Youth Unemployment in Egypt: Why is it so high and what can be done to tackle it?

On Monday in Cairo, the 20th of October, the Abdul Latif Jameel Poverty Action Lab (J-PAL) at the American University in Cairo (AUC), in partnership with UNICEF, held a seminar on how youth unemployment can be overcome through policies that have been proven to work through scientific study.

A little bit about J-PAL: they are a “global research center working to reduce poverty by ensuring that policy is informed by scientific evidence”, according to the seminar brief. They were established in 2003 at the Massachusetts Institute of Technology (MIT).

J-PAL’s operations in Egypt began in 2018 where it has been conducting research in the areas of “labour markets, financial inclusion, and social protection” with the purpose of bettering the impact of the country’s social programmes, as well as in the Middle East and North Africa.

Attending the seminar were Bruno Crepon, professor of economics at ENSAE and Ecole Polytechnique and co-chair of J-PAL’s labour markets sector; Hana Yoshimoto, education chief at UNICEF; Manal Youssef, a representative from Egypt’s ministry of youth and sports; and Mohamed Abdel Rahman, a representative from Egypt’s ministry of manpower and immigration.

The seminar began with Crepon introducing Abhijit Banerjee, Esther Duflo (who both co-founded J-PAL), and Michael Kremer, the three economists who recently won the 2019 Nobel Prize in Economic Sciences for their research in how poverty can be alleviated. They created a methodology through their ground-breaking work known as “randomised evaluation” to be able to quantitively measure the reasons that cause youth unemployment as well as the factors that boost employment. Crepon said that this is a method used by J-PAL to generate evidence to inform policymakers of strategies that can tackle poverty and unemployment.

According to the seminar brief, global unemployment amongst the youth is three times higher than in adults. Youth unemployment is especially bad in North Africa where it is nearly four times higher than adult unemployment. For those aged between 15 to 24 years, the unemployment rate is 29.9 percent, according to Crepon.

He went on to explain how randomised evaluation is applied in the field. In the context of Egypt, they identified six key barriers to youth employment. This is the initial stage of any randomised evaluation, after which a number of solutions are designed. Then, random individuals that fit the demographic are selected and put into several groups. At least one of the groups is treated with a kind of intervention, such as a small transport subsidy to help individuals search for jobs and attend job interviews. There can be another group that is treated with another kind of intervention too, and there is also at least one control group that isn’t intervened with. After a time, the results of each group are assessed to draw up qualitative and quantitative data to see which intervention was the most (in)effective in comparison to the control group(s).

The six key barriers in Egypt were identified as 1) lack of information for job seekers on reality of labour markets; 2) high costs of job searching; 3) complexities of job searching; 4) lack of information for youth about quality of the job; 5) poor matching between job seekers and employers; and 6) lack of information for firms about quality of applicants.

Expanding on the point of high costs of job searching, Crepon explained that a common problem young people face is that they don’t know how to properly show their skills to potential employers, hence not being rewarded for their efforts in finding jobs and attending interviews. Due to the lack of returns, paying for transport to search for jobs and attend job interviews is seen as a fruitless expense.

However, Crepon cited a programme that J-PAL tested in Ethiopia. A group was given a small sum to subsidise their transport costs for job searching and going to interviews. He said the experiment was extremely successful and the majority of the group secured a job within a year.

Abdel Rahman from the Egyptian labour and immigration ministry then stepped in to provide a few details of the state of the local labour market and what his ministry is doing to tackle the issue of unemployment.

According to Abdel Rahman, there are 69 million people of working age in Egypt, defined as those between the ages of 15 to 64 years. 1.2 million people enter the job market every year, which includes school dropouts and high school graduates. Egypt’s current labour force is 28 million strong, of which 22 million are male. The ministry representative revealed that approximately 15 million women are housewives and that the reason behind the high unemployment rate amongst women was due to cultural perceptions of gender roles. Yet, the numbers of educated women are higher than men.

In fact, according to the International Labour Organisation (ILO), the Middle East has some of the highest young female unemployment rates in the world and has the lowest female labour force participation rates in the world. In the future, young women will be twice as likely to be unemployed as young males. And according to UNICEF, by 2030, if current trends continue, Egypt will have 2.2 million unemployed young people.

Abdel Rahman went on to discuss details of an employment programme developed by the ministry in partnership with the ILO to help in matching job seekers with the right employers who are searching for candidates with specific skills. It is being called the “electronic exchange for employment”. Another programme will also focus on seasonal employment.

Additionally, Youssef from the youth and sports ministry talked about another government programme designed specifically to tackle youth unemployment called “Meshwary”, which provides relevant skills training to young people to help them become more employable in the job market.

When UNICEF’s education chief, Yoshimoto, started speaking, she discussed at length the importance of the quality of education and what school curricula should target. She revealed that Egypt has historically focused on higher education and the local private sector pays too much attention to candidates’ credentials rather than the core skills needed for the job market. Teaching core skills that are seamlessly transferrable to the job market is extremely important in tackling youth unemployment, she said. And this is especially so in the current era of the Fourth Industrial Revolution that is causing trends to evolve and change faster than the government is able to develop the human capital for.

Indeed, the seminar brief reveals that many experts attribute Egypt’s high youth unemployment rate to a significant disconnect between the supply and demand of youth labour. This is because of what the Organisation for Economic Cooperation and Development (OECD) reported in 2016 to be the high numbers of youth entering tertiary education. This has led to 76 percent of young graduates preferring to go for professional and/or technical jobs instead of craftsmen and/or blue-collar jobs. However, the reality on the ground is that only 15 percent of the youth become employed in white-collar and technical jobs. Nearly 60 percent of all employed young people work in craft industries and blue-collar jobs.

In an effort to address this issue, Yoshimoto discussed a programme UNICEF has been working on with the Egyptian government to include crucial job-relevant skills in school curricula. She said that 14 core skills were identified and have so far been adopted nationwide at the kindergarten and grade one levels of schooling. Their introduction into older year groups will continue into the future. Teacher training and textbooks have also been changed to reflect these new introductions. Additionally, she said that UNICEF is working to encourage the private sector to provide its own training of these skills.

When the floor opened for questions, a notable attendee, Samir Radwan, Egypt’s former finance minister who served between January and July 2011, and who also worked at the ILO, mentioned the issue of the informal sector, a point which wasn’t discussed by the panellists. He said that half of Egypt’s working population was employed by the informal sector and added that the lack of skills in the labour market was due to a high demand for unskilled labour in the private sector.

Abdel Rahman responded by saying that the informal sector accepts the lowest skills and that only 12 million people are employed by it. While not half, it is still 43 percent of Egypt’s 28 million working people. He said it was part of the government’s “Vision 2030” plan to integrate the informal sector into the formal one. ???????? ???? ?? ?????

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