Thursday, February 3, 2011

Egypt: An Unemployed Population Cohort


Updated November 26, 2012

Egypt and its new president have once again hit the news headlines since Morsi granted himself dictatorial powers late last week.  Here is a look at the country from an economic perspective since it appears that many of the issues that created the uprising in the winter of 2011 were related to economic factors, most particularly, youth unemployment, a problem that Morsi has not solved.  What we read in the mainstream media tends to skim the surface of the youth unemployment problem so I thought I'd take a deeper look at one of the largest issues facing Egypt's future.

One of the great problems facing Egypt has been a very high birthrate, particularly in the 1970s.  According to CAPMAS, Egypt is estimated to have 79.74 million people and UNICEF statistics from 2008 show that there were 31.527 million Egyptians under the age of 18, roughly 38 percent of the population.  Egypt's population growth rate has slowed from an annual rate of 2.4 percent in the period from 1970 to 1990 to 1.9 percent from 1990 to 2008.  In 2008, the fertility rate was 2.86 births per woman, well down from 6.23 births per woman in 1967 and 4.56 in 1990.  Interestingly enough, contraception was used by 60 percent of women.  

Here is a graph showing the rapid growth in Egypt’s population over the last century:


Here is a graph showing the drop in birthrate over the past 45 years:


Here is a chart and graph showing how life expectancy at birth has risen over the past 50 years by gender:


This rising birthrate is creating (and will continue to create) rising stress in the country's employment picture.  Here is a population pyramid for Egypt for the years 1986, 1996 and 2006 showing a rapidly growing population in the 1980s.  It is these young people that are now forming the “unemployed cohort” as many of them have already reached (or will soon reach) their working years:


From CAPMAS, here is Egypt's overall unemployment rate by gender over the period from 2006 to 2009 inclusive:


Notice that the country's over all unemployment rate of 9.4 percent in 2009 was not that far off what was experienced (and is being experienced) in the United States. 

One issue that is heavily impacting the overall employment picture in Egypt is demography.  The large number of young Egyptians is creating higher unemployment levels among those of working age: over 90 percent of unemployed Egyptians are young people between the ages of 15 and 29.  Unemployment in Egypt is largely a product of large numbers of young people entering the job market over a short period of time, preventing the economy from absorbing them.  Many young people end up with low wage jobs which prevent them from starting families and purchasing homes.  This is leading to a situation where many young Egyptians feel excluded from their own society.  Seventy percent of  young Egyptians that are unemployed state that they are unemployed simply because work is not available to them.

Here's a graph showing how labour force participation for non-student youth between the ages of 15 and 29 varies by educational level and gender from the Population Council Survey of Young People in Egypt:


It is interesting to note that among all youth, only 13.4 percent of females participate in the labour force compared to 61.4 percent of males, even when female Egyptians finish schooling.  Even among those women that have finished school, on average, only 17.6 percent participate in the labour force compared to 86.3 percent of non-student males.  Here's a graph showing how employment varies by gender and age:


Prior to marriage, 25.1 percent of never-married non-student females participate in the labour force; this drops to 11.9 percent among married women.  In comparison, 84.1 percent of never married non-student men participate in the work force; this rises to 95.3 percent once they are married as shown in this graph:


The total youth unemployment rate is 15.8 percent but when discouraged workers are added, the total youth unemployment rate reaches 21.5 percent.  The male youth unemployment rates are 12.5 percent and 16.4 percent respectively; women's youth unemployment rates are 31.7 percent and 42.7 percent respectively.   Note that female unemployment generally rises with age, reaching averages of between 30 and 40 percent after the age of 19, dropping only because many of the women marry and drop out of the work force entirely. 

Rather unexpectedly, unemployment among Egypt’s youth generally rises with educational level.  This is likely due to difficulties in the labour market because of a skills mismatch where employers are not interested in hiring post-secondary graduates because their chosen field of study does not match the employers requirements.  Males with a post-secondary institutional education (not university) have a 19 percent unemployment rate and females at the same educational level have a 41.3 percent unemployment rate as shown in this graph:


This phenomenon is contrary to what is experienced in most Western nations where those with a higher level of education generally have a lower rate of unemployment.    

As an aside, according to UNICEF, 7 percent of children between the ages of 5 and 14 years were involved in child labour meaning that children between the ages of 12 and 14 did at least 14 hours of economic work per week was undertaken by 7 percent of the cohort and 17 percent of children between the ages of 5 and 14 were married.

When one sees employment statistics like these, it is no wonder that there is a sense of anger and hopelessness among young Egyptians.  I wonder how Western youth, most particularly those who have invested in post-secondary education, would behave toward those who are in control of our governments if their economic futures were as bleak.  Most OECD nations are seeing unemployment rates well into the double digits; the one difference is that generally, as educational levels rise, employment prospects tend to improve.


20 comments:

  1. Thanks, useful background for those of us who do not know Egypt as we try to understand what is happening there.

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  2. Good post. I'm left wondering what any government could do to rectify the situation, whether a dictatorship or a democratic government.
    Jenn

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  3. Good post. I'm left wondering what any government could do to rectify the situation, whether a dictatorship or a democratic government.
    Jenn

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  4. What is scary is this young people thinking and getting change through violence. India is going through a similar transition, but the young ones there are doing through education and attracting business. These young ones accepted and know violence is a way to change things, they can now be manipulated any which way by a wrong mind.

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  5. Thank you for this post. It sheds more light on the gravity of the situation of the youth there in Egypt. I'm with you ... how could we blame them?

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  6. We're starting to see this problem here in the U.S.

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  7. I don't know what any government anywhere can do about these demographic issues. Their hands are pretty much tied by nature.

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  8. This comment has been removed by the author.

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  9. I would not argue the same way, because following your analysis one can expect youth in Baltic states and Spain (http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-01022011-AP/EN/3-01022011-AP-EN.PDF) shall hold with young Egyptians and go to streets.
    I would argue young Estonians, Latvians, Lithuanians and Spaniards shall spare their time to train for the new profession, start their own business or travel to other EU countries to out-rival less competitive workforce there.
    Economics is very important to consider with regard to current Egyptian situation but you should check also some other statistics (e.g. http://www.heritage.org/index/ranking) to get wider picture of what and why events happen.

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  10. There are an army of 800 pound gorillas that no one is mentioning. Few Arab countries have any history of non-floating-on-oil economic stability. Nor do they have any history of non-rigged-democracy.

    Additionally, very large numbers of unemployed/underemployed Islamic youth looks to me like a bad combination. Iran has a (so called) democracy - with the Mullah's having a veto on who can seek office - ugh. I have NO CONFIDENCE that Egypt would end up with a even slightly secular constitution given the power of Islam these days.

    My heart goes out to Egypt. To me the road(s) forward all look bleak. Serious pity.

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  11. the post is brilliant
    as an israeli I hope for the egyptians for the best outcomes
    BUT I see many obstacles ahead.
    This revolution will be beneficial to the middle east if it will have a critical mass of countries going through a similar transition but will it be enough for a self reinforcing democratic region like europe?

    In a relatively plausible scenario the revolution will hold on in egypt and tunisia and perhaps in jordan soon. Yet in this scenario each country will go through a different transition. Tunisia will be secular, egypt muslim (cause the data this posts show there is no basis to implement democracy- the minority of graduates wont have electoral power to influence the outcomes of an elections) And jordan will be somewhere in between these two and will be at last Palestinian (70% of the population).
    In this scenario, the governments will drift apart to 1-2 semi democracies and 1 dictatorship by a party like in iran (probably less extreme muslim by far)

    less likely but still possible scenario is that a mass of 5-7 countries in the region such as yemen, qatar, sudan, saudi, algeria will join this transition and create a hub for exchanging ideas and compete on implementing economic benefits of democracy. My wish this scenario will materialise. In any case what we saw is phase 1 of this revolution. The Q is when will be phase 2 and 3. Soon or in decades.

    Btw if someone got offended by what I said about Jordan I apologise. I just wish a democracy for the Palestinian people where they live and in the occupied territories under their own rule!
    Israel should be in israel in my view (67 borders with minor exchanges)
    Bless u if u got this far in this comment
    :-)

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  12. btw 2
    Obama need to let go....all his comments after his concern and the need for change he expressed are direct intervention in the inner politics which are forming in egypt.
    The transition is on the way. They need to decide how to do it. Today or in 3 months. They need to understand they are free to negotiate peacefully. 1 or 2 weeks of negotiation with agreed transition will have a positive effect on the future.

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  13. oh sorry...i also wanted to say it will be interesting if you will write a post on israel's economy. We have pretty interesting data and the economic crisis has barley dented the economy. I think its the fastest growing economy in the OECD

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  14. Ireland was OECD's fastest-growing economy until the economic crisis, and now is a total mess. It's Turkey now, their economic growth rate is quite a bit higher than Israel's.

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  15. Ur right Khalid!
    Still we are one of the fastest growing economies in the OECD.
    Not saying it to say we are amazing, like ireland we can go down fast if the right choices are not made.
    I think Turkey is positioned to be a massive power house and it sits in a geopolitical gold mine. Between the middle east, russia and western asia and europe.
    The population is young and it has good relation with all parties (except israel).

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  16. actually i just checked it and its chile...

    Israel is only 4-5th place
    Turkey is 2-3

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  17. The underlying problem then is demographic AND sheer numbers. Without a single doubt the world's ever increasing population is unsustainable and will eventually lead to some pretty horrific events.

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  18. Israel made the right choice like Norway with ties to the EU. Here in Greece we are a basket case, too much too quick and no controlled to so much corruption. I blame Greece but the EU knew that funds were paid and work never completed. Education is the answer, Israel works as has concentrated on high tech development, whereas Europe foolishly turned their production over to China. Mostly due to bad management by union representatives that were too interested in high wages rather than working with management to keep factories in Europe. Germany only benefits as geographically has taken over as main distributer for all imports from China, India and USA to other EU partners. They make the profits. For sure Egypt will become Islamic as we only see the youth in Cairo but the rest of Egypt has poor education and few with modern ideas. They also like Greece have so much corruption which destroys democracy. This is why Israel must be protected and supported, it is the living example in the Middle East that you can have democracy too.

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  19. The best hope for Egypt Is to have a leader emerge who has the guts to say" let's make peace not war". He could lead a move that offers Gazan relief, Sinai and Negev development as outlined in http://www.fourponds.org. (A noncommercial freely availiable site)

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