The Banking Executive Magazine - January 2022 Issue

The Labor Market in Egypt Besides unemployment, underem- ployment is another major problem of the Egyptian economy. Poorly paid, low productivity jobs, both in the informal and formal sectors, bad working conditions and the lack of social protection affect a large por- tion of the Egyptian labor force. The Government uses to recruit double the number of employees actually need for its own structure which will arise major problems such in govern- ment expenditure relative to its pro- ductivity. SELF-EMPLOYMENT Only 9% of young population in Egypt are self-employed and this group comprises more male than fe- male. The top reason is the expres- sion of wanting greater independence. Another reason, they choose to earn a higher income at their own risk. Other self-employed young workers take it up because they cannot find a suitable paid job and about 10% were required by their family to follow the path of self- employment. The key challenges that self-employment are facing in running their businesses are the com- petition in the market, followed by insufficient financial resources and political uncertainty. Mainly, family, friends, personal savings served as the main source of financing for self- employed. The use of formal finan- cial institutions is low (only 2.5% re- ceiving financing from a financial institution). SUPPLY AND DEMAND SHOCKS IN THE CONTEXT OF THE CORONA CRISIS CYCLE A few weeks after the Corona pan- demic began, the estimated number of workers affected by the virus in early April at 2.7 billion people, or 81% of the world's workforce. The severity ranged from reducing the number of working hours, lowering the wage, poor worker productivity due to the psychological effect of so- cial distancing measures, and tempo- rary or permanent layoffs. In general, international surveys and estimates indicate that the continued closure of companies for one month exposes 20% of them to the risk of bankruptcy, this percentage increases to 40% if the lockdown continues for a period of three months without government intervention. THE MOST IMPORTANT FACTS OF THE IMPACT OF COVID-19 CRISIS ON EGYPTIAN LABOR MARKET: • Labor demand is derived from de- mand on final product or service, therefore is primarily affected. Pro- duction cut and marketing prob- lems are directly transmitted to problems in labor demand for all sectors. • Women are the most hit by the cri- sis among vulnerable categories, given their high representation in the service sector such as educa- tion, health, tourism. • The impact of the crisis resulted to a job losses in companies and an increase in the unemployment rates in particular, especially in food services, leisure activities (cinemas and theaters, hotels, etc.) and transportation (taxis, Uber, travel) • The tourism sector have experi- enced a sharp decline in employ- ment, whom its employees do not intend to search for other jobs, but rather awaiting the recovery. • The government body did not lost its workforce, despite the freezing of 50% of the workforce. The ex- port sector is generally one of the most hit sectors. It is clear that some businesses will stabilize faster than others. However, small enterprises that have gone bank- rupt in all fields are not expected to return to operation, which will lead to an increase in the number of the new jobseekers. • The low-skilled blue-collar work- ers are more likely to face job losses as a result of troubled man- ufacturing industries, while the problem for white-collar workers appears in the form of a salary cut of 30-50% or more. (shown in Table 2). As a result of the crisis, an increase in severity of a problem in unem- ployment is expected, and its rates may reach 20% due to the return of workers from abroad. On the other hand, despite the importance of the role of medical sector and winning the government attention as a result of the crisis, a large number of doc- tors have decided to immigrate to the United States and European coun- tries. These countries have opened the door to receive them, taking ad- vantage of unsuitable working con- ditions in Egypt (low wages, and difficult working conditions), which will cause disruption in medical the BANKING EXECUTIVE 44 ISSUE 157 JANUARY 2022