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The Phenix Center for Economic and Informatics Studies warned that the Arab region is facing a deepening crisis in youth employment, stressing that the continuation of current economic policies without serious review threatens a “bleak future” for large segments of Arab youth.

The warning came in a report by the Center analyzing the findings of the International Labour Organization’s report, Global Employment Trends for Youth 2026, which revealed that the Arab States recorded the highest youth unemployment rate among all regions of the world.

According to the report, the youth unemployment rate in the Arab States reached 26.2 percent in 2025, more than double the global average of 12.4 percent. The number of unemployed young people in the region stood at approximately 2.6 million, and is expected to rise to 2.8 million by 2027, while the unemployment rate is projected to remain at around 26 percent in the coming years.

The Phenix Center noted that the limited recovery experienced by youth labor markets globally following the COVID-19 pandemic has stalled. The global youth unemployment rate rose again to 12.4 percent in 2025, after reaching its lowest level in two decades in 2023, bringing the number of unemployed young people worldwide to 67.3 million. The Center pointed out that young people are now more than three times as likely to be unemployed as adults, highlighting the growing difficulty faced by new labor market entrants in securing their first job.

The report identified another particularly concerning indicator: the proportion of young people who are not in employment, education or training (NEET). This rate reached 32.4 percent in the Arab States in 2025, meaning that nearly one in every three young Arabs is outside both the education and employment systems. This amounts to 11.6 million young people, a figure expected to rise to 12.2 million by 2027. The Phenix Center warned that prolonged exclusion from education and employment leads to greater loss of skills and confidence in institutions, making it increasingly difficult for this group to return to economic activity over time.

One of the report’s key findings is that higher education does not provide a guaranteed pathway to employment in the Arab region. On the contrary, the unemployment rate among young people with university degrees stands at approximately 25.6 percent, compared with only 8.6 percent among those with secondary education and 9 percent among those with basic education. The Phenix Center attributed this paradox to the limited capacity of Arab economies to generate jobs that match young people’s increasingly higher levels of education, amid the continued reliance of these economies on sectors with limited value added.

The report also revealed a sharp gender gap in Arab labor markets. Globally, the rate of young women who are not in employment, education or training stood at 27.4 percent, compared with 13.1 percent among young men. This gap is even wider in the Arab region and North Africa due to unpaid domestic care responsibilities, inadequate childcare services, discrimination in the labor market, and limited access to safe transportation. The Center cautioned that the narrowing of the gender education gap in many Arab countries has not yet translated into comparable economic gains for women.

The Center warned that the rapid technological transformation, particularly the rise of artificial intelligence, is entering Arab labor markets that already suffer from deep structural imbalances, potentially making its impact on young people more severe than in other parts of the world. According to the UN report, approximately 6.1 percent of jobs held by young people globally are highly exposed to the effects of artificial intelligence, and around 5.6 million young people could lose their jobs if just 10 percent of these jobs were displaced.

The Center noted that medium-skilled jobs, including clerical and administrative positions that have traditionally served as an entry point for Arab youth into the labor market, are among the categories most vulnerable to decline.

The Phenix Center stressed that the persistence of these imbalances affects more than just labor markets. It also delays young people’s economic independence, perpetuates poverty across generations, widens social inequality, and undermines confidence in institutions and public policies, increasing the likelihood of social and political tensions. The Center emphasized that these challenges cannot be addressed through security measures, as they are fundamentally an economic and rights-based crisis requiring structural solutions.

The Phenix Center called on governments across the Arab region to move away from treating youth employment as a limited sectoral issue managed primarily by labor ministries, and instead make it a central objective of all economic and investment policies. This should include evaluating such policies based on their actual ability to create decent work opportunities, rather than focusing solely on overall economic growth rates.

The Center also called for expanding social protection to cover new forms of work, investing in high-value-added sectors such as healthcare, technology and engineering, and developing flexible education and training systems capable of keeping pace with rapid economic and technological transformations.