Egyptian labour market 'very promising,' capable of growth, sustainability: WEC president

MENA , Tuesday 14 May 2024

Bettina Schaller, president of the World Employment Confederation (WEC), said the Egyptian labour market is very promising, given its young population and the size of its working force.

Bettina Schaller
Bettina Schaller, President of the World Employment Confederation (WEC) speaks in the American Chamber of Commerce’s annual HR Day in Egypt.

 

These remarks came amid her visit as a keynote speaker at the American Chamber of Commerce’s annual HR Day in Egypt.

The WEC president added that the labour market constituents in Egypt are ready to embrace the shifts in the world of work.

"With a workforce of around 30 million, more opportunities for youth and women, increased labour market participation, and reforms for growth, opportunities are ripe."

Schaller pointed out that the Egyptian labour market also faces some challenges, including the unemployment level, the high proportion of refugees, and the informal economy.

She emphasized that one way to move forward is to establish a regulatory framework that would allow for diverse forms of work to coexist sustainably.

"Regulated and clearly defined types of labour contractual arrangements could deliver decent working conditions, including open-ended contracts, direct fixed-term contracts, and temporary agency work," she said, adding that there is a need to clarify what outsourcing/agency work means.

As for the broader Middle East region, she pointed out the need for appropriate regulation on diverse forms of work. "ILO Convention 181 on private employment agencies should be used as a standard to update regulation in those markets," she noted.

Schaller also stressed that job seekers should not be charged fees for employment services provided by private recruitment agencies.

According to a recent WEC research, in which more than 700 senior executives were surveyed around the world, three major trends are reshaping the labour market, including digital transformation (AI in particular), flexibility in work, and compensation.

The research found that about 92 percent of senior executives said they would need a more flexible workforce in the next two years, and 88 percent of senior executives said increasing the hiring of agency workers would be important for building workforce resilience in the same period. However, half of the organizations want to source workers from under-employed groups.

According to the research, another strategy to make recruitment practices more efficient is using new recruitment platforms to access untapped talent (33 percent) or reducing formal education requirements when hiring.

Moreover, facilitating well-managed work mobility is essential. It was found that migration can play a vital role in increasing the talent pools available to employers.

Additionally, 81 percent of respondents say that increased labour migration has allowed their organization to access talent with high levels of skills, while 78 percent said workers from abroad help fill vital skills gaps at their organizations.

Schaller mentioned that AI creates strategic uncertainty and makes it harder to predict talent needs, but the technology can also transform how organizations analyze and anticipate skills gaps – and fill them.

She added that there are legitimate concerns about how AI will be used, and the risks that it could replicate or worsen existing workplace biases.

She also stated that the WEC has developed a Code of Ethical Principles for using AI, setting out how employers can adopt AI responsibly.

"The Principles on AI also embody those set out in the WEC’s overall Code of Conduct, such as fairness, non-discrimination, diversity, inclusiveness, and privacy."

"According to our survey, 81 percent of senior executives believe that AI will force organizations to radically rethink skills and resources across large areas of the workforce, and 78 percent are concerned that their organization won't be able to train employees fast enough to keep pace with technology developments in the next three years," she explained.

Schaller emphasized that AI will not necessarily ‘replace’ a human worker, but it will serve as a hugely powerful aid to productivity.

"Randstad finds that more than half of working people believe that AI will lead to career growth and promotion, and the Adecco Group has likewise found that most workers are optimistic about AI in the workplace, while research from ManpowerGroup shows 58 percent of empowers believe AI and Virtual Reality will be job creators," she added.

"79 percent of senior executives say employing agency workers with knowledge of a new technology is an effective way to spread understanding to permanent employees, and 88 percent of organizations plan to increase the use of agency workers," she continued.

Schaller has two important meetings on her agenda during her visit to Egypt: a meeting with Egyptian Minister of Labour Hassan Shehata and another with the International Labour Organization (ILO) office in Egypt.

Regarding her meeting with the labour minister, she said she would explain the capabilities and services of the WEC, which operates in more than 54 countries.

"I will also exchange experiences and discuss work frameworks with the ministry, in addition to discussing International Labour Organization Convention No. 181, which falls under the umbrella of international labour law, and could be extremely beneficial for Egypt to ratify," Schaller said.

She pointed out that the WEC can work with Egypt on three axes. The first is to fight companies with bad practices, such as not providing contracts, salaries, and benefits to employees, and the second is to enhance the capabilities of Egyptian employees through skills development programs.

She added that she will also discuss how to support companies in the Egyptian market, which is home to many multinational companies, and by adding some regulations and exchanging experiences that can lead to more job opportunities and thus support the overall economy.

Regarding the green economy, she indicated that Egypt places renewable energy, especially green hydrogen, at the top of its priorities as the fuel of the future, by preparing development programs for cadres capable of using this technology on a large scale, which makes Egypt at the forefront of the world in this field.

She stated that the Egyptian market is a promising and attractive market for investment, in which all the ingredients for success are available, which explains why international companies are keen to invest in it.

WEC president indicated that inflation ate into people's purchasing power, and there was less good/service for the buck, while the poorest were hit the hardest. She added that pressure for more social justice, plus, skill/labour shortages once the COVID pandemic started fading, became the elephant in the room.

She emphasized that in the year 2024, inflation witnessed a decline compared to wage growth, pointing out to the importance of the level of wages and the related labour productivity and the terms of trade.

The situation is normalizing in the Western world," Schaller said, adding that the US has a higher level of productivity than before the pandemic while eurozone and UK performance has been pretty flat.

"The ECB forecasts suggest eurozone wage growth can be above 4.5 percent in 2024, above 3.5 percent in 2025. In the UK, the improvement in terms of trade makes the real growth of pay since 2019 sustainable, but there is little room for more catch-up."

The president of the WEC added that younger generations will represent a larger share of workers. "In 2024, Gen Z (anyone born between 1997 and 2012) is set to overtake the Baby Boomer generation in the full-time workforce, and Millennials will be the dominant generation in work for many years to come," she stressed.

Schaller pointed out that in many countries around the world, there's a representation gap between politicians and younger workers, and that legislators are underestimating the change in the mindset of many members of the workforce.

She added that there is substantial evidence to suggest that younger people are particularly keen to secure flexibility in their working lives.

The WCE president pointed out that policymakers need to think about the particular challenges facing younger generations of workers, such as the high levels of anxiety and mental health.

"One way for organizations to support their employees’ mental health is through career support, which can help individuals feel in control of their careers and increase their sense of empowerment," she noted.

"Policymakers around the world could bring forward rules that support the development of more flexible job markets, which helps younger workers to find the diverse and rewarding opportunities they seek," Schaller concluded.

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