Job creation is one of the most important challenges facing Egypt today. Demography is part
of the problem. Egypt’s population growth is not particularly high by the peer group
standards, but Egypt has a young population and a large number of young people are entering
the job market each year searching for first jobs. Demand for labor is the other side of the
problem. Economic performance has been uneven in the past decade, but even in periods of
high growth, the job content of growth has not been strong enough to absorb the new entrants
to the labor market. Disparities related to education, training and skills between the jobs
offered and the qualification of job seekers have also hampered employment, particularly
among the youth.
Until the mid-1970s, major public investment in heavy industries and import substituting
activities generated sufficient growth and employment. Perhaps more importantly,
government’s guaranteed employment policy absorbed the bulk of labor force entrants.
Unemployment was low—in the range of 2-3%—and youth unemployment was virtually
nonexistent, masking large costs and inefficiencies associated with a bloated public sector
which surfaced later.