The aim of this paper is to assess to what extent is the Egyptian labor market dynamic and the
impact of its dynamics on stagnant unemployment rates. By estimating annual and semiannual
transition probabilities of workers among different employment sectors as well as
between employment and non-employment states, the paper explores how sluggish the
Egyptian labor market has been throughout the past decade, and characterizes the
subcategories which suffer the most from this rigidity. In the absence of official and research
statistics of these transitions in Egypt, these estimates would surely improve the monitoring
of business cycles, the detection of inflection (turning) points and the assessment of labor
market tightness. A unique semi-annual panel of labor market micro-data, generated from the
new cross-sectional Egypt Labor Market Panel Survey 2012, is used in the analysis. Results
show evidence of relatively rigid dynamics within the Egyptian labor market with a turning
point in trends of job accession (job finding) and separation rates right after the financial
crisis and the January 2011 uprising. Flows into and out of unemployment seem to have been
affected by the slowdown of the economic growth following the Arab Spring during which
separation rates almost doubled and job finding rates declined. Even after an increase in the
separation rates of about one percentage point, these rates remain very low, reflecting an
extremely rigid labor market. In such times of crises, unemployment rises not only because
workers lose their jobs into non-employment (evidence of increasing involuntary job exits),
but also because it becomes harder to find jobs, which is verified by a substantial decline in
the job finding rate after 2009. Results also suggest that claims of increasing job losses after
January 2011 uprising were exaggerated. Additionally, a rise in job-to-job transitions,
especially among informal workers, is observed.