With the government having pledged high rates of foreign direct investment (FDI) over the coming period, the latest report issued by the International Labour Organisation (ILO) points out that FDI’s ability to affect unemployment rates is largely dependent on the sector to which it is directed.
Basing its research in 2011, the report noted that “in Egypt, 45% of total FDI inflows were directed to the petroleum sector. Not only are these sectors capital-intensive, they also offer job opportunities for a very limited number of occupations.”
The 2014 Global Employment Trends (GET) report added that petroleum engineers represent a large part of Egypt’s labour demand, employees for which many MENA countries cannot domestically provide, and thus are positions largely fulfilled by foreign workers.
“To ensure that labour markets receive more benefit from FDI, countries in the MENA region need to make substantial efforts to diversify the sector allocation of FDI inflows,” the report added.
Discussing skill mismatches, the report indicated that around 30% of working males in Egypt are overeducated for the current position they hold while around 10% are undereducated. It added that over 35% of women are overeducated and some 9% are undereducated.
“The unequal distribution and, on average, inadequate quality of education reduce the return that many people receive from their education and prevents the regions from benefiting from the large overall investment they make in education,” the report said.
The ILO’s report commented on the quality of education in Egypt and Jordan saying that their education systems “struggle to deliver graduates with the necessary skills for finding productive jobs”.
According to the World Bank’s Enterprise Surveys, labour skill levels are recognised to be one of the key constraints in around 31% in the surveyed firms in Egypt.
The Central Agency for Public Mobilisation and Statistics (CAPMAS) reported in November that the national unemployment had reached 13.4% of the total workforce during the third fiscal quarter of 2013, adding that the youth constitute 70.8% of the total unemployed, with around 10.6% aged between 15 and 19 and 20.9% between 25 and 29 years old. CAPMAS stated that 84.5% of those unemployed had high school and college degrees.
The report also noted that unemployment among young people has reached 25% in Egypt.