Labor Mobility In Egypt

LABOUR MARKET MOBILITY AMONG EGYPTIAN YOUTH

Dennis A. Ahlburg

Industrial Relations Center

Carlson School of Management

University of Minnesota

321 19th Avenue South

Minneapolis MN 55455

U.S.A

and

Division of Social Statistics

University of Southampton

Highfield U. K.

dahlburg@csom.umn.edu

and

Mona Amer

University of Cairo

Faculty of Economics and Political Science

and

Institut d'Etudes Politiques de Paris

mona_amer@yahoo.fr

November 1 2004

* Thanks to Ragui Assaad, Cynthia Lloyd, Alia El Mahdi, Ozlem Onaran, and Insan Tunali for comments on the paper. The authors acknowledge funding support from the International Center for Economic Growth, through its Economic Policy Initiative Consortium Project in Egypt funded by USAID and from the Fesler-Lampert Professorship (Ahlburg).

Abstract

This paper investigates the dynamics of labor market experiences of young Egyptians. Sectoral persistence was found to be high, especially for women. Over an eight year period almost three-quarters of women and 41 percent of men did not change their sector. Over this period 50 percent of women remained unemployed but only 17 percent of men remained so. Women who left the labor force were unlikely to return while men who re-entered the labor force found work in the private sector and the irregular sector. Public sector employment is highly prized and this sector continues to dominate employment of young women but its importance as an employer for young males has declined. Mobility was found to have increased since the 1980s, particularly for young men

In the aftermath of the events of September 11, 2001, political leaders in the West have expressed concern that rapidly growing populations in the Middle East and North Africa (MENA) may present a threat to the security of the West. In particular, youth unemployment is seen as a key factor driving radicalism in the Arab world. Robert Zoellick, the U.S. trade representative, stated: "population growth threatens to turn the social crisis of unemployment into chaos and despair" (2003). Because about one-third of the working-age population in the MENA region is 15-24 years of age and the potential labor force of the region will increase by 40 percent over the next decade, it is critical that we know as much as possible about the dynamics of MENA labor markets and the link between them and radicalism.

The scarcity of official data on the labor market has made it difficult to answer many labor market questions in the region. To remedy this deficiency, in one critically important nation in the region the Economic Research Forum (ERF), with the assistance of the Egyptian Central Agency for Public Mobilization and Statistics (CAPMAS) carried out a detailed nationally representative labor market survey of 5000 Egyptian households in 1998. In this paper, we use the 1998 survey and a comparable survey carried out a decade earlier to give us unprecedented insight into the workings of the Egyptian labor market. In this paper we focus upon the mobility of young Egyptians among major job classes, unemployment, and out-of-the-labor force. While we cannot investigate the link between youth unemployment and radicalism, we can address the question of whether unemployment is chronic and a number of other important labor market issues.

We will first look at mobility over one, four, and eight years to gain insight into the dynamics of the Egyptian labor market. For instance, little is known about the persistence of workers in areas other than public sector employment. The belief is that educated workers (students) wait in a queue for a public sector job to open up. But is this still true given the erosion of real public sector wages and the lengthening of the queue for public sector jobs and the effective suspension of public employment guarantee for graduates (Assaad 1997a: 93)? Where do students go who do not succeed in obtaining a public sector job? Assaad (1997b) identified the informal sector as being the most important source of labor absorption since the 1980s and the private formal sector as having grown rapidly, although from a small base. Relatively little is known about the dynamics of these sectors. How stable is employment in these sectors? If workers leave these sectors where do they go? Where do the workers being absorbed by these sectors come from? Al-Bassuai (2002) has described working conditions in some parts of the private sector as "unsuitable and hard". These difficult conditions are felt to discourage women in these areas from acquiring professional skills and motivate them to prefer their reproductive role over their labor force role. If this is so, we should expect to see strong flows of women from the private sector (or at least parts of it) out of the labor market.

The unemployed are generally graduates. For instance, in 1995 75 percent had earned a secondary school diploma, eight percent had earned a diploma from a two-year post-secondary technical institute, and 13 percent were university graduates (Assaad 1997a). Although we know the characteristics of the unemployed, we do not know how persistent unemployment is in Egypt nor do we know much about where individuals who leave unemployment go. Little is known about those out of the labor market. Do they remain out of the labor market so that the population is composed of those that work in the market and those that work in the home or is there movement into and out of the labor market? The 1998 labor market survey allows us to answer such questions. Graduates have long been of particular interest in part recognized in the government's guaranteed employment scheme. We will also investigate the mobility of students over the 1980s and the 1990s using the 1988 labor market survey and the 1998 survey. Were the mobility patterns different over the two decades? Did changes to the guaranteed