In Charts, Egypt’s Unemployment Problem

About 1 million Egyptians lost their jobs in 2011 as the economy shrank for the first time in decades.  And the paradox of the Middle East deepened with more young people than ever searching for jobs, while at the same time, the private sector encountered increasing difficulty in its search for qualified employees.

The latest figures from the government statistics agency, CAPMAS, show the problem is only getting worse. More than 162,000 Egyptians lost their jobs in the last quarter of 2012.

Based on these government figures, Rebel Economy has compiled a chart detailing how much the country’s unemployment rate has widened in the last four years:

Unemployment rate

Of course, very high levels of youth unemployment (those between the age of 15 and 29) is a huge contributing factor to the jobless rate as discussed in previous posts.

Yet, bizarrely, the same government statistics show Egypt’s labour force is growing, even as the total number of unemployed rises:

labourforce

So why the discrepancy? All is explained by Moustafa Bassiouny, an economist at the Signet Institute, a Cairo-based think tank:

If you look at Egyptian population pyramids, you’ll see a huge bulge at the 0-14 bracket, so bearing in mind that the labour force here is counted as those within the 15-64 age brackets it is expected that there will be large increases in the labour force every year; these gains won’t be reflected in the population data because they are already counted, they’ll just shift from being out of the labour force to being in it.

In other words:

The labour force will continue to grow even if population growth stagnates as the large chunk of the population in the 0-14 age bracket gets older and becomes counted in the labour force.

The main problem here is that employment hasn’t grown with the same rate (just 0.18%) and this is what drove the unemployment rate up.

So that’s another black mark for Egypt’s main statistics agency, aside from the fact it ignores the vast informal economy. A re-think of how this data is compiled would not go amiss. 




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