Economic Development and Security for Afghanistan

Event Report | January 27, 2010

Jobs and income generation for Afghan people are two key elements to increase development and achieve stability in Afghanistan. With a jobless rate of 40 percent (out of a total labor force estimated at about 15 million people in 2004) and 44 percent of the population below the age of 14, the issue is of paramount importance. Jobs and income generation are also relevant for the international community's efforts to tackle the Taliban insurgency in the near term. Given the widely accepted position that many "rank and file" Taliban fighters are "Taliban for economic reasons" they should be open to reintegration where economic opportunities are created. The upcoming London conference on Afghanistan on January 28 will see Afghanistan’s president unveil a plan to offer jobs, education, pensions and land to Taliban fighters who lay down their weapons as part of the reconciliation and reintegration plan.

Executive Summary

While President Karzai promises economic opportunities for the Taliban, Afghanistan remains heavily dependent on foreign aid and has few sources of income generation for the government or the people. There is certainly potential for advances in these areas in Afghanistan, in agriculture or mining for example, but it will take time to develop them and make them sustainable. In the short term, no significant improvements are expected in the labor market. Achieving some progress and stability in Afghanistan, however, is time-critical. Dwindling support for international engagement in the country highlights this urgency.

In light of this situation, the international community should focus on developing Afghanistan’s migrant labor capacity in a targeted and systematic way in order to increase the prospects for income generation in the form of remittances. The development of semi-skilled and skilled vocational sectors in line with forecast requirements of employment markets, targeting the GCC member states, could provide a near-term solution to Afghanistan’s limited economic prospects.

  • The potential of remittances to enhance economic development in poor developing nations is highlighted by the many successful examples of remittance flows to Asian countries, whose workers are based in member states of the Gulf Cooperation Council. In that context, the volume of remittances sent home is, for many developing countries, the largest source by far of external capital. In many cases migrant labor contributes considerably to the Gross Domestic Product (GDP) of recipient countries.
  • Despite the financial crisis and subsequent economic problems, economic growth prospects in GCC countries and the need for migrant labor appears to be strong over the coming decade due to large scale infrastructure projects in Saudi Arabia and the U.A.E. in particular.
  • The increasing jobless rate among nationals of GCC member countries in coming years is not likely to negatively affect migration flows from the Asian countries as the greatest need remains blue collar unskilled and low-skilled labor. Nationals of GCC countries generally target junior and senior white collar jobs.
  • Currently, the numbers of Afghan migrant laborers in GCC countries are relatively small. Afghan migrant labor has so far (often illegally) targeted the neighboring countries of Iran and Pakistan. Due to their own demographic situation and economic difficulties, both countries, however, will not be able to continue to accommodate significant numbers of Afghan migrant laborers. They are, on the contrary, in the process of returning Afghan nationals back to Afghanistan and implementing significant refugee return programs.
  • A coordinated approach by GCC countries in line with expected labor requirements would considerably enhance the stability of Afghanistan via remittances. Historically, GCC member states have shown a strong commitment to supporting Afghanistan. With the expected economic growth in GCC countries, there is the further potential for a considerable strengthening of bilateral relations and an increase in the numbers of Afghan migrant laborers to GCC countries. Such a move would quickly result in external income for Afghanistan and contribute to its economic development.
  • The large numbers of Pakistani migrant laborers in GCC countries and the role their remittances play in the Pakistani economy may lead to friction with Afghanistan if Afghan laborers in GCC countries are perceived as a competition harmful to Pakistan’s economy. A possibility to avoid such situation would be a cooperative approach based on a quota system that allows Afghanistan to profit from the increase in labor demand expected over the next years in a predictable and agreed-upon way.
  • Many international donors have given their support to the Kabul government, actively promoting vocational education and training in the context of their development programs. The next logical step is to strengthen these programs in line with needs of migrant labor markets to qualify unskilled Afghan labor force for employment opportunities.
  • Cooperation between GCC countries and the international community’s training programs in Afghanistan would help deliver migrant labor programs in a targeted and economically viable manner.