High unemployment rate despite the increasing level of education in Egypt

This article is an abstract of the sector analysis published in the Outsourcing Destination Guide Egypt which is available for free download, written by Stephan Fricke, CEO & Head of Advisory Board at German Outsourcing Association and German Process Automation Association.

Labour market

Egypt has a labour force of 28,5 million people (World Bank 2022) and young society with more than 20 million people in the age group of 18-29 years. Despite the increasing levels of education and the progressively narrowing gaps between genders, young Egyptian university graduates suffer from high unemployment rates, especially females. The unemployment rate over the pandemic years was 7.9% but improved to 7.3% in 2021.

Nevertheless, unemployment in the age group (18-29) remains around 30%. The Reasons vary by economy but may widely include mismatches between job supply and demand and the insufficient formal job creation in the private sector (The British University in Egypt 2021).

Especially for women unemployment was high around 17% in 2021 and at first glance this could potentially indicate a rise in the employment rate but research confirms that women are actually dropping out of the labour force despite the gender gap in education rapidly closing. Especially women under the age of 36 face a tradeoff between their productive and reproductive roles in society. Thus marriage and burden of care responsibilities are among the main factors hindering women from reaching their full economic potential.

Literature and research highlight how the limited participation of women in the labor market is negatively affecting economies and limiting its inclusive growth (World Bank 2011). For the case of Egypt, a report by the International Monetary Fund (IMF) indicates that if the rate of women participation in the labor market increased to the same rate of men, the GDP for Egypt would increase by 34 percent?(American University in Cairo 2022).

This may change in the near future as Egypt’s Government and the MCIT launched programs since 2016 to empower women not only in the field of ICT but in general. In addition Minister of International Cooperation Sahar Nasr said that they want to provide women and youth with help and lines of credit to fund their own MSMEs, adding that women-owned enterprises are the key to female empowerment, both politically and socially (MCIT / Ahram Online 2016).

Labour cost

The average monthly salary in Egypt is 9,200 EGP (Egyptian Pound) which converts to 462,45 EUR, or 496,77 USD and the gender pay gap is slowly closing but still lies at roughly 10%. (Salaryexplorer.com)

For the ICT sector the average lies slightly higher at 9,240 EGP. Entry level salaries for fresher and juniors incrementally increase about 32% after 2-5 years experience and another 36% after 5-10 years although these numbers might vary depending on company and position.

Obtaining a Bachelor’s degree increases the salary over people that only managed to earn a certificate or diploma by 24%, another 29% more for attaining a Master’s Degree, while a PhD holders can add additional 23%. About 48% of employees in the ICT and customer care sectors receive annual bonuses that average at 4-5% of their annual salary (Salaryexplorer 2022).

IT Services (monthly average salaries)

For the information technology sector in Egypt the monthly average salaries are between about 700 EUR and 2,400 EUR gross, incl. 20-30% taxes.

Customer Care (monthly average salaries)

The average monthly salary for customer care related jobs is about 317,18 EUR. The wages range from about 300 EUR to 2.400 EUR gross.

Salaries complied by comparing different sources, incl. Salaryexplorer.com, Glassdoor.com, payscale.com and information from local companies.

Conclusion

With the rising number of workers in the ICT sector, up to about 300,000 in 2021, slowly but steadily rising growth rates (15,2% in 2020 and 16% in 2021), continuous infrastructure development, law implementation to reduce costs of doing business and ongoing efforts to further implement ICT into the education system the Egyptian Government created a good foundation to build on (MCIT and World Bank 2021).

According the Egyptian ICT Ministry the sector attracted $390M in 2021 up from $190M in 2020. The industry grows at a 16% rate making it the highest growing sector in Egypts economy and hopes are high that it helps to accelerate job creation which, apart from improving and reforming the education system, is one of the main challenges for the Government to tackle its high unemployment rate and stop the brain drain (MCIT 2021).

Thus it is absolutely crucial for a country like Egypt, where a large population of school and collage graduates enter the job market each year, to have an investor-friendly business environment that allows the private sector to become an engine creating more and better jobs (World Bank 2022).

While not without problems, the sector seems to be mostly well organized and supported by the government which shows a great level of ambition to provide the right stimulus through the?plethora of its projects, initiatives, and bilateral co-operations. And with a GDP contribution of 5% and rising it is not surprising that Egypts Government is heavily invested as the industry is expected to drive future economic growth (American Chamber of Commerce in Egypt).

Read the entire article with graphs and numbers in the Outsourcing Destination Guide Egypt, which is available for free download at www.outsourcing-destinations.org.