BUILDING A SKILLED WORKFORCE: THE CASE OF EGYPT

PRESENTED BY: IMANE ABDEL FATTAH HELMY

EGYPT YOUTH ESSAY COMPETITION

YOUTH EMPLOYMENT IN EGYPT

JANUARY 17, 2017

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Building Skilled Workforce: The Case of Egypt

Imane Abdel Fattah Helmyi

The current economic reforms embarked by Egypt could be undermined by different challenges including

youth unemployment that remains at the center of policy debates since the January 2011 Egyptian

Revolution. As result of high unemployment, the youth face increasing level of exclusion. A key reason of

youth unemployment is the poor human capital investment that results in serious skills mismatch problem.

This paper argues that increasing job creation is a necessary but not sufficient condition to solve youth

unemployment in Egypt as many employers reported having difficulty filling current job vacancies due to

skills shortage. Therefore, there is a need to refocus Active Labor Market Policies on building a skilled

labor force to support the reintegration of the unemployed into the labor market. The proposed

intervention is launching a national skills development and employment program that uses technology-

based solutions to offer a bundle of services including projecting future skills demanded by the labor

market, bridging information gap, offering targeted training programs and career counseling services as

well as improving job matching and job search efficiency.

iEmail: imane.helmy@gmail.com

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I. Introduction:

Unemployment remains a persistent phenomena facing the Egyptian economy. The total

unemployment rate increased to 12.5% by mid-2016 despite the improvement in annual GDP

growth rate witnessed since 2015 (Figure 1 and 2). The labor market in Egypt is characterized by

some dysfunctions that deepen unemployment problem including low female labor participation

rate, underemployment, high level of informality as well as a high rate of youth unemployment

(18-29 years) (Said, 2014).

Even though the recent figures indicate that the youth bulge started to enter the market, youth

unemployment reached 26.7% in 2016 (CAPMAS, 2016). It is worthy to mention that females,

new entrants and highly educated young people are the highly affected groups by unemployment

(Assaad & Krafft, 2016; Said, 2014). Barsoum et al. (2014) supported this argument by

mentioning that the largest group of unemployed youth had attained university education or

above followed by Technical Vocational Education and Training (TVET) graduates.

There are several causes of youth unemployment including the malfunctioning labor market

characterized by limited mobility and rigid regulations as well as the insufficient labor demand.

On the supply side, potential reasons include low quality of education due to the lack of qualified

teachers and outdated curriculum in addition to the mismatch between labor skills and those that

are demanded by employers (Assaad & Barsoum, 2007). A recent survey by the International

Labour Organization (ILO) showed that around 48% of Egyptian youth are working in jobs that

do not match their education. While 8.8% are overeducated and earn less than deserved, 39% are

undereducated which has an adverse effect on their productivity (Barsoum et al., 2014).

Even though the aforementioned reasons of youth unemployment are interrelated, this paper

focuses on labor supply issues, namely, the poor investment in human capital that resulted in a

mismatch between the skills acquired by youth and the requirements of the job. Given the

structural nature of unemployment in Egypt, increasing labor demand alone will not solve the

problem unless the quality of labor supply is addressed. The current labor market in Egypt has

job opportunities that are not resulting in hiring candidates who want to work while many

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individuals seeking work find themselves without the required qualifications for available jobs.

Therefore, the next section of this paper proposes some measures to solve the skill mismatch

problem in Egypt.

Source: World Bank Database (2016) - Authors’ Calculation

Source: World Bank Database (2016) - Authors’ Calculation

7.09 7.15

4.69 5.14

1.82 2.19 2.11 2.23

4.20 4.90

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 1: GDP growth (annual %)

0

5

10

15

20

25

30

35

40

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 2: Unemployment

Unemployment, total (% of total labor force) (national estimate)

Unemployment, youth total (% of total labor force ages 15-24) (national estimate)

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II. Building a Skilled Workforce in Egypt

Growing labor demand and increasing job creation is a necessary but not sufficient condition to

solve youth unemployment in Egypt as many employers reported having difficulty filling current

job vacancies due to skills shortage. For instance, an enterprise survey conducted in 2008

indicated that skills mismatch was among the top five constraints facing employers (Semlali &

Angel-Urdinola, 2012). A more recent study in 2012 showed that private sector firms were not

able to find qualified candidates for 600,000 vacancies despite the large pool of job seekers

(World Bank, 2014).

According to Egypt Labor Market Panel Survey (2012), 90% of those who worked during the

past 3 months (14,488 respondents) reported that they did not participate in any training program

other than regular education to be able to perform their job. As for those who participated in

training programs, figure 3, the burden of the training was supported mainly by employer (42%)

followed by vocational training program through public provider (26%). Similarly, youth data,

reported by Survey of Young People in Egypt (SYPE) in 2014, reinforced this argument as

shown in Table 1. The percentage of employed youth (aged 15-29 years) who reported learning

the skills required for their job by formal education and vocational training declined significantly

in favor of on-the-job training (Roushdy & Sieverding, 2015). This sharp increase was evident

among men and women which indicate that employers in Egypt pay the cost of weak training

provided by the formal education system.

These figures point out that the long-term efforts of government to solve the skill mismatch

problem did not pay off the expected return. Evaluations of current skill development programs

showed that they are fragmented and ineffective due to offering supply-driven and outdated

curriculum as well as the poor facilities and lack of coordination between training institutions

(Assaad & Barsoum, 2007; Semlali & Angel-Urdinola, 2012).

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Figure 3: Training Programs Participation

Source: ELMPS 2012- Authors’ Calculation

Table 1: Skill learning (employed youth aged 15-29)

How did you learn

your skills?

2009 2014

Male Female All youth Male Female All youth

Formal education 11.1% 34.6% 14% 9.2% 39.1% 12.2%

Vocational training 26.3% 45% 28.6% 13% 23% 14%

Apprenticeship 43.9% 5.6% 39.2% 45.2% 10.7% 41.8%

On the job training 3.3% 1.1% 3% 19.9% 15.7% 19.4%

Family/self-trained 11.5% 6.8% 11% 11.9% 11.4% 11.9%

Others 3.9% 6.9% 4.3% 0.9% 0.0% 0.8%

Source: SYPE (2014) - Authors’ Calculation

42%

26%

4%

4%

21%

3%

0% 10% 20% 30% 40% 50%

job-related program provided by employer

vocational training program through public provider

vocational training program through private provider

language-course

computer course

Others

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The proposed Active Labor Market Policies (ALMPs) include launching a comprehensive skills

development and employment program that encompass different services aiming at projecting

future skills demanded by the labor market, bridging information gap using technology-based

solutions, offering targeted training and career counseling as well as improving job matching and

job search efficiency (Figure 4).

Figure 4: Components of suggested intervention

Skills Projections-Mapping

New Expanded Markets- More

Jobs

A Skilled Workforce

High School Students:

Study Program

Selection

Graduates:

Stock of Current Skills

Inventory of Current

Training Programs

Design Targeted

Training Programs

Career Guidance and

Mentorship

Job Matching Effective and efficient labor force

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Based on the Sustainable Development Strategy (SDS): Egypt Vision 2030 launched in 2016, the

Government of Egypt will embark several reforms to achieve inclusive sustainable development

in different social, economic and environmental dimensions. As result, there are certain sectors

where the economy will grow and there is a need to prepare a skilled workforce for growing

employment in these sectors. In line with SDS and the Youth Employment National Action Plan

(2010-2015) prepared by Ministry of Manpower and Migration (MOMM) and ILO in 2009, the

proposed national initiative will start by projecting the skills demanded by the Egyptian Labor

Market in the next five to ten years. The skills projection will cover different types like technical,

soft, interpersonal, computer, language…etc.

In order to collect data for projections, online surveys will be sent to employers in addition to

conducting qualitative interviews and analyzing national census and surveys. This data will

allow for analyzing the competencies needed for different types of jobs and assign weight for

each skill in order to develop a map of skills needed for different jobs by economic sector (see

example in Table 2).

Table 2: Example of Skills Mapping

Name of Sector: Business,

manufacturing, transport,…etc

Jobs Skills required: from Highly

required to less required

Managerial Occupations -Director

-Department managers

List of examples

Professional and Technical

Occupations

List of examples List of examples

Administrative Occupations List of examples List of examples

Source: The Author

This map of skills will feed into an interactive technology-based portal (e.g. website or mobile

application)ii. This portal could be easily accessible by high school students who would like to

explore the skills and jobs that will be growing in the future to be able to select the study

ii A website demonstrating the intervention could be accessed through (http://www.forsatania.com/)

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program. Also, schools can access this map to align and update their academic curriculum

accordingly.

This web application will act as one single platform that has multiple functions. Given the

potential role of technology solutions in solving economic problems, the technology-based portal

will use digital tools to get a deeper understanding of the profiles of unemployed graduates. For

instance, the online portal will allow unemployed persons to register and fill in information about

themselves like how long they have been unemployed, how far they have to travel to find a job

and their technical skills to create individual competency profiles. Examples of this profiling

process include Germany where employment programs studies four components to determine the

profile of job seekers: personal factors like motivation, qualifications, obstacles like disability

and regional labor market context. In Netherlands and Luxemburg, practical tests of

competencies and employability take place during the profiling process (Semlali & Angel-

Urdinola, 2012).

These profiles will create online skills-bank that can be assessed by employers and/or training

institutions. This data bank will assist in identifying gaps between youth competencies and the

projected skills. Also, the data will be easily classified by sector and regions which would

support the idea of cluster development.

The program will also have an additional component which is building an inventory of current

training programs to support the design of new targeted technical, vocational, soft skills and

entrepreneurship training programs based on skills projection and current profiles. The existent

literature indicate that education and training that is targeted to growing economic sectors will

have higher tendency to reach the desired outcomes (Holzer, 2013).

It is crucial that the new training programs combine regular education and on-the-job training.

The suggested measures include involving employers in the design and implementation phases of

trainings by linking them with training institutions as a prerequisite for creating a demand-driven

training system. The employers will play a key role in providing training places and experiential

learning, such as internship and apprenticeship programs, which will help them in identifying

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good calibers that could be hired in the future while giving on-the-job training to the

unemployed. The government can encourage employers by providing incentives, like tax

reduction, to those who offer internship to unemployed persons within the context of the national

employment program.

By the same token, public works programs might be an effective solution to train youth and

acquire skills. This could be particularly useful if it is targeted to disadvantaged youths without

vocational training degree and/or without labor market experience. Public works programs are

considered as an effective training instrument that have been used and proven to be effective in

various country contexts including Malawi, Argentina, El Salvador, South Africa and Rawanda

(Subbarao et al., 2013). These programs have dual objectives of providing temporary jobs and

generating some labor-intensive infrastructure projects and/or social services.

Once the youth graduate from the training program, they will be offered career guidance services

to guide them towards lifelong learning and decent productive work. By this way, a skilled labor

force will be well equipped with the necessary skills and this will require a new job matching

component to complement the suggested national program. Currently, the programs offering

accurate market information are very limited in Egypt. As result, the graduate youth can rarely

find precise information about available vacancies and types of trainings needed to get these jobs

(Assaad & Barsoum, 2007).

SYPE 2014 reported a difference in youth job search methods compared to 2009. Registration at

government office was the second most commonly used method after asking relatives and/or

friends in 2014 showing a significant increase among both males and females as opposed to

2009. Likewise, registration at private offices almost tripled in 2014 survey and around 30%

reported using mobile phones and/or internet in searching for a job. Nevertheless, there is a

fundamental need to invest in building the capacity of employment offices. According to

MoMM, 127 offices out of their 307 offices need large investment to improve their infrastructure

(Semlali & Angel-Urdinola, 2012).

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These results point out that employment offices can play a crucial role in promoting the

suggested employment program by using the web application to match unemployed persons with

available vacancies based on their profiles. By the same token, this portal could also support

new, youth-friendly technology platforms, such as mobile applications, for the delivery of

employment information and services to youth.

III. Conclusion and Policy Recommendations

Youth unemployment has been a key challenge discussed by different stakeholders since the

January 2011 Egyptian Revolution. The high relevance of unemployment among the educated

youth reveals that the labor market in Egypt still suffers from skill-mismatch and large

information gap. This is fostered by the limited gains from formal education and the

ineffectiveness of current training programs.

This paper suggested a national skills development and employment program with multiple

components to act as one single platform with a broad array of partners that have a shared vision

which is “Building Skilled labor force in Egypt”. These partners include ministries, educational

institutions, international donors, private sector and youth NGOs.

The proposed intervention is comprehensive and interrelated. It will offer multiple services to the

youth in Egypt as indicated by the below components:

1. Developing detailed and strategic skills projections that cover the next five to ten years.

These projections will be linked to the growing economic sectors based on the national

priorities.

2. Mapping the current profiles of unemployed graduates to create an online skills bank by

regions and sectors. This skills-bank will serve the purpose of identifying gaps between

youth competencies and projected skills.

3. Building inventory of the current training programs.

4. Supporting the design of targeted technical, vocational, soft skills and entrepreneurship

training programs based on the strategic projections of skills demand and the current

profiles of unemployed persons.

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5. Offering career guidance to support the youth in making career choices in response to

market signals.

6. Matching job-seekers with employers.

The aforementioned program represents a short term intervention that can relief the labor market

malfunctioning in Egypt. Nevertheless, it can not replace the medium and long term reforms to

create more jobs, foster entrepreneurship and facilitate doing business in Egypt. Education

reforms are also crucial to raise the responsiveness of the education system to the signals coming

from the labor market. Moreover, career guidance offices at schools and universities should

complement the role of national employment offices.

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