The uprisings in the Middle East and Gulf in recent weeks highlight the fundamental flaws and long-term instability of the rentier state model. The model is an authoritarian and paternalistic one where, in the case of the Middle East and Gulf, oil-rich governments provide most of the jobs in the country through secure public-sector employment. They pay employees high salaries and generous benefits from their hydrocarbon revenues, which keeps their population "onside", limiting their demands for greater rights and inclusivity. However, this role, as "dispenser of wealth and privilege", also invites the "bad habits" of corruption, informality, lack of transparency and inefficiencies.
Countries such as Egypt, which have limited oil wealth compared to their neighbours, have struggled to restructure their economies and reduce unemployment. While the uprisings have not yet spread across other Gulf states such as in Qatar and the UAE, due to their high oil reserves and lower unemployment, such countries may nevertheless be storing up problems for the future if they do not address the demands of their populations and restructure their economies now.
In recent years, Gulf countries have put significant investment into education, industry diversification and partnering with multinational corporations. US and European universities and even think tanks have set up base in the Gulf to increase the variety of thought, product and work available. Dubai, for example, has in part moved away from reliance on oil revenues and into technological innovation, tourism, real estate and retail areas. But they have also faced greater economic turbulence and rising unemployment due to the recent property crash. Dubai's experience shows the limitations of a rentier system where oversight and independent processes are limited.
Governments in Qatar and the UAE have also implemented national targets to increase the employment levels of their nationals across the economy, in the hope of encouraging employers in the private sector to recruit more nationals, and to encourage nationals themselves to seek employment outside the public sector.
However, what most Gulf countries have not yet done is to develop an infrastructure that supports a smooth transition from education into employment for young people. They have not addressed the high wage differential between public- and private-sector jobs – a public-sector worker in the UAE can earn between 170 per cent and 400 per cent more money than a worker in the private sector.
Nor have they recognised that young people in these countries, many of whom have studied abroad or at international universities at home, have greater demands and aspirations than previous generations. Many young people are the first in their family to attend university, and many – including women – are putting off marriage until later in life, opting to study and have a career first.
There is not yet a level playing field in the Gulf. "It's as though you choose randomly," one female Qatari graduate said to me. "Schools don't prepare you for university and universities don't prepare you for work." Even those who feel they have made the right education choice feel it is not enough. "You have to rely on connections here to get a job," said a male university student. "Without it, you are nowhere."
How can young people be asked to make the unfair choice between high salaries and security in the public sector versus the private sector, with its lower wages and benefits? The trade-off between high pay, security and rewards in the public sector versus low pay and insecurity in the private sector is irrational and there is no incentive to persuade them otherwise.
In addition, more than 75 per cent of students in the national universities of Qatar and the UAE are women. How will Gulf economies absorb this untapped pool of motivated female graduates – and how will this educated resource be leveraged into hydrocarbon-based and traditionally male-dominated economies?
An educated, motivated, young and growing population is an asset to any country. The Gulf countries need to recognise that the demands of their young people for greater transparency and fairness in employment need to be met now if they are to ensure future stability and growth.
Increasing public-sector salaries, as some Gulf countries have done in recent weeks, is a Band Aid, an exchange for absolutist rule, and crucially misses the point of the underlying dissatisfaction, growing unemployment and the unmet aspirations of young people. It further expands the gap between public- and private-sector pay which, in the long term, is unsustainable.
The writing on the wall is clear in the Gulf – listen to your young people now, or risk storing up problems for the future.
Zamila Bunglawala is a visiting fellow at the Brookings Doha Centre.