Experts are not short on solutions to Egypt's unemployment problem, Niveen Wahish listens in Job-generating growth is what everybody is after these days. Growth in itself is not enough unless it is translated into more employment opportunities. Egypt could not be a starker example of this, for despite having witnessed seven per cent growth rates for a couple of years, the number of jobless people was practically constant. And, this country is not alone in its predicament as the entire global economy is also troubled by unemployment. In fact, as Azita Berar Awad, director of the Employment Policy Department at the International Labour Organisation points out, the death of the Tunisian fruit vendor Mohamed Bouazizi personifies all the failures of unemployment policies. "He had done everything right but he was not able to integrate, neither in the formal nor informal economy." Awad was addressing a seminar organised by the Egyptian Centre for Economic Studies (ECES) on "Human Capital in Egypt: the Road to Sustainable Development." Awad first diagnosed the problem by showing that the unemployment crisis in Egypt is "first and foremost a problem of young first-time entrants to labour markets." She showed that the unemployment rate among those aged 15-29 is 15.8 per cent, bearing in mind that 40 per cent of Egypt's population is between 10 and 29 years of age. Awad also said that on average, it takes a school graduate over two and a half years before they could find a job after finishing school, and that takes even longer for those with higher education. "That is not only a problem of skills mismatch," she says but, "the economy is not generating enough good-quality jobs to attract those educated." To her, these are just a few of the problems in the labour market. To deal with these problems, Awad called not only for revisiting labour market policies, but also the macroeconomic framework policies and sectoral policies that are not pro-employment. For example, she pointed out that there is a need to review the incentives' structures in Egypt which have encouraged capital intensive investments and speculative investment in real estate. Another important element to consider when seeking a solution is that decent work is good for productivity. She said that the new perspective is not to look at better wages, conditions of work and social security as labour cost diminishing competitiveness in global markets, but as a means to cultivating a more productive labour force. In this regard Awad's theory is backed by the findings of Iman Al-Ayouty, senior economist at ECES. In a study presented during the seminar, Al-Ayouty showed that "labour productivity is directly related to job satisfaction which embraces basic rights, provision of a working environment conducive to health and safety, the provision of health and benefits and the availability of a sound venue for voicing employee concerns." Her findings were based on surveying 50 textiles and apparel firms employing more than 50 individuals. "Without committing additional financial resources, it is possible to raise productivity through decent work," she said. In the meantime, Awad also stressed the importance of dealing with the informal economy as an integral part of the labour force, not a by- product. Therefore, she said, it should be supported with policies that encourage gradual transition to formality. These policies should facilitate access to finance for small and medium enterprises, extending business development services and encouraging representation of workers. Two more areas in need of attention, according to Awad, include education and the skills development system and the labour market policies and institutions. The latter refers to democratic participation and representation, freedom of association of workers and employers and a culture of social dialogue. That should be accompanied by fair, transparent and enforceable regulatory frameworks and a functioning mechanism for policy coordination among the different authorities. Within the same framework, ECES economist Maye Ehab argued that tackling certain labour market rigidities could help decrease informal employment, thus creating more jobs. She said there are regulations in place to increase job security that have consequently increased labour market rigidity, and thus have led to high unemployment and low level of job creation. Revising these laws, Ehab said, and amending them will allow more flexibility thus creating jobs. Among those rigidities are the hiring and firing regulations. She showed that the notice period for redundancy dismissal reaches 10 weeks in Egypt, the second highest among the Arab countries after Kuwait. In Indonesia, Mexico and Iran, there is no notice period at all. Likewise, the severance pay for redundancy dismissal in Egypt is 27 weeks of salary, the second highest after Indonesia. Ehab also carried out a survey of 75 textiles and apparel firms in six governorates. One third of the surveyed firms saw labour regulations as a major constraint to hiring new employees. She too called for stronger labour market intermediaries by strengthening labour unions to avoid high cost of strikes and increasing awareness of laws and regulations; some firms' unawareness of regulations makes them rigid in applying the law, she said. Another major area that is an essential part of the solution, according to Awad, is reserving fiscal space for targeted employment generation and social transfers for the poor and vulnerable segments of the labour market, as well as counter cyclical intervention. These span a wide area of good practices of job creation through public works, employment guarantee schemes, training opportunities and cash transfers. However, what is most important, said Awad, is that these perspectives are dealt with as a "coherent, integrate and balanced whole", she said, adding that "the global financial, economic and jobs crisis on the one hand, and the Tahrir Square cries for freedom, dignity and social justice on the other, have made this quest more than ever imperative and achievable."
