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Egypt's Path to Economic Growth: A Focus on Youth Employment


Youth unemployment is arguably one of the largest problems currently facing Egypt. This has been a cross-generational issue for Egypt, which witnessed a historical low of 20 percent in 1999 before stagnating close to 30 percent from 2012 to 2017. Despite a reduction to around 25 percent in 2021, the most recent year for which figures are available, this still sits well above the global average of 17 percent; and for countries such as the UK, the comparable figure is just 10 percent.


Whilst the impact of this is partially economic, as having a significant portion of the labour force out of work will damage GDP, it also has other ramifications. Undoubtedly, the primary motivation for the Arab Spring protests boiled down to high levels of unemployment within the MENA region. This is significant as issues around finances and unemployment have once again surfaced within the region, as seen in a new wave of protests in Algeria, Sudan, Iraq, and Lebanon. Moreover, issues of youth unemployment are particularly pertinent as the youth appear tend to be the drivers of revolution and social change. Undoubtedly, the youth’s power to organise protests and discuss collective grievances also outstrips that of older generations, as technological literacy is generally higher amongst this group.


This article examines three ways in which Egypt can hope to reduce its youth unemployment levels. This includes encouraging foreign investment in the country, increasing education, and removing barriers to female participation in the labour force. As part of this, the article also measures taken by the Egyptian government with respect to the extent that progress has been made.


Encouraging Foreign Investment


One measure which the Egyptian government could pursue in order to bring down youth unemployment is seeking to attract foreign investment into the country. This can take several forms including foreign direct investment (FDI) and investment in infrastructure projects. However, it is important to note the potential detrimental impacts that this may have on employment practices. This includes the fact that it may lead to increased automation and labour-saving technologies. Despite this, if done responsibly, such foreign investment can be an effective tool, as researchers focusing on other developing countries found that increased FDI can in turn contribute to a higher employment rate for the host population. The benefits of infrastructure investment are even more evident, as the set out by the Asian Development Bank which stated that such investment helps to create additional jobs and bolster economic activities.


Egypt has already shown an awareness of the need to attract FDI, setting out its ambitious aim to be attracting USD 10 billion annually, in four years’ time. As part of this, Egypt has already begun passing regulatory reform laws including new laws around companies, bankruptcy, and customs. These reforms are designed to offer incentives to investors, streamline procedures, and better codify the rules around foreign investment. In addition to this, Egyptian authorities can be seen to be moving towards cracking down on endemic corruption. Here, the country has adopted a new anti-corruption strategy. This strategy seeks to improve measures of accounting and accountability in business conducted in the country, in addition to reinforcing the pre-existing legal codes which address the problem. Despite this, these measures are yet to be reflected in perceptions of corruption, with Transparency International’s corruption index showing little change in score in the past decade. If Egypt continues to fail to improve this perception, the amount of FDI in the country which is required to resolve youth unemployment issues is unlikely to materialise.


Despite this, Egypt has had some success in attracting investment in recent years, with regards to both FDI and foreign infrastructure projects. This has been seen in key investments by the British International Investment, an institution that has invested more than USD 4.5 billion into African companies, which they suggest has created over 32,000 jobs across Egypt. As Figure 1 demonstrates, this as part of a broader trend of Egypt gaining an increased share of FDI, despite the international levels of investment stagnating. In addition, strides have been made in international collaborative infrastructure projects, including major Chinese investment in Egypt’s new administrative capital; China’s state owned ‘China State Construction Engineering Corp’ providing USD 15 billion towards this project. In the short term, this investment is set to provide construction and engineering jobs for young Egyptian. In the long term, the investment will help to bolster the Egyptian technology sector. A similar investment is seen in the Dabaa nuclear power plant, for which Russia is providing a USD 25 billion loan.


Improving Education


One of the key drivers behind the youth unemployment experienced by Egypt is a lack of opportunities for education. Former director of the NGO Education for All, Pauline Rose has described how for the developing world, the root cause of issues around youth unemployment is a failure in education standards which provide basic skills such as literacy and transferable skills such as teamwork and communication. In Egypt, this is evidenced by statistics which show that over half of Egyptian students so not meet the lowest standards in international learning assessments. Moreover, if an education system is failing at this level, it means the base knowledge never exists for young people to develop technical and specialised skills, which have and will become increasingly crucial within the modern world.


Egyptian policymakers are making steady inroads to addressing the country’s shortcomings with regards to education standards. The most recent budget, despite a backdrop of economic turmoil prompted by the Ukraine crisis, has committed to increase investment in more classrooms, teachers, and affordable schooling. Also among this is an increase in educational spending for technology and science, which should help to equip young people with more skills to tackle an increasingly technical world. Other key initiatives have also emerged including the Tatween Misr Development, which aims to create a college town. This initiative combes entrepreneurship, innovation, and education to strengthen Egyptian further education prospects, working closely with US and European institutions. These initiatives have been reflected by the marked increase in enrolment in Egyptian secondary schools, as evidenced by figure 2.


Increasing Female Labour force Participation


Youth unemployment within Egypt should also been seen as a gendered issue, with women suffering from higher rates of unemployment beyond what is experienced by their male counterparts. This is shown by Figure 3, which indicates that 82.1 percent of non-student female youth are out of the labour force. In addition to this, women generally stay unemployed for longer than men, have less avenues for conducting their job searches, and are primarily concentrated in the public sector. Addressing these problems will be crucial for the wider economy in Egypt, as women represent half of the country’s potential labour force, with measures to support and encourage young women into work being key to reducing youth unemployment.



The Egyptian government has already shown a willingness to combat this problem, which is foremost seen in the centrality of the pledge to enable "women’s economic empowerment through capacity building, entrepreneurship, and equal opportunities for the women’s employment in all sectors" according to the Egyptian Vision 2030 plan. Specific legislation has also aimed to address this, with the 2014 constitution guaranteeing equal opportunities to all citizens and Egyptian labour laws prohibiting wage discrimination on the basis of sex. Furthermore, in 2019 the government passed new legislation which introduced a quota of 25 percent of parliamentary seats to be held by women. Despite such reforms, there is progress to be made in this area, as the constitution maintains a list of 30 jobs which are forbidden to women. These jobs are restricted on the basis of a perceived harm to women’s health and/or morals. Moreover, the impact of these reforms have yet to filter down to societal level. A World Economic Forum report finds that Egyptian women hold only 7.4 percent of leadership positions and the average income for women is 24 percent lower than that of their male counterparts. Whilst these are wider trends, it suggests that Egypt has more work to do in incentivising young women to join the labour force.


Conclusion


Egypt does appear to be making strides in enticing investment from foreign markets and improving the standard of education within its young population, as it seeks to redress the issue of high unemployment. Whilst it has not yet filtered down to societal levels, and many issues remain, Egypt does seem to have a positive trajectory when it comes to enticing young women into the workforce.

The issue here is that policy improvements will take an extended period to filter into tangible improvements that are reflected in data. Efforts around attracting investment, education and encouraging female labour force participation must all be sustained over a long period of time – which may prove problematic given the lack of short-term results. Regardless, the incentive is there for Egypt to improve youth employment. This is vital as without high levels of youth employment, there will be a drop in morale and the country will be unable to achieve its economic potential. Moreover, as previously demonstrated, high levels of youth unemployment are detrimental to the security situation.

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