Unemployment in Egypt drops to lowest level since 2010

Nesma Nowar , Thursday 8 Mar 2018

Unemployment has dropped to its lowest level since 2010, but structural problems in the job market persist

File Photo: Unemployment in Egypt (Ahram)

Egypt’s unemployment rate dipped to 11.3 per cent in the fourth quarter of 2017 from 12.4 per cent in the same period a year earlier, the lowest rate since December 2010, figures from the Central Agency for Public Mobilisation and Statistics (CAPMAS) show.

President Abdel-Fattah Al-Sisi has pledged to cut unemployment to 10 per cent over the next few years, a target that will require higher levels of economic growth.

Egypt’s economic growth rate continued to improve for the fifth consecutive quarter to record 5.3 per cent in December 2017, its highest since 2010, according to the Central Bank of Egypt (CBE).

The decline in the unemployment rate, accompanied with a decline in inflation, has helped Egypt improve its position on US investment firm Bloomberg’s Misery Index from the second-most miserable country last year to the fourth this year.

“The national mega-projects that are currently underway have helped absorb a big portion of the workforce, especially in construction,” said professor of economics at Ain Shams University in Cairo Yomn Al-Hamaki.

However, Al-Hamaki said that women’s participation in the labour market was still weak and there were larger problems including segregation and wage disparity.

“Eleven per cent is still high for unemployment,” Al-Hamaki told Al-Ahram Weekly. She added that a main challenge now was maximising the benefit Egypt could take from its human resources to enhance competitiveness.

Professor of economics at the Al-Sadat Academy in Cairo Ihab Al-Dessouki agreed, saying that the mega-projects, mainly in construction, had helped the recent drop in the unemployment rate. But the number of industrial projects was still small, he said.

Planning Minister Hala Al-Said said this week that the construction sector had helped provide around 3.7 million jobs, representing 20 per cent of workers in the domestic market. She added that the sector was expected to achieve 12 per cent growth in the upcoming fiscal year.

Al- Dessouki said that the state should set up more industrial projects, provide better training for state employees, and link educational outcomes with labour market demands to address unemployment.

World Bank Country Director for Egypt, Yemen and Djibouti Asad Alam said that Egypt needed to provide around one million jobs a year to address unemployment.

He also flagged up the weak participation of women in the labour market as a challenge, saying that should the level of women’s participation in the labour market in the Middle Eastern countries increase, the GDP of those countries could also increase by some 44 per cent.

Alam’s comments came during his participation in the Egyptian Policies and Job Creation for Youth seminar organised by the Egyptian Centre for Economic Studies (ECES) last week.

Alam said that providing jobs for young people in Egypt was related to achieving macroeconomic stability, an investment-friendly environment, and a labour market that could achieve competitiveness and efficiency.

Christine Hoffman, a skills development specialist at the International Labour Organisation (ILO), said that Egypt lacked coherent job-recruitment services, which made it hard for young people to find jobs.

She also referred to the problem of the rise in the rate of informal employment within the formal sector through temporary contracts and low wages.

ECES Director Abla Abdel-Latif said that unemployment was a problem that needed non-traditional solutions, adding that Egypt was one of the few countries that have high unemployment rates among university graduates.

In the first quarter of 2017, Egypt’s labour force was estimated to be 29.14 million, increasing by 79,000 since the fourth quarter of 2016. Young people (aged 15-29) made up 79 per cent of those unemployed in May 2017.

Though the drop in the unemployment rate might still not be sufficient, some economists see the recent successive declines as a positive trend that could pave the way for achieving single-digit rates.

Egypt has embarked on a bold economic reform programme that has included cutting energy subsidies and imposing new taxes. It also floated its currency in November 2016, before it clinched a $12 billion loan deal with the International Monetary Fund.

*This story was first published in Al-Ahram Weekly  

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