The demographic time bomb that has been a key inspiration for the Arab Uprisings has forced job creation to the top of the region’s policy agenda. Whether oil-rich states with robust public finances or poorer economies struggling to keep their heads above water, the problem is broadly the same. Regional economies are simply not generating enough jobs to match the increasing numbers of labour market entrants.

This has got decision-makers thinking. Numerous policy briefings over many years have urged regional governments to examine their collective failure to support private sectors that are capable of driving growth and, crucially, generating jobs. Across much of the world, the most efficient creator of real jobs is the small to medium-enterprise (SME) sector. Yet in most Arab states, SMEs are in no position to play this role.

The reasons for this dismal situation are complex. Across the region, the private sector is largely dominated by family businesses. These companies are often not geared to investing in industry and other value-added sectors. Then there is the influence of the state, which in the Gulf at least, is the employer of choice for many nationals. However, as the vehicle for steering broad-based economic development, it is becoming increasingly ill-suited.

The irony is that, just when leaderships were finally absorbing the message that private sectors need to be the major job creators, the Arab uprisings intervened to restore even greater power to the state. Visibly shaken by the protests in 2011, the first response has been to ramp up public expenditure and throw money at the problem. This delivers results, but comes at a heavy price in the long term.

According to Jadwa Investment, Saudi Arabia’s public spending is now equivalent to 36 per cent of gross domestic product, compared with an average 30.1 per cent in the five years to 2008. It is time governments made a fresh start and let the private sector drive economic growth.