Young Workers and the Labor Market in Egypt: Persistent Inequality

A significant feature of demographic transition in Egypt over the past few decades has been the appearance of a youth bulge in the population pyramid, resulting from declining child mortality coupled with unchanged  fertility  rate.

Youth (ages 15–34) as a proportion of the population increased  from 32.7% in the 1980s to 37.6% in 2006. Their percent from the population declined from 2012 to 2018, reaching 27.6 million, representing around a third of the total population (31.2%) . The decline seems to be driven by the drop in the shares of the intermediates age categories  (ages 20–24 and 25–29)  (Amer & Atallah, 2019). Despite this decrease, however, young people continued to represent  a substantial demographic weight that constitutes a pressure on the labor market. Although young people were consistently better educated than their elders (Assaad & Krafft, 2017), this did not translate into higher rates of labor market participation.

Figure 1: Percentage of youth ages 15–34 in the total population, 1988–2018

Source: Amer & Atallah, 2019

Features of the youth labor market in Egypt

The labor market in Egypt shows a persistent gap between males and females, particularly among youth. It is estimated that nearly two-thirds of young males are involved in the labor market while young females’  participation did not exceed 17% in 2018. Overall youth participation in the labor market declined from 2012 and 2018 and among young women ages 20–24 especially, pointing to delayed entry to the labor market. In contrast, participation by females ages 15–19 increased, suggesting that young women want to start working after concluding basic or secondary education (Amer & Atallah, 2019; Kraft et al., 2019).

Figure 2: Participation of youth ages 15–34 in the labor market by gender, 1998–2018

Regarding the impact of educational attainment on entry to the labor market, findings of the Egyptian Labor Market Survey in 2012 and 2018 pointed to declining levels of participation by young men of all educational levels. Among young women, participation declined for those with a secondary education or higher, while it increased among illiterate young women.

Although the data shows declining overall unemployment, the rates vary widely among youth depending on factors like age, gender, education, and economic level. Unemployment among women ages 15–34 is four times that of men in the same age group (32% versus 7.7%). Particularly notable as well is the rising unemployment among younger aged youth. The Labor Force Survey and the Labor Market Panel Survey found that unemployment was especially high among young men ages 15–19, whereas among women of the same age group unemployment had declined. Youth unemployment in Egypt is concentrated among university graduates (22%), and particularly among women (Amer & Atallah, 2019; Krafft et al., 2019). Unemployment among female university graduates is three times the rate of male graduates.

More young people working in the informal sector (without a written contract) means more of them are working in inadequate and at times unsafe conditions. Poor labor conditions are thus a feature of the youth labor market. Most young people (75.7%) do not have a labor contract, according to the results of “School-to-Work Transition Survey” conducted by the International Labor Organization (Barsoum et al., 2014).

Another aspect of the quality of the youth labor market is the extent to which young people’s qualifications fit their jobs. It has been found that 47.7% of young people work in jobs that are not commensurate to their education. When overqualified youth work in such jobs, it means that they are making less than they could and are not making optimal use of their productive capacities. Young women are also overrepresented among youth working as unpaid family workers, occupying such jobs at twice the rates of their male peers (Barsoum et al., 2014).

In the labor economics literature, it is commonly known that longer unemployment durations negatively affect the probability of finding a job later on and the time it takes for young people to enter the labor market is an important indicator of the market’s ability to absorb new entrants. The Egyptian Labor Market Survey of 2018 found that among the currently unemployed, the average duration of the most recent unemployment was longest among those with a secondary education—3.9 years (Amer & Atallah, 2019).

Impact of the Covid-19 pandemic

How does this picture stand after the COVID-19 pandemic? The most recent estimates show that almost 88% of young people ages 15–24 and 79% ages 25–34 reported that their wages had declined because of the pandemic, particularly in rural areas. One-third of young people ages 15–24 and 28% ages 25–34 lost their jobs—a higher rate than older age groups (CAPMAS, 2020).

Youth difficulties in entering the labor market

Declining participation in the labor market is one of the most important challenges facing young people, particularly youth ages 20–24, the most educated young people, and females. Although the gender gap in education has narrowed, the drop in labor participation among female university graduates is bigger than the gains made in university education. Women’s low rate of participation in the labor market can be explained by the paucity of jobs in the government or public sector and inadequate conditions in the private sector for women, particularly married women (Krafft et al., 2019). Research by Assaad et al. (2018a) found another critical problem to youth newly entering the labor market: the mismatch between graduates’ qualifications and labor market needs. This has served to increase unemployment among university graduates, particularly in light of the growing desire to obtain a university degree (El-Hamidi, 2020). This is in addition to the long duration of most recent unemployment among young women of all educational levels, as well as the poor quality of available jobs and the higher rates of informal employment among youth (Barsoum et al., 2014). Informal workers are more vulnerable to layoffs in time of crisis or economic turndown and to infringements of their labor rights, both of which are now evident as a consequence of the COVID-19 crisis.

Socioeconomic background of household  like parents’ education and wealth status improve access to better jobs in the formal labor market. In turn, early interventions to improve family conditions, most importantly investing in children’s education, can help to expand children’s options in the labor market when they become young adults. 

Proposed interventions

Meeting the growing expectations of workers in the future must begin by transforming the educational system and encouraging coming generations to think about non-academic career paths, with a focus on technical education and vocational training. This requires stronger effort to strengthen education and raise skills levels from kindergarten through secondary education.

With growing youth demands for good jobs, confronting the challenges to finding jobs and gender equality has become more urgent, particularly considering the fallout from the coronavirus crisis, when young people will be asked to contribute to economic recovery efforts and be equipped with the skills and flexibility necessary to successfully navigate challenges and adapt to a turbulent future. This situation creates an intense competition for jobs, particularly among highly skilled young people. Creating jobs, and especially good jobs, is therefore one challenge facing the Egyptian labor market. It is particularly challenging given that research shows that job growth in Egypt is largely dependent on informal enterprises (Assaad et al., 2018b). Many rapid-intervention measures and initiatives are thus required to mitigate the adverse impact of the crisis on the labor market. These include: developing and upgrading training centers; rapidly implementing state “mini-complex” initiatives, such as Furniture City in the Damietta governorate and the plastic industries complex in Alexandria, coupled with accommodations like affordable rents for youth; offering incentives like tax breaks to labor-intensive industries that can create new jobs; facilitating the operation of the private sector and improving the labor environment to make it more attractive; and offering facilities to small and micro-enterprises in the form of low-interest credit, the simplification of financing procedures for micro-businesses, and the expansion of outlets for their products, to open up new markets. In order to make the most of all these measures, they must be coupled with structural economic reforms of the labor market in Egypt, undertaken in parallel to these interventions.

Rising unemployment and low quality jobs are severe economic hindrances. With a large proportion of youth involved in low-wage, unstable, or informal work (Assaad & Krafft, 2020), the challenges of securing good, stable jobs are pressing for youth and especially for more vulnerable groups such as women and disabled young people. More attention must be given to the experiences of those who have higher levels of education but have lost hope of translating this into good jobs, especially young women who are withdrawing from the labor market. Better jobs for youth must be created in more dynamic economies that are able to compete globally.

References

• Amer, M., & Atallah, M. (2019). The school to work transition and youth economic vulnerability in Egypt (Working Paper Series No. 1353). Economic Research Forum.

• Assaad, R., AlSharawy, A., & Salemi, C. (2019). Is the Egyptian economy creating good jobs? Job creation and economic vulnerability from 1998 to 2018 (Working Paper Series No. 1354). Economic Research Forum.

• Assaad, R., & Krafft, C. (2014). Youth transitions in Egypt: School, work, and family formation in an era of changing opportunities (Working Paper No. 14-1). Silatech workshop, June 24–25, 2014.

• Assaad, R., & Krafft, C. (2020). Excluded generation: The growing challenges of labor market insertion for Egyptian youth. Journal of Youth Studies.

• Assaad, R., Krafft C., & Salehi-Isfahani. D. (2018a). Does the type of higher education affect labor market outcomes? Evidence from Egypt and Jordan. Higher Education, 75(6), 945–995.

• Assaad, R., Krafft C., & Selwaness, I. (2017). The impact of marriage on women’s employment in the Middle East and North Africa (Working Paper Series No. 1086). Economic Research Forum.

• Assaad, R., Krafft C., & Yassin. S. (2018b). Job creation or labor absorption? An analysis of private sector job growth in Egypt (Working Paper Series No. 1237). Economic Research Forum.

• Barsoum, G., Ramadan, M., & Mostafa, M. (2014). Labour market transitions of young women and men in Egypt (Work4Youth Publication Series No. 1). Youth Employment Program Employment Policy Department. International Labor Organization.

• Central Agency for Public Mobilization and Statistics. (2020). Impact of the coronavirus on Egyptian households as of May 2020 (Athar Fayrus Kuruna ‘ala-l-Usar al-Misriya hatta Mayu 2020). [In Arabic].

• El-Hamidi, F. (2020). Employment polarisation and deskilling of the educated in Egypt. Economic Research Forum Policy Portal.

• Kraftt, C., Assaad, R., & Keo, C. (2019). The evolution of labor supply in Egypt from 1988–2018: A gendered analysis (Working Paper Series No. 1358). Economic Research Forum.