Saturday,21 October, 2017
Current issue | Issue 1210, (21 - 27 August 2014)
Saturday,21 October, 2017
Issue 1210, (21 - 27 August 2014)

Ahram Weekly

Deceptive stability

Egypt’s unemployment levels may be stable but that is little consolation for people looking for work, writes Niveen Wahish

Economy
Economy
Al-Ahram Weekly

Unemployment in Egypt was relatively stable at 13.3 per cent during April and June 2014, according to figures released by the Central Agency for Public Mobilisation and Statistics (CAPMAS) earlier this week. The rate of unemployment fell by 0.1 per cent compared to the first quarter of the year.    

However, for many people such figures are deceptive. Moustafa Mohamed is a tourist guide in Aswan. He has been without work for almost three years. For him, the figures are meaningless.    

“Most people in Aswan are unemployed,” he said, explaining that they depend either directly or indirectly on tourism, a sector that has yet to recover from the political instability surrounding the 25 January Revolution.    

“Businesses like hotels, bazaars and even horse-drawn carriages have all come to a standstill,” he said, adding that others have been indirectly affected, such as those providing catering or laundry services for hotels. “There are people who lived on washing tourist buses. They are also jobless now,” he said.     

Tourism has been suffering since the 25 January Revolution. The sector’s revenues, which reached US$12.5 billion in 2010, with almost 15 million tourists, fell to around US$6 billion last year.    

Mohamed described how many of his colleagues were taking any jobs they could get their hands on, “some working as salespersons or driving taxis to make ends meet.” He told of cases where people have taken their children out of school because they cannot afford the tuition or are not able to pay their monthly water and electricity bills.     

“Some are leaving for Cairo where there are more opportunities for odd jobs, and others are trying their luck abroad,” he said. “Some have travelled to the Gulf, investing plenty of money in plane tickets and accommodation, hoping to find a job yet without any luck.”    

Due to the fallout of the revolution, Egypt’s unemployment figures have risen over the past four years from nine per cent during the same quarter in 2010.

CAPMAS attributes the rise to the slowdown in labour-intensive activities such as industrial production, tourism and construction.     

While Mohamed may not be an economist, his stories sum up the situation. Inger Andersen is vice-president of the Middle East and North Africa programme at the World Bank. According to Anderson, “Unemployment in Egypt alone does not tell the whole story; instead, jobs are getting increasingly informal and insecure.”     

She was speaking in late July at the Middle East Institute, at an event marking the release of a World Bank report entitled “More Jobs, Better Jobs: A Priority for Egypt.”     

“Jobs are central for poverty reduction; therefore, worsening job quality and insecurity has accompanied the poverty story we see unfolding,” she said. The number of Egyptians living below the poverty line increased in 2012/13 to 26.3 per cent, compared to 25 per cent in 2010/11, according to CAPMAS.    

Egypt’s labour market is made up of 27.6 million people, according to CAPMAS, of which 3.7 million are unemployed. Seventy per cent of the unemployed are youths aged between 15 and 29; 70 per cent of them have some kind of higher education.    

Mahmoud Al-Khouly, director of the Social Contract Centre, a nongovernmental organisation (NGO), agreed that unemployment could not be seen as just a figure. While the post-revolution economic slowdown has increased unemployment, there are other factors that might not be directly linked to the economic situation, he said.    

Among these is education. Al-Khouly says there is a mismatch in the Egyptian labour market between skills and educational output. The government should play a greater role in providing education that gives students the basic skills needed by the labour market, he said, adding that quality technical education, in addition to more academic skills, is needed.    

Al-Khouly called for universities and NGOs to play a greater role in capacity-building and preparing students for the job market. He is hopeful that in the medium- to long-term more jobs will become available. More jobs will be created when the economy picks up and development projects spearheaded by the government get under way.    

Tara Vishwanath is the lead economist in the Poverty Global Practice of the World Bank Group and lead author of the Egypt report. Vishwanath said that the deterioration in the labour market was evident well before the present crisis. “The declining job quality is a pre-existing condition,” she said.    

She pointed out that informality has become a staple feature of the labour market in Egypt. More than half of employed workers (aged between 15 and 64) are working in informal jobs where they do not have a contract or social security, she said.     

The problem of informality was highlighted by another World Bank report issued earlier this month. The report, part of the MENA Quarterly Brief, highlighted challenges faced by Egypt and six other MENA countries, Tunisia, Iran, Lebanon, Jordan, Yemen and Libya.    

The report showed that most of the labour force in Egypt and these other countries is engaged in the informal sector, either self-employed or working in household enterprises. “These people, who are not part of the unemployment statistics, are in an even worse situation since they lack any security in their earnings. Moreover, they lack social security coverage and medical insurance and have fewer possibilities to participate in formal education and training programmes,” it said.    

Governments should support the informal sector, according to the report, by “enforcing regulations and improving access to markets and finance for firms and supporting workers by creating both safer work places and access to social services.    

“While unemployment has been exacerbated by the slowdown in economic growth, much of it is due to long-standing structural factors on both the labour supply and demand sides,” the report stressed.

In order to break the cycle, the report said, the growth rate of Egypt and the other six MENA countries needs to more than double from current low levels. Egypt’s economy grew 2.5 per cent in the third quarter of the fiscal year 2013/14.     

“Further growth sustainability can be achieved with prompt acceleration in reforms paving the way for the private sector to become a growth-driver and creator of jobs,” it said.

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