Labour market pressures in Egypt : why is the unemployment rate stubbornly high?

Abstract EN

Unemployment is one of the key policy challenges in Egypt.

The unemployment issue in Egypt is mainly about the educated youth seeking its first job.

The mismatch of skills between job requirements and the qualification of job seekers, the high reservation wage of new school leavers, and limited labor mobility are at the root of the problem.

The wage setting mechanism seems to be operating fairly efficiently in Egypt, and non-wage costs - although relatively high - do not appear to be a binding constraint.

Moreover, recent legislation has on balance, increased labor market flexibility.

Economic performance in Egypt has been uneven, but even in periods of fairly robust growth, unemployment has remained stubbornly high.

This paper explores the job content of economic growth over the past decade and concludes that high growth may not necessarily lead to a substantial decline in unemployment unless it is sustained, is generated by more labor-intensive activities, and is accompanied by structural changes in the labor market.