Coming to grips with Egypt's unemployment crisis.

CAIRO: Om Ahmed squats on a low stool behind the counter of her sweet stall in Bulaq El-Dakror, holding the ends of her niqab in bunches so as not to let it touch the dusty floor. Her eyes flicker nervously at the ahwa across the road.

"My friends and I prefer to stay indoors these days, because these streets here are full of young men with nothing to do. None of them have jobs so they spend all day in the ahwa," she said.

And, indeed, by the middle of the afternoon, in the sweltering mid-summer heat, the smoky coffee shops of Bulaq's main road are so swarming with people, that the seats spill onto the pavement. The landscape is littered with rows of young men who nurse glasses of tea, while staring expressionlessly at passersby.

The scene in Bulaq is being played out in neighborhoods across Egypt and, with almost 1 in 10 Egyptians living without a job, the unemployment situation is the source of flustered discussion both within and outside government circles.

Observers have started to make ominous links between Egypt's future and the political instability other countries face. "Having high youth unemployment has all kinds of political implications for countries such as Egypt. You can see it with the rise in support for extremism in places like Pakistan and Iraq. There is enough evidence of what can happen if governments don't ensure that their young citizens have ownership of their futures. If nothing is done, the situation is set to explode," said a researcher working on unemployment in Egypt said, preferring to remain anonymous.Aa

The labor market 

According to the World Bank and Ministry of Trade and Industry, there are 650,000 new entrants into the Egyptian labor market each year, 83 percent of which are aged between 15 and 29. And with a soaring population and a steady rise in post-primary education levels, there are little signs of the trend slowing.

It is widely recognized that, to absorb these workers and keep unemployment rates steady, the country needs to achieve an annual GDP growth of at least 6 percent. Although, the GDP growth was extremely positive for the 2007-2008 fiscal year at 7.2 percent, it has slumped to 4.5 percent in 2009, due to the global financial crisis, causing widespread tension.

Improved GDP levels are not the only crucial ingredient in the unemployment-busting formula that Egypt needs. The country's leading economic experts and business corporations insist that the problem is deeply structural.

"There is a mismatch between demand for workers and supply because people are not receiving adequate training," said Alia El-Mehdi, an economics professor at Cairo University.

Shahinaz Ahmed is the CEO of the Education for Employment Foundation, Egypt, an organization which finds work for unemployed Egyptians. "People are still competing for government jobs, even though there are less and less these days, while growing industries in the country's private sector are struggling to find the qualified workers they badly need," she explained.

Economic observers agree that, despite the shrinking of the public sector, Egyptian middle class and lower middle class parents continue to encourage their children to pursue university education and apply for government posts, as they are perceived as a secure option. Guaranteed government jobs for graduates have been institutionalized since the 1962 National Charter by former president Gamal Abdel Nasser.

Experts also warn that the nation's brightest citizens continue toAa launch themselves into parochial jostling matches for prestigious careers that will lead to jobs in a small cluster of fields, such as medicine and engineering, instead of seeking training in sectors which have real potential to take off.

"Doctors and engineers are seen as perfection in Egypt, so everyone wants to be one. They are respected," asserted Doaa Hassan, a 25-year-old graduate from the applied arts faculty at Helwan University.

Yet, these long-established trends are having a serious impact on Egypt's long-term economic prosperity. CEOs of companies in some of Egypt's fasted-growing industries bemoan the problems they relentlessly encounter in sourcing the employees they need.

Adel Danish, chairman of Exceed, a leading call-center firm, believes that the growth of Egypt's call center industry is being hampered by an inability to find enough qualified workers.

"Our company has had a 50 percent growth rate over the last five years. We have faced difficulties sourcing the workers we need. Sometimes we hesitate before we take new business because we are not sure if we have sufficient staff to deliver our service," he said.

Complaints of labor shortages resonate with equal force from the textile industry, which produces 26 percent of the nation's industrial revenues. According to Hassan Mekawy, a managing partner at Gherzi Egypt, a Swiss-owned textile consultancy firm, a lack of sufficiently skilled applicants is hamstringing the expansion of an industry that has the potential to rocket in Egypt.

"Egypt has a number of significant advantages in the textile industry, including the proximity of markets C* trade agreements with the US, Europe, the Arab region and Turkey; and low-cost labor. However, the lack of skilled workers is a drawback," he said.

"There is a huge demand for trained individuals in this area, because with the right employees we can outstrip our Arab and Asian rivals," he added.

Breaking the cycle

Unfortunately, the solution to the country's unemployment conundrum is not easily evident, said Shahinaz Ahmed. Aa "This is a very risk-averse society. Life is difficult here and young people are anxious to cling on to the few guarantees they have. There was a girl who turned down an offer through our scheme for a job with a private company that was offering LE 1,000 a month in wages for a non-permanent government contract with a salary of LE 150 a month because she was afraid she would not be good enough."

Others refer to social prejudices that put off potential candidates. One that is often highlighted is the incompatibility of private sector's undervaluation of university and secondary school diplomas against vocational training with the traditional Egyptian attitude to education.

"It is like a ranking, especially in the cities," said Ahmed Mokhtar Abdel-Rasoul, a 25-year-old student from Cairo. "Whether you have a university degree or not effects who you can marry."

In order to address the ostensibly unbreakable unemployment cycle, there are increasing calls for an overhaul of the education system; critics warn that the focus on rote memorization limits students' employment options.

"Students aren't being encouraged to think for themselves and be creative in school, so they are coming out of school without the basic skills we need," said Ahmed from EFE Egypt, an organization specialized in training unemployed people in accordance with market needs for human resources.

There are glimmers of government-backed reform in the shape of campaigns to encourage more Egyptians to seek vocational training. The government sponsored Social Development Fund has invested in over 700 new trade trainees to retrain the Egyptian labor force; upgraded 152 vocational trading centers; and produced 38 new curricula.Aa

In addition, in order to transform traditional societal hostility to the private sector, the Ministry of Trade and Industry recently piloted an awareness-enhancing initiative aimed at secondary school students, called the "Train Campaign," which espouses the mantra: "It is not important which faculty I have graduated from, it is more important that I have a job."

However, as far as Soraya Salti, regional director for Injaz Al-Arab, is concerned the answer lies in ensuring that the private sector achieves more penetration into the school system.

"What we're trying to tell the private sector is to send their staff members into schools to transfer their knowledge from the private sector directly into the classroom. Then there's this bridging that can take place, so that schools and students at a young age can start to understand the demands of the private sector and what's required of them," she said.

There is also growing consensus that it is equally crucial to promote entrepreneurship and job creation by encouraging Egyptians to set up their own small businesses.

El-Mehdi is adamant on the issue. "The answer lies in improving incentives for small businesses, and giving entrepreneurs business and technical training, which will open up new markets in Egypt and the rest of Africa."

Salti agrees, saying, "In every economy, it is small and medium-sized enterprises that generate about 70 to 80 percent of the jobs. So with the demographics that we have, and with the youth unemployment that we have in the region, clearly it's not existing companies and corporations that are going to be generating the new jobs.

"It must come from entrepreneurship. Then we can start moving forward."

Daily NewsEgypt 2009

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