Dispatch

Idle Kingdom

Saudi Arabia’s youth unemployment woes go far deeper than most realize.

JEDDAH, Saudi Arabia—In the wide stretch of the Middle East bypassed by revolution, Arab spring turned to Arab summer peacefully but not altogether promisingly for the Arab world's largest-ever surge of young people. In Saudi Arabia, more than half-a-million proud high school and college seniors crossed the stage at graduation ceremonies. The new graduates step into a job market featuring the highest regional youth unemployment rate in the world.

Around the Gulf, gold prices are hitting their annual summer spike for the wedding season, as young men lucky enough to have the means shower dowries upon their beloved, and launch their adult lives as respectable married men.

For older Saudi men fortunate enough to have government jobs, summer this year means flying off with the wife and kids for summer vacations in Europe and Turkey. The families, and Euro Disney, are reaping the benefits of revolution in the Arab world. That's thanks to a two-month salary bonus that Saudi King Abdullah ordered to maintain the prevailing peace in his kingdom, as part of a massive public-benefits package intended to stave off unrest. (Owing to the troubles, Gulf vacationers are staying away from closer holiday spots in Egypt and Lebanon this summer.)

In her mother's home in the coastal city of Jeddah, Nada Jan, a 26-year-old with a special-education major and a bachelor's degree who is losing her drive after a nearly four-year job search, stirs in her sleep and yawns.

As horrible as the roughly 40 percent unemployment figures are for Arab young people overall, they're worse for any ambitious college-educated Saudi women, analysts say: 30 percent of Saudi women of all ages looking for jobs can't find any, and 78 percent of the fruitlessly job-seeking women have university degrees.

For young men, prospects aren't much better. Behind a sales counter at a mall in Riyadh, 21-year Abdul Rahman Saeed -- like Nada, a Saudi in a national labor market overwhelmed by the flood of cheap labor from South Asia -- sells mobile phones. In between chats with customers about phone accessories, he despairs of ever pulling a job with enough salary to marry the love of his young life.

All is calm here in Saudi Arabia, but that doesn't mean all is well.  

Just when a rising wave of young Saudis is hitting the job market, in a generational surge of tens of millions of new workers expected to subside in the kingdom only around 2050, and just when Arab governments  most want youth jobs for the sake of stability, economists are concluding that decades of effort by Gulf governments to get their young into the labor market have fallen short -- way short.

Most Gulf job programs have focused on prodding private employers to increase the percentage of Gulf citizens they are hiring. And jobs are being created in Saudi Arabia; but they're going to Indians, Pakistanis, and other expat workers, not Saudis. Of the 1.2 million jobs added by the Saudi private sector between 2004 and 2009, only 280,000 went to Saudis, government statistics show.

"After 40 years of Saudi-ization, Oman-ization, Emirati-zation, they've not managed to increase the national share of jobs," one expert on employment in the Middle East said, speaking on condition of anonymity because, he said, officials have yet to publicly acknowledge the extent to which the job-nationalization programs missed their objectives. Gulf countries have long tried to absorb their national workers into the public sector instead. The result in Saudi Arabia is that about 80 percent of all working Saudis have government jobs, but more than 80 percent of private-sector jobs are held by foreigners. Foreign workers in Saudi Arabia on average receive wages that are 3.6 times less than what Saudi workers receive, and have a reputation for accepting long hours and poor conditions.

"You must work like a machine," Nada, the would-be teacher in Riyadh, quotes one private school as telling her, offering her a teaching job with 10-hour days and overcrowded classrooms for a very few hundred dollars a month. The prevalence of cheap foreign labor has driven down wages overall -- the average foreign worker in Saudi Arabia receives $266 a month, but even Saudi workers average only $966.

The job picture may be even worse than it looks. In late winter, when the Saudi government announced the country's first broad program of unemployment payments, as part of King Abdullah's benefits package, Saudi officials expected about 500,000 Saudis to sign up. Instead, seven times as many Saudis as anticipated did so -- some 3.5 million.

Ministry of Labor officials told Saudi reporters they expected to find that many of the applications were duplicates, or submitted by people who didn't understand the rules. (Top Labor ministry officials were at a labor conference in Switzerland during my trip to Riyadh, and said they wouldn't be able to speak to me.)

However, even if almost half the applications are thrown out, says Saudi businessman Essam al-Zamel, it still suggests that Saudi Arabia's actual overall unemployment rate may be a multiple of the official 10 percent figure. That would mean millions more among Saudi Arabia's 26 million people would look for work if they thought they had hope of finding any.

"Unemployment will be a real problem year after year, and in three or four years it will be very, very obvious," Zamel told me.

The discontent of the Arab world's youth bulge -- a fluke of demographic timing that has given the Arab world the second-largest percentage of young people in the world, after sub-Saharan Africa -- has been a "huge factor" in this year's revolutions across the Middle East and North Africa, says Larry Diamond, an expert on democratization at Stanford University. About two-thirds of Arabs are 30 or younger -- a percentage of young people twice that of North America's.

Political scientists credit Turkey and, unexpectedly, Iran with doing the most early on to try to make a place in their economies for the coming surge of under-30s. Saudi Arabia and a few other Gulf states tried more than most of the other Arab countries, through the job-nationalization programs and by padding government payrolls. Still, Saudis had a higher fertility rate longer than some of their Gulf neighbors, so will experience the youth bulge longer, political scientists say.After Tunisia's uprising, virtually every government in the region contacted Maurizio Bussi, deputy director at the ILO's regional office, and his colleagues at the ILO for advice -- quick -- on programs to create jobs for young Arabs, Bussi says. Several of the governments are now examining new job and training programs.

Saudi Arabia, under King Abdullah, has put its money where its worries are.

Abdullah, who returned home early after back surgery to respond to the regional unrest, in February and March announced a $130 billion package of jobs, especially for women; plans to build 500,000 units of affordable housing; raises; charitable gifts; and other benefits for Saudis. The figure is equal to 30 percent of the Saudi annual GDP. The 2008 U.S. stimulus package, by comparison, came in at less than 6 percent of U.S. annual GDP.

Supporters of the royal family say they expect the king, and his successor, to continue concentrating on economic reforms. Already, the Saudi labor ministry is moving ahead on enforcing a tougher version of the old job-nationalization programs. The new program variously rewards and punishes private companies based on how well they meet quotas for hiring Saudis.

None of the young people I talked to expected to get a job or an apartment out of the program.

Nada and her friends and sisters say they fill out hundreds and hundreds of online applications for government jobs. They say they know that without connections to people of influence, they will never hear back.

Nada's mother, hating to see her once hard-driving daughter lose hope, prods her to keep hunting for teaching jobs at private schools. But the pay that private schools offer -- as low as $200 a month for a full-time counselor -- is often less than Nada's mother pays her household help.

"I wake up to sleep, and sleep to wake up, and take my naps in between. And here are my kilos to prove it," Nada, who wears a black scarf over her hair and a dainty bit of jewelry in a piercing in her left nostril, exclaims. "Every day is like this."

Nada claps her hands to those parts of her where she thinks the torpor of unemployment is taking its toll -- slap, slap. Her sisters and girlfriends, sitting around her in the "ladies' section" of a Jeddah Starbucks that is screened by opaque glass, burst into laughter.

At his counter in the Riyadh mall, Abdul Rahman, a high-school graduate, talks over phone apps with customers, and talks over the math of his life with me.

Abdul Rahman earns less than $800 a month. He estimates the cost of a dowry and wedding at almost $25,000. He has one, and one only, woman he yearns to spend his life with. There are millions of other Saudi men in potential competition. And he has zero family associates with the influence to help him get a better-paying job.

"I wish, I hope. But if things go on too long like this, maybe my beloved will be married to another," he says.

To be sure, Saudi Arabia offers comparatively generous social services, including free health care and education for all citizens. Government employees enjoy much higher wages, early retirement with good pensions, and other perks. Charities also offer support -- such as a June 29 mass wedding in Jeddah thrown for 1,200 Saudi men and women too poor to wed.

But all that largesse may be taking a toll on the kingdom's finances. Already, the Saudi government is forced to devote nearly 40 percent of its budget simply to paying wages, economist John Sfakianakis at Banque Saudi Fransi in Riyadh says. "They can't keep creating $130 billion spending packages," he warns. "They can do it for another few years. But I don't think it is sustainable."

Beyond handing out money, economists told me, Saudi Arabia and most other Gulf countries must make two key changes to their economic policy.

First, they must stem the flow of cheap migrant labor that is driving wages down and driving Saudis out of the private sector (foreigners make up more than  half of the work force, and the number of foreigners receiving work permits in Saudi Arabia annually actually doubled over the past few years).

Second, and even more importantly, economists say, Gulf states and Arab states overall must make a priority of creating more high-skilled, high-wage jobs for the millions of young Arabs coming down the demographic pipeline. "The economy has to structurally shift from a menial one to... one of higher skilled jobs that have a higher salary," Sfakianakis says.

None of which is to say that Saudi Arabia is on the brink of revolt. No Saudis I talked to in Riyadh and Jeddah -- two cities away from areas of Saudi Arabia's minority Shiites, who often have more grievances against the government -- say they could imagine a bottom-up revolution in Saudi Arabia. A "Day of Rage" called in March for Saudi Arabia fizzled.

But Zamel, the businessman, says few Arab leaders would be willing to test the support of their people by making tough short-term reforms for the long-term economic good -- such as throwing unneeded Saudi workers off the government payrolls to make the economy more productive.

In the end, though, handouts alone won't cut it with the growing numbers of Arab young people, says Diamond, the U.S. democratization analyst. "Look at the rate of population growth -- you look at that and wonder how that is going to be sustainable indefinitely. I think it's a misconception to think all people care about is a certain level of income," he said. "Jobs provide dignity."

Omar Salem/AFP/Getty Images

Dispatch

Waltzing Past the Graveyard

Austria may have buried the final heir to the Habsburg crown on Saturday, but the empire's political culture is far from dead.

VIENNA — On Saturday, July 16, central Vienna assumed the bearing of a costume drama, as Austria's democratically elected leaders, members of the European aristocracy, church representatives and military regiments in historic dress assembled in St. Stephen's Cathedral to pay their respects to the House of Habsburg -- or, more specifically, to Otto Habsburg -- Lothringen, son of Austria's last emperor, who died two weeks ago at 98. He was born in Vienna on the cusp of World War I -- the conflict which put an end to his family's long-lived empire.

But the nation still focused its undivided attention on his funeral: indeed, the public broadcaster ORF covered the funeral for nine straight hours. The viewers at home, and the 1,000 guests invited to St. Stephens -- including the Austrian President Heinz Fischer, Chancellor Werner Faymann -- bore witness to formal funeral rites that may never be practiced again. They listened intently as representatives from the Vatican offered their condolences on behalf of Pope Benedict, and Cardinal Christoph Schönborn pronounced a solemn homage to the Habsburg family. A part of the audience then marched through the city center, past a cordon of tourists -- some bewildered, others in awe - toward the Imperial Crypt. There, the Master of Ceremonies knocked three times on the door before the monks inside opened it to make way for the coffin.

All this ceremonial pomp, however, was not a mere exercise in nostalgia; it was a tribute to a past that never really died. Yes, Vienna is no longer a world capital -- the ubiquitous portraits of the emperors have all been packed away, but Habsburg political culture (including some of its pernicious aspects) is still very much alive.

From the moment of its establishment in 1438, the House of Habsburg was never a modern centralized nation-state, but rather a multi-national empire that left its mark not only on Austria, but across the continent. The most concrete reminders of its rule -- in cities from Lviv to Warsaw, Prague to Sarajevo -- are the many remnants of Habsburg architecture in the form of train stations, schools, and government buildings.

But it is the Habsburg's animating political philosophy -- informed as it was both by hierarchy, and tolerance; authority, and plurality -- that is its most significant legacy. The nations subject to Habsburg rule earned the privileges of law, but were also forced to learn the caprice of imperialism, most prominently in the form of special privileges for a German-speaking minority, and the strict, unquestioned, power of the Roman Catholic Church.

The Habsburg indulgence of the Catholic Church, and its anti-Enlightenment and anti-Protestant fervor, led to cruelty across the continent. Protestant aristocrats were routinely beheaded, their heads and hands displayed in public as warnings to others. (In Prague in 1621, for instance, after the Habsburg regime quelled an incipient reformation, the Catholic rulers ordered that a Protestant city official be nailed to the gallows by his tongue and left to hang there for twelve hours.) Subjects of the Habsburg crown who practiced the wrong denomination of Christianity were often summarily disowned of their property. (Indeed, most of the opulent baroque palaces in Vienna that today attract tourists were built with the fortunes the Catholic aristocracy stole from Protestants.)

The Habsburgs also were Europe's major bulwarks against the advance of democracy. In the 19th century, the House of Habsburg continued to advocate a feudal notion of Europe, with its appointed frontman, Chancellor Klemens Wenzel von Metternich, spying eagerly and repressing any and all potential disruptions from the empire's burgeoning nationalists and democrats.

And yet, despite these reactionary traits, Habsburg monarchs also at times displayed forward-looking policies of cosmopolitanism and tolerance. These monarchs reigned over a multilingual and multinational empire, and they largely refrained from stoking anti-Semitism. Islam was declared an official religion in Austria in 1912.

Unfortunately, the Austria that buried its last heir to the Austro-Hungarian Empire on Saturday sometimes seems more inclined to heed the repressive, rather than the liberal, aspects of its imperial past. Austria, of course, is no longer as empire, but a small country in the European Union. Economically, it is one of the EU's richest countries and has long been an AAA-rated country, according to the OECD. Its infrastructure ranks sixth, and its overall competitiveness ranks 18th in the latest Global Competitiveness Report by the World Economic Forum. Banks like Erste Bank and Raiffeisen, insurance companies like the Vienna Insurance Group, and telecommunication companies such as A1 control large market shares in Eastern Europe.

And yet, while Austria celebrates its economic success, it has abandoned any pretense of international responsibility or far-sighted politics. Where the Habsburgs cultivated cosmopolitan virtues and European ties, Austria's political class today shuns cooperation with their neighbors. On the contrary: In modern Austria, party and fraternity allegiances have replaced the dynastic affiliation of the former days, and the spirit of Metternich has seen a certain renaissance in the past decade.

Indeed, when the political establishment is not indulging the nation's far-right radicals - as the conservative People's Party did by forming a national coalition with Joerg Haider's Freedom Party earlier this decade - it has tended to settle on Grand Coalitions between the main conservative and social democratic parties, governing sluggishly, and partly without accountability, on the basis of consensus and lazy populism. The important issues surrounding the integration of foreigners are currently under the sole purview of the law-and-order obsessed ministry of interior. The current grand coalition controls the public broadcaster and entertains close relations with political tabloids by offering them government money. And since most Austrian media organizations belong to two players on the market, there isn't much pluralism of public opinion. Civil society initiatives on human rights or education are tolerated, but their ideas don't get far with the risk-averse political establishment. The problem is compounded by the lack of a "Freedom of Information Act", which stifles investigations and leaves a large share of the public sector unchecked -- a problem which politicians don't seem in much hurry to solve.

Like the Habsburgs in their final days, Austria's political class is evidently fatigued, unable to stimulate innovation and to tackle overdue social reforms. Citizens with a non-Austrian background are severely underrepresented in political and public life, a problem that no one in the government seems concerned about. Although Vienna is home to immigrants from all around the world, and especially from parts of the former empire, cosmopolitanism is  absent in politics.

Instead, right-wing opposition leaders hold sway over social and international issues. Heinz-Christian Strache, successor of the right-wing maverick Jörg Haider, who died in a car accident in 2008, has rolled out a modern-day counter-reformatory campaign, promoting slogans like "pure Viennese blood" or "being at home; without Islam."

Mr. Strache often poses with a cross in his hand, alluding to the sermonizers of the Catholic Counter-Reformation. He protests the construction of mosques in Austria, and presents himself as a one-man fortress against Islamic intruders. Many Austrians find his message appealing: Strache's party has gained 26 percent in the Viennese municipal elections last year.

Contemporary Austria has a particular lack of fellow feeling for many of its neighbors, despite the fact that no other country has seen a higher per-capita profit from recent EU enlargement rounds. Not once since its EU accession in 1995 has a majority of Austrians declared the European Union to be "a good thing." Austrian companies establishing trade ties in Eastern Europe have benefitted until now from the region's shared cultural ties, but the economic success is being progressively poisoned by Austria's inward-looking general politics.

This anti-EU sentiment prevails even in the upper echelons of the political establishment. Three years ago, Chancellor Werner Faymann, a Social Democrat, wrote a letter to the editor of the Kronen Zeitung, an influential political tabloid, announcing his party's farewell from the pragmatic EU policies it had pursued until then. Faymann wrote that "any future change in the EU Treaty that touches Austrian interest will be put to a referendum in Austria." And Vice-chancellor Michael Spindelegger, of the conservative People's Party, recently criticized the proposed EU budget in polemic terms, calling it a "horror-budget."

What leadership Austria has shown in Europe has come in the form of negativity. Vienna made a prominent effort earlier this decade to block Turkey's EU accession process. Recently, the Financial Times Deutschland called Austria a "Griechenland-Scharfrichter" (Greece's executioner) because of the Austrian government's remarkably harsh pronouncements on the Greek economy.

To be sure, Austria will not return to monarchism. But the opulent display of Habsburg imagery surrounding the funeral in Vienna betrays more than a historical interest in bygone days. It is, instead, an indication of a country mournfully obsessed with the symbolism of the past, the better to avoid the politically pressing questions of the present.