Analysis in this policy note indicates a rapid deterioration in employment opportunities for
young individuals transitioning from school to work in Egypt. Despite substantial improvements
in labor market outcomes in recent years (in raising employment and participation and in
lowering unemployment), unemployment rates in Egypt remain exceedingly high among youth
entering the labor market for the first time. A slow school-to-work transition remains the main
reason behind high unemployment rates. Young entrants to the labor market have become
more educated than ever before: the share of the working-age-population with university
education in Egypt has increased significantly between the years 1998 and 2006 (from 14% to
19% among men and from 9% to 14% among women). However, youth are unable to capitalize
the time and resources invested in their education as the labor market is not providing enough
good-quality jobs for them. To cope with scarce formal jobs, young-educated workers are opting
to work in the informal sector and/or withdraw from the labor force, which is contributing to a
deadweight loss of recent investments in education. There are three key factors that seem to
explain why school-to-job transition remains low in Egypt: investments in the private sector
remain low and capital intensive, new graduates are not equipped with the skills demanded by
the private sector, and the public sector still provides incentives for educated individuals (mainly
women) to queue for private sector jobs. There are several policy options used in the
international context to further enhance the performance of the labor market; such as removing
obstacles in regulation, enhancing employability of new entrants, reforming the civil service, and
designing targeted programs aiming to boost labor demand.