In addition to the current wave of labour unrest in Egypt that threatens the country's economy, the findings of the recently launched International Labour Organisation's (ILO) annual report makes the picture looks even grimmer when it comes to the labour market. The report, called “Global Employment Trends 2014”, says that unemployment in the Middle East and North Africa (MENA) region remains the highest in the world and at least two percentage points above rates observed in the developed economies and the European Union, which experienced serious deterioration during the financial crisis of 2008. It also says that the region has the world's highest unemployment rates among young people and very weak female participation in the labour force. According to the report, youth unemployment in MENA countries reached more than 29 per cent in North Africa in 2013 and 25 per cent in Egypt. “We expect that unemployment will continue to rise in the region in general and in North Africa in particular, especially among the youth,” said Youssef Qaryouti, ILO's director of the organisation's sub-regional office for North Africa in a press conference launching the report in Cairo last week. Qaryouti said that the poor quality of Egypt's vocational and academic education was one of the reasons contributing to the increase in youth unemployment and that the lack of skilled labour in the country had attracted types of investments that did not create new jobs or contribute to the economy. “Most of the investments in Egypt's industrial zones are in the ready-made garments industry for example,” Qaryouti said. “Foreign investments in the Arab region are not high impact, unfortunately,” he added. The report says that Foreign Direct Investments (FDIs) in the region have not had a significant impact on employment. It attributes this mainly to the fact that a very limited number of sectors have benefited from FDI inflows and that these have not been labour-intensive sectors. “In Egypt, 45 per cent of total FDI inflows were directed to the petroleum sector. Not only are these sectors capital-intensive, but they offer job opportunities for a very limited number of occupations, such as petroleum engineers, which many MENA countries lack in a sufficient number and so need to import,” the report says. The report indicates that though FDI into the MENA region has increased substantially over the past decade, from $8.7 billion in 2001 to $94 billion in 2008, these inflows have been directed to only a few sectors, such as construction, telecommunications and mining, while the manufacturing and agriculture sectors have been neglected. In addition, high-technology service sectors have received very little FDI inflows, limiting positive spill-overs onto productivity growth in the region. Qaryouti said that the employment conditions in many of the Arab states lacked fairness, including fair salaries, an appropriate social security system and respect for international labour laws. “The lack of these components prompts the youth to shun the formal sector and work in the informal one instead. This explains the prevailing phenomenon of street vendors and kiosks in Egypt.” Most of the ongoing labour strikes in the country are seeing workers demanding fair salaries and the implementation of the minimum wage of LE1,200 per month, which was set by the government for public-sector employees and has gone into effect starting this year. However many workers at public companies have been excluded from the implementation of the new minimum wage because they belong to public economic entities not included in the law. The last couple of weeks have seen strikes by public-sector textile workers, workers at the Real Estate Department and a strike by public transport workers that started this week. The government is currently working on amending the labour law in order to fix its shortcomings. No details of the amendments have been announced, but minister of manpower and immigration Kamal Abu Aita said last week that the amendments would target improving job safety in the private sector and preventing arbitrary firings. In order to beat unemployment, Qaryouti said that states in the region should follow job-friendly macroeconomic policies and policy-makers should take these into account. He said that although Egypt had been achieving a growth rate of six or seven per cent before the 25 January Revolution, unemployment and poverty rates had been inching up. “This means that the policies followed were not job-friendly,” he noted. In answer to a question from Al-Ahram Weekly, Qaryouti said that job-friendly policies could be ones that would encourage investments and give priority to projects that would create jobs. He praised the interim government's expansionary policies, although these might be expected to be followed by contractive ones, these pumping some LE50 billion into the market for investment in infrastructure projects and other labour-intensive areas. Qaryouti said that a recent poll in Egypt had shown that the majority of the unemployed in the country held Bachelors degrees, adding that unemployment among females was at least double that among males. He added that few young people started their own businesses in Egypt, due to the lack of incentive policies and other problems such as access to finance. Egypt's unemployment rate for the fourth quarter of 2013 stood at 13.4 per cent of the country's 27.3 million work force, remaining unchanged from the previous quarter. Qaryouti said that the social unrest in Arab countries in recent years had not only been because of corruption but had also been the result of high unemployment and poverty rates. According to the ILO report, the Arab Spring has threatened long-term perspectives in the region, it saying that the crises in Syria and Libya have intensified the political tensions in the region and considerably slowed down economic growth. As a result, neighbouring countries such as Egypt, Jordan, Lebanon and Tunisia have witnessed a significant flow of return migrants, which in turn will have a drastic effect on the labour markets in the region, the report says. Qaryouti added that the political events in the region had negatively impacted FDI flows to the region, which in turn had exacerbated the problem of unemployment. He said that before Egypt's Revolution in 2011, the country had been receiving $9 billion in foreign investments, but this rate had declined sharply in 2011 and 2012 and had reached a mere $3 billion in 2013. Globally, the ILO report says that unemployment has increased by five million in 2013 to reach 202 billion jobless people around the world. It says that uneven economic recovery and successive downward revisions in economic growth projections have had an impact on the global employment situation and warns that if the current trends continue, global unemployment will be set to worsen further, albeit gradually, reaching more than 215 million jobseekers by 2018.
