Youth employment issues pose a threat to Egypt’s democratic transition. Persistent high unemployment rates among youth, the increasing deterioration of the quality of jobs available with no social protection and the growth in employment informality are central policy challenges in Egypt.

The concern about unemployed youth has long stemmed from the potential political volatility of this group. In post-January 25 Egypt and amid the ensuing economic stagnation, the unemployment rate in the age group 20-24 reached 33 percent in September 2011, according to Egypt’s central statistical bureau, CAPMAS. Almost one in three young people in this age group is unable to find work. Among those aged 15-19, the unemployment rate is a high 24.4 percent.

The unemployment rate in Egypt is much higher than the global youth unemployment rate of 13 percent as recently reported by the International Labor Organization (ILO). Research has repeatedly shown that unemployment in Egypt is primarily a problem of youth insertion to labor market. This explains the fact that unemployment rates are highest at points of school to work transition. Young women are at a particular disadvantage in Egypt’s labor market. The unemployment rate among female youth aged 20-24 years is 52.8 percent (compared to 33% among male youth). While most unemployed male youth eventually find work, most young women move out of the labor force in conjunction with marriage and childbearing.

However, unemployment is not the only problem in Egypt’s labor market. There are two main issues that unemployment figures fail to capture. The first is what is termed by the World Bank as “joblessness.” By definition, the unemployed are those not working for at least one hour per week and are available for work and actively searching for a job. Statistics on joblessness include young people who have given up searching for a job due to limited opportunities. This group of “discouraged” youth is significant and is particularly high in rural areas in Egypt. Many young people have given up looking for work upon realizing that the search does not lead to employment. Analysis of recent survey data on Egypt’s youth shows that the joblessness rate among young people aged 15-29 reaches 60 percent. This means that almost two thirds of young people in this age group are not in school, or employed. Unemployment statistics, while significant, only refer to a sub-group within this large group of jobless youth.

Unemployment figures also fail to reflect details on the quality of jobs available for youth. It is important to remember that Mohammed Bouazizi, the young Tunisian who burned himself to death, was employed. He was a frustrated street vendor protesting the injustices facing the working poor. The World Bank refers to the prevalence of “bad” jobs in the Middle East region including Egypt. These “bad” jobs offer low incomes and no benefits in the form of pension schemes, medical insurance, or potentials for growth.

Most of these low-pay, low-productively jobs are within the informal economy. There are many methodological hurdles in measuring the size of the informal economy. A recent ILO report notes that 51.2 percent of non-agricultural employment in Egypt falls within the informal economy. This statistic includes wage workers without work contract in both registered and unregistered enterprises, and own-account workers or employers in unregistered businesses. Among working youth, a recent survey showed that only 15.7 percent had a work contract and only 14.8 percent had social insurance.

While unemployment is a problem that primarily affects young, first-time entrants to the labor market, informality remains a long-term problem with serious impact on Egyptians’ access to social security and other work benefits. If unemployment is a problem that affects youth currently seeking employment, informality is an issue that will also affect their future. In the current legal framework, informality eliminates the potential of young people’s access to social security in old age and at times of inability to work due to unemployment, illness, or maternity for female workers. Informality also eliminates the possibility of access to health care insurance in Egypt.

Jobs that offer financial stability, employment security and social protection are rare in Egypt. The government remains the employer of choice to young people in Egypt as confirmed by many polls and youth-focused studies, particularly women, for the benefits that it offers to its employees. Interviews with young people show that access to social security and work stability are the main reasons for wanting a job in the government. Other reasons mentioned relate to the shorter workday and the democratized relations of power in the workplace, where “no one owns you,” as in the private sector. Compared to the precarious conditions of working in the informal private sector, a government job seems like a panacea for job seekers. This explains the continuing wave of demonstrations of temporary workers in government bodies demanding permanent contracts.

It is commonly accepted that the employment challenges for youth in Egypt are triggered by the combination of two interrelated issues. On the supply side, the youth population continues to grow due to a demographic situation called the “youth bulge.” Egypt currently has its largest cohort of youth ever. Equipping this large group with the skills needed to compete in a globalized knowledge economy is a central challenge. On the demand side, the slow pace of job creation in the formal economy and persistent low productivity and underemployment within the informal economy are limiting young people’s options. What policies would support an investment climate to boost labor demand?

Productive employment for young people will require long-term, determined and concerted action spanning a wide range of policies and programs. International experience points to three areas of focus that are central for policy interventions to address youth employment issues. First, there is a need for an economic environment conducive for job creation and sustained growth to meet the growing need for jobs. Second, interventions are needed to enhance the skill level of youth, smoothen their transition to the labor market, and encourage entrepreneurship. These are often described as active labor market policies. Third, measures must be pursued to extend social protection to workers within the informal economy. Effective support to youth employment requires an unwavering political commitment and a strong partnership with the private sector, civil society and youth as key partners in the process, according to the ILO. This three-pronged approach places youth employment issues at the heart of economic and social policies.

Job creation is central to any meaningful discussion of youth employment issues. While the government can no longer be the main employer of youth in Egypt, it is the role of the government to enable an environment in which the private sector can develop to its full potential and play a role in generating employment and decent jobs. Forging partnerships with the private sector and civil society organizations would improve youth employment outcomes.

There is little consensus regarding how to create an environment that enables job creation. Approaches span from a focus on skill specialization and divisions of labor to an emphasis on investment in physical capital and infrastructure. More recently, there has been an interest in innovation, macroeconomic stability and good governance. The Global Competitiveness Report lists a number of “pillars” for global productivity and economic growth. A sound institutional environment with a clear legal and administrative framework within which individuals, firms, and governments interact in the economy is central to competitiveness. This refers to good governance in both public and private institutions and proper management of public finances, and transparency. A stable institutional environment strengthens the level of investors’ protection and, thus, encourages both domestic and foreign investment. The reliability of the police and a strong rule of law are also part and parcel of the required institutional environment for productivity and economic growth. Other pillars relate to well-developed transportation and communication infrastructure; and well-educated workforce.

A policy focus on job creation requires mobilizing resources in sectors with high employment potentials. Recent studies highlight the opportunity of greening agriculture and green jobs, such as jobs in agriculture, water management, recycling and waste management, and renewable energy. However, reports note that the skills to participate in these markets need cultivation and upgrading.

Interventions that facilitate young people’s transition to the labor market have been implemented in Egypt at varied degrees of success. The accumulated international experience shows that these programs need to be multifaceted and integrate an array of services in order to have a deeper impact. Generally, these programs fall within four main categories: training for skills in demand in the labor market; job search assistance and counseling; entrepreneurship promotion; and subsidized employment programs in the form of public works or guaranteed employment schemes.

International experience highlights a number of lessons learned in the implementation of active labor market policies. In training programs, it has been shown that workplace-based training programs are the most successful modus operandi for labor market training. Training programs that are demand-driven, connected to employers and include work-place exposure increase youth employability by providing them with market relevant skills and social networks needed to find jobs by connecting them to employers and more senior workers. There is also a growing focus on “portable” or “soft” skills, which can be used in different jobs and include the ability to read and write, communicate with others, solve problems and think independently.

Job search assistance and counseling are often described as the most cost-effective active labor market measures for youth employment. Despite this fact, there is little focus on employment services in Egypt. Career development offices are not a common service in public universities in Egypt, and such services are almost nonexistent for youth who do not enter university.

Entrepreneurship promotion for youth employment has been one of the most widely implemented programs in Egypt. Egypt’s Social Fund for Development has provided loans to youth to support project startup and expansion for decades now. Between 1991 and 2007, the Fund provided loans to small enterprises with a total amount of 7.1 billion Egyptian pounds. It is important to note that entrepreneurship is not a panacea, and that young people who are unable to find employment might not be the best entrepreneurs given their limited skills and experience. In fact, research shows that older and more educated entrepreneurs are more likely to be successful.

The fact that most young people are working in the informal economy and not contributing to pension schemes urges policy interventions in this area. International experience in this area highlights the importance of flexible and simplified contributory social security schemes that take into account the inconsistent income of workers in the informal economy. Progressive contributory schemes include government matching of contributions as in some OECD countries, and allow for workers to accumulate insurance funds to utilize during times of unemployment, illness, or in old age. Subsidizing the premium for self-employed workers in the informal economy who are unable to pay their contribution has also been recommended.

There is also a growing interest worldwide in micro-insurance schemes that are provided by cooperatives, unions, non-governmental organizations, self-help groups, and the private sector. These programs have the potential of benefiting the working poor by protecting insurance policyholders from the financial consequences of various risks, including illness and death. Insurance can be a means through which the workers within the informal economy can amass a lump sum of savings, for example through a long-term life insurance policy. Takaful (Islamic insurance business) has grown in a number of Arab and Islamic countries. It is seen as an Islamic alternative to conventional insurance, based on the concept of mutuality. These programs have grown significantly in recent years in Saudi Arabia, Bahrain, and Malaysia. Such programs require adaptation in order to encourage low-income contributors.

Youth employment issues require concerted and sustained government efforts. Job creation, assisting young entrants in their transition to the labor market and extending social protection to workers within the informal economy should be the focus of such interventions. A successful policy framework would also require taking a gendered approach to young people employment issues. As women are increasingly withdrawing from the labor market, efforts need to be made to engage them in labor market insertion programs.

Finally, it is important for youth to have a voice in the process of addressing their employment issues. Engagement with youth, particularly those working within the informal economy, is central to a youth-focused policy framework for employment. Fragmentation and limited avenues for advocacy has meant that youth are absent from the policy process. Violence and angry demonstrations have been the only means for them to be heard. 

Ghada Barsoum is an assistant professor in the Department of Public Administration at the  School of Global Affairs and Public Policy at the American University in Cairo.