countries have witnessed improvements in regards to infant mortality and thus it can be inferred that the healthcare system has advanced in the region.

Average life expectancy in the Arab region stood at 71 years in 2014, similar to the world average and naturally below the OECD average of 80 years. As in all other indicators, life expectancy varies greatly between Arab countries as it ranges from 79 years in Lebanon and 75 years in Algeria to 62 years in Djibouti and 55 years in Somalia as of 2015.

Egypt's ranks on life expectancy and infant mortality are currently not impressive at 71 years and 20 deaths per 1000 live births; however, according to its Sustainable Development Strategy: Egypt Vision 2030, Egypt aims at providing an integrated, accessible, high quality, and non-discriminatory health system by 2030, that is capable of improving the country's health indicators through a comprehensive coverage for all citizens, especially the poor and vulnerable. Moreover, Egypt hopes to reduce neonatal, infant, and under 5 mortality rate by 50%, reduce maternal mortality by 60%, increase government expenditure on health to 5% of GDP, and ensure 100% coverage for each vaccination and expand national immunization schedule.  

In conflict-ridden Syria, the impact of war on healthcare services is reflected in progressively deteriorating health indicators since 2011. Life expectancy decreased from 73 years in 2010 to 55 years at the end of 2014 due to the ongoing violence and armed conflict. The overall health infrastructure of the country has been negatively affected as most hospitals face shortages in both healthcare materials and personnel. Moreover, “almost half of the total 493 hospitals in the country in 2010 have been directly impacted in the five years of fighting.  One third (165) of the country’s hospitals (88% of them private) had been destroyed by 2015, and a further 11% had been partially damaged,” (Escwa 2016a).

 Table 5: Infant Mortality and Life Expectancy in Arab Countries

Infant Mortality Rate

(per 1000 Live Births)

Life Expectancy at Birth (Years)

2009

2015

2009

2014

Algeria

24

22

74

75

Comoros

65

55

61

63

Djibouti

64

54

60

62

Egypt

25

20

70

71

Iraq

31

27

68

69

Jordan

18

15

73

74

Lebanon

9

7

78

79

Libya

15

11

72

72

Mauritania

71

65

62

63

Morocco

30

24

72

74

Palestine

21

18

73

73

Somalia

100

85

54

55

Sudan

55

48

62

63

Tunisia

16

12

74

74

Yemen

45

34

62

64

Arab World

33

28

70

71

World

39

32

70

71

OECD

7

6

79

80

Source: World Bank, 2016.

2.      Total, Public, and Private Health Expenditure

Along these lines, total health expenditure stood at 4.8% of GDP in the Arab region in 2014 (compared to 4.6% in 2009), significantly lower than the world average of 9.9%, and OECD average of 12.4%. Similarly, public or government health expenditure as a percent of GDP remains low in the Arab region at 3.1% in 2014, up from 2.8% in 2009, but still lower than the world average of 6.0%, and OECD average of 7.7%. However, public health expenditure as a percentage of total health expenditure in the Arab region reached 62.3% in 2014 (compared to 61.6% in 2009), higher than both the world and OECD averages of 60.1% and 62.2%, respectively.

It should be noted that total health expenditure includes both public and private health expenditure. Public or general government expenditure on health comprises the direct expenses allocated for the improvement of the health status of the population and/or the distribution of medical care goods and services. Alternatively, private health expenditure is defined as the sum of expenditures on health by prepaid plans private insurance schemes (pre-paid plans), firms’ and NGOs’ expenditure on medical care, and household out-of-pocket outlays to health practitioners and suppliers of pharmaceuticals (Word Health Organization 2016).

As shown in Figure 18, total health expenditure as a percent of GDP increased in all Arab countries over the period 2009-2014 except in Jordan, Lebanon, and Syria. In 2014, total health expenditure was highest in Djibouti at 10.6% of GDP, Sudan (8.4%), Jordan (7.5%), and Algeria (7.2%). On the other hand, Mauritania and Syria had the lowest total health expenditure at less than 4% of GDP. However, public health expenditure as a percent of total health expenditure declined following the uprisings in all countries except Algeria, Lebanon, Libya, Mauritania, and Syria. In 2014, public health expenditure as a percent of total health expenditure was highest in Libya at 73.5%, Algeria (72.8%), and Jordan (69.7%). Conversely, it was lowest in Sudan, Comoros, Morocco, and Egypt at less than 40%, (see Table 6).

 Figure 18: Total Health Expenditure in Arab Countries (% GDP) – 2009 vs. 2014


Table 6: Public Health Expenditure, % of Total Health Expenditure

 

2009

2014

 

Algeria

71.6

72.8

Comoros

45.1

32.9

Djibouti

71.2

63.9

Egypt

41.1

38.2

Iraq

74.3

60.3

Jordan

70.2

69.7

Lebanon

42.1

47.6

Libya

68.9

73.5

Mauritania

47.5

49.6

Morocco

36.1

33.9

Sudan

29.3

21.4

Syria

46.0

46.3

Tunisia

56.7

56.7

Yemen

25.1

22.6

Source: World Bank, Global Health Expenditure Database, 2016.

 The constitutions of several Arab countries explicitly emphasize the role of governments in guaranteeing provision of health care as a public right for all citizens. However, several Arab countries still have inequitable healthcare systems (Saleh et al 2014). As shown in Figure 19, the recent Arab uprisings created a sociopolitical impetus that failed to achieve universal health coverage, as public health expenditure only increased in Tunisia and Libya both as a percent of GDP and as a percent of total government outlays over the period 2009-2014. In Egypt, government health expenditures declined from 2.1% of GDP and 6.0% of total government expenditure in 2009 to 1.6% and 5.2%, respectively in 2015. However, according to its ambitious Sustainable Development Strategy: Egypt Vision 2030, Egypt aims at providing an integrated, accessible, high quality, and non-discriminatory health system by 2030, that is capable of improving the country's health indicators through a comprehensive coverage for all citizens, especially the poor and vulnerable.

 Figure 19: Public Health Expenditure in Arab Countries that Witnessed Uprisings – 2009 vs. 2014 


On the other hand, the government in Djibouti spends a considerable 6.8% of GDP and 14.1% of total government expenditures on health, as of 2014. Jordan also dedicates significant public resources to healthcare; however, public health expenditure declined from 6.7% of GDP and 19.1% of total government expenses in 2009 to 5.2% and 13.7%, respectively in 2014, possible due to the budgetary strain created by over 1.5 million Syrian refugees.

 Table 7: Public Health Expenditure in Selected Arab Countries – 2009 vs. 2014

Government Health Expenditure

 % of GDP

Government Health Expenditure

% of Total Government Expenditure

2009

2014

2009

2014

Algeria

3.8

5.2

9.0

9.9

Comoros

1.7

2.2

7.3

8.7

Djibouti

6.0

6.8

14.1

14.1

Iraq

3.5

3.3

5.0

6.5

Jordan

6.7

5.2

19.1

13.7

Lebanon

3.1

3.0

9.7

10.7

Mauritania

1.8

1.9

7.6

6.0

Morocco

2.0

2.0

6.6

6.0

Sudan

2.4

1.8

10.4

11.6

Source: World Bank, Global Health Expenditure Database, 2016.

 Concerning the direct link between health and poverty, in the lack of an adequate and inclusive healthcare system in the Arab region, illness exposes households to the threat of financial distress and in some cases to poverty, either directly via healthcare payments or indirectly due to lost income from inability to work (Rashad and Sharaf 2015). Moreover, out-of-pocket health payments can cause households to incur catastrophic expenditures, which in turn can push them into poverty. The need to pay out-of-pocket also means that governments have failed to achieve collective healthcare coverage to all households and segments (World Health Organization 2005). For instance, one study shows that out-of-pocket health expenses “exacerbate households’ living severely in Egypt, pushing more than one-fifth of the population into a financial catastrophe and 3% into extreme poverty in 2011,” (Rashad and Sharaf 2015). Moreover, as of 2013, expenditure on medicine in Jordan accounted for 62.5% of out-of-pocket health expenses. However, this was higher for the poorest quintile (69.4%) than for the richest quintile (58.8%),” (UNICEF 2016).

As shown in Table 8, out-of-pocket health expenditure accounted for 30% of total health expenditure in the Arab region in 2014, compared to a world average of 18.2% and OECD average of 13.6%. Yemen, Sudan, Morocco, and Egypt recoded the highest out-of-pocket health expenditure as a percent of total health expenditure, at 76.4%, 75.5%, 58.4%, and 55.7% respectively in 2014. Contrariwise, Jordan, Algeria and Libya, and Djibouti recorded the lowest percent at 20.9%, 26.5%, and 35.8% respectively.

 Table 8: Out-of-pocket Health Expenditure (% of Total Health Expenditure)

2009

2014

Algeria

27.4

26.5

Comoros

54.9

45.1

Djibouti

28.5

35.8

Egypt

57.1

55.7

Iraq

25.7

39.7

Jordan

22.6

20.9

Lebanon

42.4

36.4

Libya

31.1

26.5

Mauritania

48.8

43.8

Morocco

56.1

58.4

Sudan

67.7

75.5

Syria

54.0

53.7

Tunisia

37.5

37.7

Yemen

73.8

76.4

Arab World

32.1

30.0

World

17.7

18.2

OECD

14.0

13.6

Source: World Bank, Global Health Expenditure Database, 2016.

 1. Water and Sanitation: Basic Human Rights

Target 7-C of Goal 7 of the Millennium Development Goals seeks to 'improve access to drinking water and sanitation […] to support progress towards sustainable development,' (ESCWA 2013c). Water scarcity constitutes a major threat to water and food security, and is yet another factor threatening human and economic development and exacerbating poverty in the Arab region. The World Bank estimated that half of the Arab population does not have 'adequate access to water, and per capita water — already less than a fifth of global access—is expected to drop even further in the next 15 years,' (World Bank 2011). Notably, nearly all Arab countries suffer from water scarcity, and an estimated 66% of the Arab region’s available surface freshwater is trans-boundary or originates outside the region, which jeopardizes water security (UN 2013). It is a disconcerting fact that 14 of the world’s 20 most water stressed countries are found in the Arab region: Mauritania, Kuwait, Jordan, Egypt, Iraq, Oman, UAE, Syria, Saudi Arabia, Libya, Djibouti, Tunisia, and Algeria, (from most to least stressed) (UNDP 2013). Moreover, 12 Arab countries have average per capita water availability rates below the World Health Organization's threshold for severe scarcity: Algeria, Bahrain, Kuwait, Jordan, Libya, Oman, Palestine, Qatar, Saudi Arabia, Tunisia, UAE, and Yemen.

In addition, in 2015, 92% of the population in the Arab region had access to improved water sources compared to 99% in OECD countries, (see Table 9). However, this does not necessarily mean that 92% of the total Arab population has 'regular or reliable access to water supplies, or that the quality of water supplied is fit for drinking,' (ESCWA 2013c). 99% of the population in Egypt and Lebanon, 98% in Tunisia, and 97% in Jordan had access to an improved water source in 2015. On the other end of the spectrum, only 55% of the population had access in Yemen, 56% in Sudan, and 58% in Mauritania and Palestine, (see Table 9). Notably, 'most of the under-served people live in lower income, occupied or conflict-ridden countries' due to inadequate water supply infrastructure and 'disparities in water services remain particularly large between rural and urban areas,' (UNDP 2013).

In terms of improved sanitation, 90% of the population in the Arab region had access in 2015, which is higher than the world average (68%) but lower than that of OECD members (98%), (see Table 7). In Sudan, only 24% of the population had access to improved sanitation, 40% Mauritania, and 47% in Djibouti. This is closely linked to the high poverty rates and low living standards in these countries.

 Table 9: Access to Improved Water Source and Sanitation in Arab Countries

Improved Water Source

(% of Population with Access)

Improved Sanitation

(% of Population with Access)

1990

2000

2015

1990

2000

2015

Algeria

92

90

84

80

84

88

Djibouti

78

82

90

66

60

47

Egypt

93

96

99

73

84

95

Iraq

78

80

87

72

75

86

Jordan

96

97

97

97

98

99

Lebanon

83

86

99

n.a.

83

81

Libya

71

71

n.a.

97

97

97

Mauritania

29

42

58

16

24

40

Morocco

73

78

85

52

64

77

Palestine

96

91

58

87

89

92

Sudan

67

62

56

27

25

24

Syria

86

88

90

85

89

96

Tunisia

83

90

98

73

82

92

Yemen

66

60

55

24

39

53

Arab World

83

83

92

67

72

90

World

76

82

91

53

59

68

OECD

97

98

99

95

96

98

Source: World Bank, 2016. Note: Most recent data for Yemen is 2012 and Sudan is 2014. 

V.      Recommendations: Towards Productive Employment and Poverty Reduction

Presenting numbers and statistics sheds light on the severity of the problem; however, it does not solve the pervasive unemployment, poverty, and inequality in the Arab region. Consequently, Arab governments must devise a comprehensive strategy to address these pressing issues.

a. Means to Combat Unemployment

Given that the Arab uprisings were rooted in demands for better living standards and productive job opportunities, most Arab countries expanded and enhanced employment programs post-2010. Table 11 showcases a number of Arab countries' responses to the Arab uprising by employment measure. For instance, public employment as well as public and minimum wages were increased in almost all studied countries, particularly the Arab countries in transition, mainly as an appeasing social mitigation measure. On a more positive note, investment in infrastructure and training programs increased in a number of Arab countries. 

Table 10: Country Responses to the Arab Uprising by Employment Measure, post-2010

Country

Changes in Public Wages

Changes in Minimum Wages

Public Employment

Training

Infrastructure

Egypt

x

x

x

x

x

Iraq

x

 

 

 

x

Jordan

x

x

x

x

x

Lebanon

x

x

 

 

 

Libya

x

x

x

 

 

Morocco

x

x

x

x

 

Tunisia

x

 

x

x

 

Yemen

x

 

x

x

 

Source: ILO, 2012.

Change does not happen overnight and Arab governments still have a long and bumpy reform road ahead, as they need to further enhance work incentives and establish an environment conducive to job creation. Below is a list of essential comprehensive reforms based on IMF and World Bank policy recommendations that would directly reduce labor market inefficiencies and hence combat unemployment in the Arab world:

¨      Address job/skill mismatches to reduce youth unemployment: This is achieved by promoting vocational training, realigning curricula with private-sector needs, and improving the quality of educational systems to develop a range of market oriented skills.

¨      Facilitate job information and career counselling for the Arab youth.

¨      Promote private sector activity through appropriate policies and measures: Governments and banks should facilitate access to credit and offer tax incentives to feasible labor intensive small and medium enterprises. This fosters both adult and youth entrepreneurship and boosts job creation, taking into consideration that 'SMEs are responsible for around 30% of all private sector employment in the Arab region, compared to 41% in Latin America and 49% in the OECD […] and between 4 and 16% of total employment, including public sector and non-governmental organizations employment,' (Nasr and Rostom 2013).

¨      Turn Infrastructure Investment into a Vehicle for Employment Generation:

o   'Investment in infrastructure can have a sizable impact on employment generation, even in the short term. For example, […] evidence suggests that every 1% of GDP spent on infrastructure could generate in the short term as many as 87,000 new jobs in Egypt and 18,000 jobs in Tunisia. To have an immediate effect, policymakers in the region can therefore seek to bring forward viable labor intensive infrastructure projects that are already in the pipeline, while maintaining fiscal sustainability. Such a policy will not only provide wage employment – including for young people – but will also enhance long-term growth, thereby leading to sustainable job creation,' (Ahmed 2012).

¨      Increase women’s employment incentives by 'improving their access to education and giving them better options to combine work and family, for example through an improved system of maternity leave and a system of flexible part-time employment,' (Chaaban 2010). According to the ILO, in 2013, 83% of women in the Middle East were not guaranteed the right to return to work after returning from the maternity leave.

¨      End the ineffective reliance on inflated public-sector employment which inflicts a high fiscal burden and comes at the expense of productivity, by rationalizing excessive government hiring and reforming public wages. 

¨      Improve labor market regulations by introducing more flexibility into hiring and firing decisions; easing business start-up regulations; improving access to credit; and introducing effective social protection schemes, such as unemployment insurance (World Economic Forum 2012).

¨      Promote entrepreneurship and job creation in 'Green' sectors and eco-friendly projects such as eco-tourism, agroforestry, and renewable energy (UNDP 2015a).  Such projects are still a novelty in the Arab region with a large untapped potential that not only creates employment opportunities but also has positive environmental and economic dimensions. 

¨      Reassess the drawbacks and benefits of emigration: 'Arab governments, especially in labor-exporting economies, should comprehensively assess emigration policies and remittances especially with regards to their costs. Having lax emigration policies, especially with regards to labor rights and decent working environments, can alleviate pressures on the domestic labor market in the short run. However, in the long run, emigration can result in the erosion of a country’s human capital,' (Chaaban 2010).

b.Towards Poverty Reduction, Inclusiveness, Efficient Targeting, and Social Protection

Over the years, experience has shown that poverty and inequality in the Arab region cannot be eliminated by traditional handouts and generalized subsidies, which are merely short term mitigation not long term empowerment measures. According to Adam Smith, the real tragedy of the poor is the poverty of their aspirations. Hence, efforts to bridge the gap between the richest and poorest groups must focus on ensuring equitable and inclusive access to services and opportunities, which in itself increases the prospects and aspirations of the poor, and in turn leads to poverty reduction. This requires extensive and comprehensive reform efforts from Arab governments in several key areas, spanning political, social, and economic dimensions. Existing literature and global experience has shown that policy recommendations for poverty alleviation and inequality reduction include the following instruments:

¨      Tax Reform and Tax-Based Redistribution: Taxes as a percent of GDP are very minimal in the Arab region. Reforming and increasing taxation not only enhances accountability, but is vital for raising revenues to finance public expenditure on cash transfers, health, and education that favor low-income households, as well as on growth-enabling infrastructure that increases social equity, (OECD, 2012).  Moreover, progressive income taxation, based on the concept of 'ability to pay' whereby tax liability rises with income, is one of the main methods of income redistribution; however, such taxes are hard to enforce and administer, hence Arab oil-importing countries have not resorted to progressive taxation on individual incomes and corporate profits. Instead, they have predominantly used indirect taxes to generate revenue, which do not necessarily differentiate between the rich and the poor.

¨      Targeted Subsidies: Given their limited social impact and their failure to abolish poverty and inequality, with the rich reaping the vast majority of benefits, generalized subsidies consume a reprehensibly high share of public finances in the Arab region. Energy subsidies in particular are expensive, inefficient and regressive over the long run, reducing incentives for investment in renewable energy and diverting public funds away from key social programs. Hence, phasing out inefficient generalized subsidies, mainly energy subsidies, and introducing targeted subsidies is a necessity; however, it should be a gradual process accompanied by 'the introduction or the scaling-up of well-targeted social safety nets, preferably in the form of targeted or conditional cash transfers, to compensate [the poorest segments of society] who are most affected by higher prices,' (IMF 2014).

¨      Improved Access to Quality Education: Ensuring equal access to quality education alleviates poverty both by boosting individual productivity and enabling the movement of the poor from low-paying jobs in agriculture to higher-paying jobs in industry and services. Furthermore, public spending on education, when targeted towards the poor, can produce a double dividend, reducing poverty in the short run by covering schooling costs, and increasing the prospects of poor youth to access formal jobs and hence escape from the intergenerational poverty trap in the long run. This must be supplemented by a strong investment climate to ensure that productive and good quality jobs are created for the newly educated (Ncube et al 2013).

¨      A Well-Endowed and Empowering Social Protection Floor: According to an ILO Social Protection Floor seminar in May 2015, Arab governments must establish viable Social Protection Floors, that reach workers in the informal sector, through a comprehensive examination of existing schemes to identify shortfalls and solutions. Fiscal space for social protection and assistance can be created through official development assistance, domestic revenue mobilization, deficit financing and reprioritizing and efficiency of expenditure. Out of these options, revenue mobilization and reprioritizing and efficiency of expenditure are considered the most favorable (Morisse 2013). Fortunately, in many Arab economies, resources can be made available through taxation, military expenditure cut and energy subsidy reform. Moreover, one of the main suggestions at the ILO seminar included the establishment a regional fund for social protection.

¨      Regional Economic Integration: Inter-Arab investment projects are crucial to reduce disparities in development across Arab countries, boost economic growth, and reduce existing poverty and inequality. Preliminary steps to achieve greater economic integration in the Arab region could result in considerable gains, such as a 3.1% increase in GDP between 2013 and 2020, (ESCWA 2014b).

¨      Minimum Wage Increase: Smaller wage dispersion lowers income inequality.

¨      Arab banks can and must expand access to credit to MSMEs, in order to reach excluded segments, bolster financial inclusion, and reduce poverty.

¨      In the wake of Arab social upheavals, political instability, and humanitarian crises in refugee populations and countries like Syria, Iraq, Yemen, data on poverty in the Arab region is much needed to design evidence-based policies and direct humanitarian assistance (Arab Development Portal 2016).

Appendix: Progress Status for Selected MDG Indicators in Arab Countries

Extreme

Poverty

Improved Sanitation

Improved

 Water

Infant

Mortality

Primary Education Completion

Under-Nourishment

Djibouti

Target Met

Seriously Off Target

Target Met

Seriously Off Target

Moderately Off Target

Target Met

Algeria

Target Met

Target Met

Seriously Off Target

Seriously Off Target

Target Met

Seriously Off Target

Egypt

Target Met

Target Met

Target Met

Insufficient Progress

Target Met

Seriously Off Target

Iraq

Target Met

Sufficient Progress

Moderately Off Target

Seriously Off Target

Seriously Off Target

Seriously Off Target

Jordan

Target Met

Moderately Off Target

Seriously Off Target

Seriously Off Target

Seriously Off Target

Seriously Off Target

Lebanon

Insufficient Data

Insufficient Data

Target Met

Insufficient Progress

Moderately Off Target

Seriously Off Target

Libya

Insufficient Data

Seriously Off Target

Seriously Off Target

Insufficient Progress

Insufficient Data

Seriously Off Target

Morocco

Target Met

Target Met

Insufficient Progress

Moderately Off Target

Target Met

Seriously Off Target

Tunisia

Target Met

Target Met

Target Met

Insufficient Progress

Sufficient Progress

Seriously Off Target

Palestine

Target Met

Target Met

Seriously Off Target

Seriously Off Target

Insufficient Progress

Insufficient Data

Yemen

Target Met

Moderately Off Target

Seriously Off Target

Moderately Off Target

Moderately Off Target

Seriously Off Target

Source: World Bank, 2016.

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