Egypt's Private Sector: A driving force for job creation

Egypt needs better jobs. It also needs more jobs. The small-sized firms Egypt needed to employ Egypt’s young working population aren’t growing fast enough to meet the demands. Although overall employment has remained stable in recent years, the trend has been toward a growth in jobs in the informal sector that are often disturbingly insecure.

The World Bank’s Egyptian Labor Market Report 2014 "More Jobs, Better Jobs: A Priority for Egypt" sees this as the result of stagnation in Egypt’ s formal private sector over the last 15 years. Along with a decrease in public sector hiring, the gap in employment has been filled with informal jobs offering neither written contracts nor social insurance.

This burden of the jobs shortage has fallen primarily on Egypt’s youth. More than 75 percent of the country’s unemployed are young—between 15 and 29 years of age. Young Egyptians are two to three times more educated than the previous generation. However, young men find themselves having to work in lower quality jobs than they would like and young women have been withdrawing from the labor market entirely.

The sort of fast-growing small firms that generate employment in most economies today are in shorter supply than needed. Large Egyptian firms haven’t grown and, in the process, created more jobs. These firms were born large as a result of the privatization of state-owned enterprises. Partly due to the country’s economic policies, micro-firms are faced with a myriad of challenges that prevent them from fully joining the formal sector and competing with old, large, privileged firms.