Originally posted March 2010
Egypt, a country of 72.5 million, is experiencing a “youth bulge.” In fact, according to Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS), since 1976, approximately 80% of the population has been under the age of 45. In 2006, 48.2% of the population was between the ages of 15 and 45. Today, 80% of those who are unemployed are youths. Labor migration often is seen as a solution to the unemployment situation in Egypt. However, migration cannot fix the underlying problems that are chiefly responsible for it.
Egypt’s Precarious Labor Market
According to a 2006 survey, 75% of men reported that it took up to five years to acquire their first jobs, though this represents a decrease from 1998 reports, which indicated an eight year average to secure one’s first employment.
Perhaps more important than the size of the total population are the educational and sectoral breakdowns of the population and labor force. Thirty percent are employed by the public sector and 70% by the private sector, with only a tenth of the latter group employed by the formal private sector. One hundred million new jobs will need to be created regionally by 2020 to absorb the increasing youth labor force, which is equal to the total job creation of the preceding 50 years. The magnitude of this increase is reducing the opportunities within the Gulf region.
Although Europe only absorbs 4% of Egyptian labor migrants, younger migrants are increasingly turning to Europe with the assumption that one year there is better than ten years in the Gulf — the traditional destination for migrants from labor exporting countries such as Egypt.
The above-mentioned statistics paint a precarious situation for Egypt’s labor market. What seems to be at the heart of the matter is a gross mismatch between the skills of new graduates and the types of jobs that are available. Quality education is a major contributor to gainful employment. Egypt suffers from overcrowding in its public schools and the poor quality of education, which often make it necessary for students to obtain private lessons in order to pass exams and waste the opportunity of using schooling to acquire employable skills.
Studies show that problem-solving, rote memorization, arithmetic, and literacy all have proven to be major areas of concern within the Egyptian educational system, creating a labor force that is unqualified for many positions both domestically and abroad. The overcrowding of the public sector and the queuing for jobs exacerbates the unemployment rates within the domestic labor market. Hence, rising unemployment rates in Egypt are primarily among university and technical degree holders. Furthermore, the size of the labor force is unimportant if its quality is uncompetitive and thus ill-suited to both domestic and international labor needs. This poses a serious problem for graduates and a rather large predicament for the government.
The rising costs of housing — spurred by the increase in oil money coming into the country — has made it difficult for younger people to buy a house. This is exacerbated by unsatisfactory credit markets, which often fail in their basic purpose. The inability of Egyptian youths to afford to live on their own causes many of them to postpone marriage. This, in turn, makes them depend on the older generations for an extended period. This has particular implications for women, who are seen as the responsibility of their families until marriage, and as a result, are bound by the rules of the household, which often include restricted movement in an effort to preserve reputations.
In contrast, structural change in Europe in the form of the shift from agriculture to services has resulted in an increase of jobs. A declining population growth rate and an aging population open up opportunities for migration. It is expected that as a result of these two factors approximately 1.15 million temporary migrants will be needed to fill the job gap within the European Union in 2010, increasing to 4.9 million in 2015 and 11.8 million in 2020.
Is Labor Migration the Solution?
The benefits of labor migration are often assumed to be financial, with remittances being the predominant issue, and often a motivating cause of migration. Studies indicate, however, that the benefits of remittances may be less than previously anticipated, especially with regards to investment. Remittances are often not invested in the home country, but instead spent on immediate consumption.
While labor migration may prove to be an immediate solution to the problem of the youth bulge and unemployment, the solution is only temporary. In order to alleviate the problems of the labor market, the root causes need to be addressed. As mentioned above, the skill mismatch between those entering the labor force and the demands of the domestic labor force is the key problem. Labor migration is not, however, the panacea that some may perceive it to be. The skills possessed by migrants must match the needs of the receiving countries. However, given the previously mentioned problems with the quality of education, this could result in fewer opportunities than necessary to alleviate the burden on the Egyptian labor market.
Moreover, much of the migration that occurs — particularly migration to Europe — consists of the illegal migration of unskilled workers. This is problematic for a number of reasons. First, illegal or “irregular” migration increases xenophobia and stereotypes in the host community, which can result in more restrictive laws in the host country. Second, illegal migration does not take into account the needs of the home country. In this form of migration, the matching of skills to needs does not take place. Third, temporary migrants, even if legal, are vulnerable to economic and political crises that may arise. This was exemplified during the first Gulf War in 1991, when thousands of temporary migrants were forced to return to their countries of origin.
The Way Forward
Addressing the many issues facing education, housing, marriage, and labor market requires several steps. The simple expansion of the private sector through privatization and encouraging competitive forces through tariff reductions, floating the Egyptian pound, and a number of free trade agreements that have been enacted since 2004 are only likely to have a limited immediate impact on alleviating unemployment and creating jobs. Initial assessments of these measures in the Egyptian manufacturing sector show that the benefits mainly have accrued to the more skilled workers while completely overlooking the poorer and lesser skilled workers.
What is still missing are more youth specific and targeted reforms, which include training programs for unemployed new graduates; micro finance programs to help trigger self-employment; and formalized assistance in job searches by the government. The success of any of these projects will depend on the involvement of the three social partners: workers, especially youth job-seekers, potential employers, and the government through formalized modalities of dialogue and action.
Attempts to tackle this issue in a trans-migration framework also can be formulated within the Euro-Mediterranean Neighborhood Action Plans currently under negotiation, which include technical assistance on employment policymaking and capacity building to manage labor markets while focusing on the promotion of youth and female employment. Formalized migration actually may help to develop skill sets that will fill the void within the home country upon return — essentially creating a brain drain. However, the success of any such formalization will be based on the laws that govern and the way in which youth can access and benefit from these partnerships.
While labor migration may provide an immediate partial solution to the youth bulge and unemployment rates in Egypt, it is only a temporary one. Greater attention needs to be paid to the deficiencies within the domestic labor market as destination markets are unlikely to absorb the entirety of the surplus labor originating in Egypt. As indicated above, more target programs and greater cooperation between businesses (local and abroad), education and training authorities, and potential workers must take place in order to tackle the chronic skill mismatch problem underlying the phenomena of unregulated migration.
. CAPMAS, Statistical Yearbook, 2006 and 2007.
. Ragui Assaad and Ghada Barsoum, “Youth Exclusion in Egypt: In Search of ‘Second Chances,’” Middle East Youth Initiative Working Paper No. 2, Wolfensohn Center for Development, September 2007.
. Jackline Wahba, “Labour Markets Performance and Migration Flows in Egypt,” in Labour Markets Performance and Migration Flows in Arab Mediterranean Countries: Determinants and Effects, Robert Schuman Centre for Advanced Studies, Cairo, October 11-12, 2009.
. Magda Shahin, “Movement of Natural Persons: Challenges and Opportunities for Egypt,” paper submitted to the WTO Symposium on “Mode 4 of the GATS — Taking Stock and Moving Forward,” Geneva, September 22-23, 2008.
. Magda Shahin and Akram Bastawi, “Trade in Services Through Temporary Presence of Natural Persons: A Win-Win Formula for Egypt and the EU,” Egyptian Center for Economic Studies, Working Paper No. 131, April 2008.
. Mona Said and Shireen Al-Azzawi, “Trade Liberalization, Inter-Industry Wage Differentials and Job Quality in Egyptian Manufacturing,” Gender and Work in the MENA Region Working Paper Series, Population Council, No. 6, 2009 and Shireen Al-Azzawi and Mona Said, “Poverty, Pro-Poor Growth and Trade Liberalization,” paper Submitted to African Econometric Society’s 15th Annual Conference of Econometric Modeling for Africa, Cairo, July, 2010.
Rising unemployment rates in Egypt are primarily among university and technical degree holders.