Experts say rising unemployment could threaten the country's fragile economic situation unless the government steps in, Mona El-Fiqi reports In the course of the past month, tens of thousands of Egyptian workers who escaped from Libya, due to the current unrest, returned home to join millions of university, high school graduates and others in the difficult mission of finding a job. According to the Ministry of Foreign Affairs, over 180,000 workers returned from Libya until 10 March, to add their names to the millions of unemployed registered by the government. According to the Central Agency for Public Mobilisation and Statistics (CAPMAS), the unemployment rate during the last quarter of 2010 was 8.9 per cent compared to 9.4 per cent during the same period in 2009. Abu Bakr El-Guindi, CAPMAS chairman, explained in a press conference last week that although the unemployment rate was reduced in 2010, it is expected to rise in the coming period if the different sectors of the economy do not start working at full capacity. Unemployment rate is only one of the economic indicators which will be affected by the current instability in Egypt. El-Guindi expected the growth rate to drop from 5.8 to 3.8 per cent, and the budget deficit to rise from 7.9 to 8.5 per cent. Hamdi Abdel-Azim, former president of Al-Sadat Academy for Administrative Sciences, explained that the reason behind the reduction of unemployment rate during 2010 was the increase of foreign direct investments (FDI) flow to reach $8.5 billion, which provided job opportunities for a large number of workers. Since the FDI is currently on hold and local projects are also unstable, unemployment rate is expected to rise unless the government carries the burden of establishing joint ventures with the private sector, particularly in the agricultural and industrial sectors. According to Abdel-Azim, the government should boost local tourism and activate the stock market. The banks should provide facilities to finance new investments when a good feasibility study is available. For a start, last week the government began to apply some procedures to control the unemployment rate. Minister of Manpower and Immigration Ahmed Hassan El-Borai decided to stop issuing work permits for foreigners in the coming period except for highly skilled persons with rare specialisations. The aim of the decision is to keep jobs for Egyptian workers. The move was welcomed by experts who argue that it will save job opportunities for Egyptians and prevent employers from taking advantage from the presence of foreigners in the market. "Employers usually prefer to hire foreign labour to skip their responsibilities to pay social insurance," said one expert who asked not to be named. However, Karima Koryem, professor of economics at Al-Azhar University, said that since Egyptian workers' productivity is low, they are in urgent need of training. Koryem suggested that training courses could be financed by reducing a worker's salary during the training period to encourage the private sector to employ well trained Egyptian workers. On the other hand, the government should guarantee that investors are committed to pay full salaries to workers when the training course is complete, according to Koryem. Another step was taken by the Minister of Finance who announced that the government is going to pay unemployment assistance for people who lost their jobs in consequence of the revolution. An employee will be paid a full salary for six months and a partial salary for another six months when he introduces documents to prove he was fired due to the unrest. Although these procedures are considered on the right track, experts believe much still remains to be done. Koryem explained that during the past decade investments were directed towards capital, not labour intensive projects. She argues that the government should redirect both local as well as foreign investments to labour intensive agricultural and industrial projects. "Since investors are always looking for high profits, the government should provide privileges to these sectors such as tax benefits and preferential interest rates," Koryem added. Koryem asserted that although Egypt has a free market, the government has an important role to play to achieve balance among the three major playmakers in the market, namely capital owners, labour and consumers. "The government should set laws that help empower the labour unions and to activate the consumer's rights associations. Moreover, the anti-monopoly law should be amended to include severe punishments for monopolies," Koryem said. Concerning government efforts to boost investments, Ali Hefzi, board member of the Egyptian Federation of Industries, said investors need to feel the political and economic stability before launching a new project or expanding an already existing one. Moreover, it is important to encourage consumers to use locally manufactured products at this stage to increase local production and reduce imports, according to Hefzi. Although experts have different views regarding how to control unemployment, they agree that the government's figure on unemployment rate is inaccurate. Ahmed El-Naggar, head of the economics department at the Al-Ahram Centre for Political and Strategic Studies, does not trust the government's unemployment figure. El-Naggar explained that if the government is really concerned about solving a big problem such as unemployment, it should provide accurate figures in order to help the whole society to participate in solving the problem. Moreover, he noted that governmental surveys always consider the seasonal workers as employed labour although they work for only 25 per cent of their time. El-Naggar added that the labour market in Egypt is full of distortions such as employers who escape paying social insurance of 53 per cent of labour according to a questionnaire conducted by the Cabinet's Information and Support Centre. Abdel-Azim agreed with El-Naggar that the CAPMAS figures do not reflect the real situation. Seven million job applications were presented to the Ministry of Finance when it opened the door for the unemployed to apply, while according to CAPMAS, unemployed individuals were estimated at 2.3 million. "Egypt has at least five million unemployed persons," Abdel-Azim added. Koryem also agreed that the official number is not accurate, claiming that government organisations which conduct surveys are biased and the measures used by these governmental organisations are inaccurate. However, according to CAPMAS Chairman Abu Bakr El-Guindi, "the criteria announced by CAPMAS for the unemployed is a person whose age is between 15 and 60 years, wants to work, looks for a job, ready to work immediately and does not find a job. But if a person works for even one hour per week, they are considered employed according to the International Labour Organisation."
