Egypt Pulse

Egypt’s unemployment rate declines to pre-revolution levels amid economic recovery

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Article Summary
Although the Egyptian government is initiating programs to encourage work in the private sector, some graduates still see unemployment as a threat to young people.

Egypt’s unemployment rate has declined to pre-revolution levels amid an economic recovery and an increase in national development projects that employ thousands of young people.

According to a report released Feb. 14 by the state-run Central Agency for Public Mobilization and Statistics, the country’s unemployment rate fell to 8.9% in the fourth quarter of last year compared with 10% in the third quarter and 11.3% in the same quarter a year earlier.

The total labor force stood at about 28 million (22.7 million males and 5.3 million females). The urban labor force reached 11.4 million, while the rural labor force stood at 16.6 million. The number of unemployed, meanwhile, stood at 2.5 million (1.45 million males, 1.05 million females).

“One of the main reasons behind the drop in the unemployment rate is job fairs organized by the Egyptian Ministry of Manpower to provide employment opportunities for young people in the private sector. Thousands of opportunities have been provided,” Ahmed el-Shami, an economist and professor of feasibility studies at Ain Shams University, told Al-Monitor.

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The unemployment rate is about the same as it was the last quarter of 2010 (8.92%), just before Egypt's January 25 Revolution of 2011.

Two months ago, President Abdel Fattah al-Sisi launched an initiative to provide a dignified life for Egyptian citizens by improving conditions in all sectors. As part of this initiative, the Ministry of Manpower initiated several job fairs, starting with Giza governorate and then Ismailia, Asyut, Minya, Beni Suef and Menoufia and is due to launch other job fairs in the rest of the country’s cities.

The initiative also includes improving health care services, developing villages in underprivileged areas and upgrading the quality of education in neediest areas.

Shami said that since January, the government has organized six job fairs in the private sector in these cities, providing 62,940 job opportunities. “People with special needs took a noticeable share of these opportunities as well and they registered a high turnout,” he added. Shami added that the government is trying to shift young people toward the private sector and entrepreneurship in order to reduce unemployment rates.

Ahmed Koura, another economist and former head of Al-Watany Bank of Egypt, said that among the reasons behind the decline in unemployment rates are huge national projects that have been recently launched in cooperation with the private sector, covering a wide range of fields, including construction, road paving and water, sanitation and electricity infrastructure.

“The government also provided loans to small- and medium-sized enterprises, which have labor intensity,” Koura told Al-Monitor.

Egypt has recently launched many initiatives and financing programs to support small- and medium-sized enterprises, according to data released by the Egyptian Micro, Small and Medium Enterprise Development Agency (MSMEDA). The programs, given by MSMEDA, cover all types of new SMEs, including industry, trade, crafts, livestock, fisheries and poultry, among others. Financing reaches up to a maximum of 2 million Egyptian pounds ($114,187) for service and trade enterprises and a maximum of 5 million Egyptian pounds ($285,469) for industrial and agricultural projects.

In accordance with an initiative launched by the Central Bank of Egypt to support SMEs, many banks also contribute to the financing of these enterprises. For instance, the National Bank of Egypt offers loans ranging between 50,000 ($2,850) and 5 million Egyptian pounds ($285,000) for industrial establishments and under 3 million Egyptian pounds ($171,000) for non-industrial establishments.

Koura said that the government also provided insurance certificates to irregular workers.

In March last year, Aman (Safety) certificates were issued by Misr Company for Life Insurance in cooperation with four banks in order to offer insurance for marginalized brackets, especially irregular workers. The certificates are sold at prices ranging between 500 Egyptian pounds ($28) and 2,500 Egyptian pounds ($143).

“These certificates also would encourage many people to work as irregular workers and thus open the way for more people to join jobs in the private sector,” he added.

Egypt’s economic reform program has been praised by international institutions, which say the process has pushed up growth rates, reduced unemployment rates and trimmed the budget deficit.

In a Jan. 25 statement, the International Monetary Fund managing director, Christine Lagarde, said Egypt has made substantial progress as evident in the success achieved in macroeconomic stabilization.

“Its growth rate is now among the highest in the region, the budget deficit is on a declining trajectory, and inflation is on track to reach the Central Bank of Egypt’s target by the end of 2019. Unemployment has declined … and social protection measures have been expanded,” the statement read.

However, Ahmed Gomaa, a 24-year-old graduate from the Faculty of Commerce at Cairo University who is now working as a taxi driver, said many jobs require having a minimum of three years of experience even if the applicants are new graduates.

“It is either this or you should have wasta (connections). That is why I have resorted to work in a job that has nothing to do with my study,” he told Al-Monitor.

Gomaa said the wasta process occurs not only in the government sector, but also in the private sector. “The government, in cooperation with the private sector, has to eliminate this and make only efficacy and potential the criteria for accepting people into jobs,” he added.

Khaled Hassan, a bank accountant, said that job opportunities are available everywhere in Egypt, but that people are lazy about searching for such work. “Moreover, many of them are incompetent and are not developing their skills. That is why they get rejected in jobs,” he told Al-Monitor.

Hassan added that young people only look for work in the government sector where there are more benefits and there is stability and that the job-seekers do not think about starting their own businesses — although the government is strongly supporting small- and medium-sized enterprises.

“It is both the responsibility of the government and the young people themselves to reduce unemployment rates. And I believe that the government is exerting all-out efforts in this regard and is working on different fronts in order to trim unemployment rates,” he added.

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Menna A. Farouk, a journalist and an editor at The Egyptian Gazette, writes about social, political and cultural issues, including press freedom, immigration and religious reforms among other topics. On Twitter: @MennaFarouk91

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