ArabFinance: Egypt’s unemployment rate has seen a slight increase in the first quarter (Q1) of 2021, reaching 7.4% compared to 7.2% in Q4 2020, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).

The surge in the number of Covid-19 cases brings up concerns on whether unemployment will once again peak due to the pandemic. In Q2 2020, unemployment recorded 9.6%, compared to 7.7% in Q1 2020, with youth (between the age of 15 and 29) making up to 60% of all unemployed people, according to CAPMAS.

This rate, which represents 2.15 million unemployed Egyptians, is attributed to a third wave of Covid-19. The number of daily infections has almost continuously increased since early February, when cases went from about 500-600 per day to above 1,000 by April 27^th.

Pre-pandemic unemployment levels

Despite the fluctuations caused by Covid-19, Egypt has witnessed improvements in unemployment rates in the past two years. From the 1990s until 2018, rates had remained above 8%, reaching 11.9% in Q3 2011 as a result of the social and economic instability triggered by the revolution.

By 2019, however, the country began to see the results of its economic reform and more aggressive strategies against unemployment rates. In October 2019, the Cabinet’s Media Center announced Egypt had reached its lowest unemployment rate in 30 years at 7.5%, compared to 9.9% in 2018.

The country’s unemployment-focused strategies included the Emergency Employment Investment Project (2014-2017), which received EUR 67.6 million financed by the European Union, administered by the World Bank, and implemented by the Micro, Small, and Medium Enterprise Development Agency (MSMEDA), to identify and evaluate promising approaches to facilitate the youth’s transition to the workforce. In April 2019, the World Bank also approved the Catalyzing Entrepreneurship for Job Creation Project, worth $200 million, to create jobs and improve economic opportunities for Egyptian women and youth.

Covid-19 responses and expectations

As Egypt registered the first cases of Covid-19 in March 2020, the government implemented a number of measures to avoid layoffs.

“In Egypt, stimuli packages were offered to the firms working within the tourism sector in exchange for keeping their entire labor force and stopping any laying off resulting from the crisis. Accordingly, the latter firms were permitted to apply for loans to cover the basic wages/salaries of their workers and employees. Moreover, it was agreed that all property tax on such firms were to be dropped for six months in addition to postponing (or paying in instalments) any previously owed amounts for three months without any charges,” Heba M. Khalil and Kareem Megahed stated in a study published in January 2021 by the American University in Cairo (AUC).

Local businesses and multinationals operating in Egypt also adopted a number of policies to preserve their staff’s health and welfare while maintaining minimal losses, said a 2020 report by the American Chamber of Commerce in Egypt. These measures included reducing the number of shifts, shift hours, and the workweek.

Although the country’s policies did not prevent unemployment rates from peaking in Q2 2020, the measures taken by the state still helped push the rate down to 7.3% in Q1 of the current fiscal year, Ahram Online quoted Prime Minister Mostafa Madbouly in January.

AUC’s Khalil and Megahed highlighted other measures that can still be implemented by the Egyptian government, which could potentially prevent unemployment from peaking again during the third wave. Among these measures, they mention work-sharing programs, under which the government subsidizes the employer’s payroll in exchange of reduced working hours per employee.

“In other words, instead of laying off workers/employees, all workers/employees within any given company agree to share their tasks and work less number of hours for the duration of the crisis. In exchange, the government offers to cover in part the resulting gaps in their paychecks by entering into agreements with their employers. This type of programs has proven successful in Germany for instance, where about 10 million individuals managed to keep their jobs and receive up to 87% of their original salary/wage during 2020 and despite the COVID-19 crisis,” they stated in the study.

By 2030, Egypt expects to reduce unemployment rates to 5%, according to the Sustainable Development Strategy launched in 2015 by the Ministry of Planning, Monitoring, and Administrative Reform. The strategy also hopes to improve the working conditions and income of civil employees; develop a new wage system and an effective, neutral, and accurate evaluation system; and launch an early retirement system and a new code of conduct.

By Mariana Somensi