Unemployment may be falling, but labor market tells a deeper story
The 2023 Egypt Labor Market Panel Survey, released in Nov. 2024, reveals that unemployment fell in 2023 to 6.3%, about half its level nearly a quarter-century ago. On the surface, this seems encouraging. But, the researchers behind the survey argue that this decline has less to do with economic recovery than with demographic shifts and an increasing number of people exiting the labor force altogether.
According to the survey, the large cohorts born in the 1980s and 1990s—whose sheer size once placed immense strain on the labor market—have left smaller cohorts in their 20s today, easing current pressure on jobs. Yet the uptick in fertility in the early 2000s will create another youth bulge in the coming years, bringing unemployment pressures back to the fore.
Today’s labor market is producing lower-quality jobs that more vulnerable groups, especially women, are compelled to accept. In 2023, women were more likely to move into informal jobs or self-employment, while many others appear to have become discouraged and stopped looking for work.
This article analyzes the results of the latest edition of the survey—conducted every five years since 1998 by Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS) and the Economic Research Forum (ERF), and presents researchers’ reflections from its November launch event.
What happened to the 25 January generation?
A body of research argues that Egypt’s youth bulge was a key driver of the January 2011 revolution. By “youth bulge,” we mean a rising share of young people in the population, especially ages 15–29, who made up roughly one-third of the population during the 2000s.
This demographic typically faces more difficulty securing employment than older, more experienced workers. In an economy with limited job creation, the rapid growth of this group was a recipe for rising frustration.
The youth bulge was a product of high fertility rates during the 1980s, averaging more than five children per woman, combined with rising child survival due to widespread vaccination and improved healthcare. As this generation came of age, it dominated the revolution’s political scene.
That picture has now changed.
On one hand, members of that cohort are now in their late 30s, improving their chances of securing better jobs thanks to longer experience in the labor market. On the other, fertility fell from the late 1990s through 2010 to around three children per woman, shrinking today’s youth share of the population and easing pressure on jobs.
https://public.flourish.studio/visualisation/26178221/“After a period of demographic pressure due to the ‘youth bulge,’ the labor market is experiencing temporary relief, as the peak of the youth bulge is now aged 35–39.” according to a study presented at the ERF conference.
But the trend is reversing. Fertility has risen again since 2010. Not to 1980s levels, but enough to remain significantly higher than the pre-2010 period. The effect isn’t visible yet, as these younger children have not reached working age. But when they do, job demand will once again surge.
“However, the sizable ‘echo’ generation, the children of the youth bulge, with a peak at ages 5-14, will reach working age within the next decade, leading to a surge in labor market entrants,” the study said.
These studies urge policymakers not to mistake the current demographic lull for a permanent solution, and to restructure the economy now to absorb the coming wave of new workers.
The construction boom has ended
Back in 2018, a core theme of the labor market survey was the construction sector’s ability to provide many jobs that helped limit unemployment, though most were low quality and informal.
The 2023 survey, by contrast, shows construction’s role in employment has waned, unsurprising given IMF-linked limits on state investment in the sector after its fiscal risks became clear.
As construction cooled, traditional sectors such as manufacturing and financial services began to gain ground..
Other areas also grew including public utilities. One study attributes this to new job opportunities in “electricity production and waste sorting and recycling; two industry segments associated with the green transition.”
https://public.flourish.studio/visualisation/26178331/The study also notes that transport was among the sectors adding jobs, with a stronger tilt towards independent work.
The study does not detail each occupation, but many signals point to a shift towards gigs and self-employment, such as ride-hailing, to offset a shortage of alternatives.
This improvement in employment could have been stronger if the state had enacted recommended reforms, including support for small enterprises, which are among the most job-intensive.
The same study warns of a clear slowdown in job growth in education, given the sector’s importance for employment.
It also highlights the need to protect labor rights, especially as job quality is deteriorating for women, who appear most vulnerable under current labor conditions.
Why are women leaving?
In 2012, 14% of women worked in informal jobs without protection. That rose to 20% in 2018 and remained there in 2023.
A key reason women have not seen progress on protection from informality is the erosion of government jobs, long a haven offering decent work with conditions suited to their needs.
During the same 11-year period, the share of employed women in government fell from 51% to 38%.
The private sector often looks harsher. As the study notes, “There is a need for targeted initiatives to support married women’s ability to remain employed in the private sector after marriage and childbearing, such as childcare facilities, flexible working arrangements, and remote work possibilities.”
Under these pressures, it makes sense that many women choose self-employment. That share rose from 10% to 18% over the same period.
https://public.flourish.studio/visualisation/26178310/Men in 2023 faced higher rates of informality than women—36%—but that was 11 points lower than in 2018.
The study concludes that women did not benefit from the labor-market improvements their male peers experienced.
Most striking is the number of women who have exited the labor force entirely.
The survey reveals a general decline in labor force participation, the share of people either working or actively looking for work, among both men and women. But the decline is sharper for women.
As one study noted, “For women, participation rates were already low at 23% in 2012, but they have fallen further in 2023 to 18%. The drop has been especially acute for educated women, who are increasingly withdrawing due to shrinking public sector opportunities.”
https://public.flourish.studio/visualisation/26178661/This retreat is not about a lack of skills. In the survey, 21% of women held university degrees, close to the 25% for men. Rather, several factors feed the trend, especially that working conditions often do not accommodate women’s needs, notably caregiving.
In short, the studies commenting on the survey argue that the apparent improvement in unemployment reflects two forces: a temporary easing of demographic pressure as smaller cohorts reach working age, and a simultaneous exit of many people from the labor force.
They warn that this moment of demographic relief is temporary.
Egypt needs further reforms to create jobs, integrate future cohorts into decent work, and avoid squandering the energy and potential of its next generation.
(*) A version of this article first appeared in Arabic on Nov. 28, 2024