Etudes par pays volume 2, PDF, 346 p., 1,4 Mo - Femise
Etudes par pays volume 2, PDF, 346 p., 1,4 Mo - Femise Etudes par pays volume 2, PDF, 346 p., 1,4 Mo - Femise
11873_02 Study D2: Poverty, Informal Sector, Health and Labour The main essence of this kind of information is the apparent trend towards growing unemployment. This phenomenon of increasing UER started to become chronic at the end of the eighties, for three reasons: 1. The decreasing work opportunities for the Egyptians in the rich Gulf countries: This development came because of the saturation in the construction sectors –as well as others- in these countries. In addition, the growing trend to employ Asian labor (Pakistani, Afghan, Indian, Bengal, Philippine..) and to engage more of the educated natives in occupations that were usually filled by the Egyptian employment (teaching, medical services, accountants, lawyers) reduced the chances of Egyptians in the Gulf countries. 2. The decreasing work opportunities for the growing workforce in the government ranks, which came as a repercussion of the accelerating budget deficit during the end of the eighties, and the implementation of the ERSAP in 1991. These two factors led to a decrease in the employment growth rate in the Public Sector -3% during 1988-1998- as compared to 8% during 1976-1986. 3. The slow growth rate of employment in the large private sector and the FDI companies (1.5% during 1988-1998), because of their tendency to use advanced capital intensive techniques on one hand, and due the slow growth in investment spending since 1997 on the other hand. In fact the FDI showed a drastic decline in their inflows from US$1.656 Bill in 2000 to US$ .428 Bill in 2002 23.The only sector that revealed a continuous capacity to employ was the non-agricultural micro and small enterprise sector, which achieved an average employment growth rate equal to 4.8% annually during 1988-1998. Consequently, The stock of unemployment grew –according to official sources- from a modest 1.4 mill unemployed in 1996 to rise up to 2 mill unemployed in 2000. This situation was aggravated by the increase in the number of new entrants to the labor market from 600,000 in 1992/1993 to 900,000 in 2000 24 . 23 MOFT, Economic Bulletin, 2002. 24 Fawzy, S., “Investment Policies and Unemployment in Egypt”, The Egyptian Center for Economic Studies, Cairo, WP No.68, Sept. 2002, p.10 FONDAZIONE CENSIS 22
11873_02 Study D2: Poverty, Informal Sector, Health and Labour In addition, the unofficial estimates of unemployment rates- which are derived from special rounds of national surveys 25 - seem to indicate that it the UER could be significantly higher than the official figures. According to some of these estimates, the UER range between 12.0%-17.5% through the end of the nineties and until 2003. The Inflation Rates The inflation rates showed a steady decline since the beginning of the nineties from a high 20% in 1990 to a low 2.4% in the first quarter of 2002. The austerity stabilization program, which was successfully implemented in 1991 -1996/1997 helped in realizing this decrease. However, since mid 2002 the prices started to witness a steady increase, which were triggered by the shortage in foreign exchange that caused a steady depreciation of the Egyptian Pound, which was directly reflected on the prices of all imported goods, or products that had imported components. The inflationary spiral was further instigated by the decision to liberalize the Egyptian Pound (January 2003). Consequently, the value of the LE declined from 1US$=LE4.62 in January 2003 to LE6.2 in September 2003 or by 34.8% in 7 months. The devaluation is causing an escalating increase in the price levels and is significantly raising the CPI and WPI. It has an especially negative impact on the prices of the basic consumer goods. How do these developments in the UER and inflation rates relate to the previous analysis? It is obvious that despite the government’s efforts on the human development side, and despite the apparent increases in the average per capita income, both the rising UER and inflation rates had an adverse effect on the population. The combination of the high UER and the accelerating 25 See Fergany, N. (1999), “An Assessment of the Unemployment Situation in Egypt”, Al Mishkat Center for Research and Training, Research Notes, No. 13. Assaad, R. (2002), Labor Market in an Era of Transition, Cairo, AUC University Press. FONDAZIONE CENSIS 23
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- Page 59 and 60: APPENDIX
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11873_02 Study D2: Poverty, Informal Sector, Health and Labour<br />
In addition, the unofficial estimates of unemployment rates- which are<br />
derived from special rounds of national surveys 25 - seem to indicate that it the<br />
UER could be significantly higher than the official figures. According to<br />
some of these estimates, the UER range between 12.0%-17.5% through the<br />
end of the nineties and until 2003.<br />
The Inflation Rates<br />
The inflation rates showed a steady decline since the beginning of the<br />
nineties from a high 20% in 1990 to a low 2.4% in the first quarter of 2002.<br />
The austerity stabilization program, which was successfully implemented in<br />
1991 -1996/1997 helped in realizing this decrease.<br />
However, since mid 2002 the prices started to witness a steady increase,<br />
which were triggered by the shortage in foreign exchange that caused a<br />
steady depreciation of the Egyptian Pound, which was directly reflected on<br />
the prices of all imported goods, or products that had imported components.<br />
The inflationary spiral was further instigated by the decision to liberalize the<br />
Egyptian Pound (January 2003). Consequently, the value of the LE declined<br />
from 1US$=LE4.62 in January 2003 to LE6.2 in September 2003 or by<br />
34.8% in 7 months.<br />
The devaluation is causing an escalating increase in the price levels and is<br />
significantly raising the CPI and WPI. It has an especially negative impact<br />
on the prices of the basic consumer goods.<br />
How do these developments in the UER and inflation rates relate to the<br />
previous analysis?<br />
It is obvious that despite the government’s efforts on the human<br />
development side, and despite the ap<strong>par</strong>ent increases in the average per<br />
capita income, both the rising UER and inflation rates had an adverse effect<br />
on the population. The combination of the high UER and the accelerating<br />
25 See Fergany, N. (1999), “An Assessment of the Unemployment Situation in Egypt”, Al<br />
Mishkat Center for Research and Training, Research Notes, No. 13.<br />
Assaad, R. (2002), Labor Market in an Era of Transition, Cairo, AUC University Press.<br />
FONDAZIONE CENSIS<br />
23
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