Egypt’s demographic boom has been a blessing to the economy. As the largest consumer market in the Middle East every sector of the economy can confidently expect sales to increase backed by national demographic trends. The needs of the growing population provide massive investment potential, and the private sector continues to find new opportunities to capitalize on this increasing demand.
However, population growth is undermining economic development with demographic pressures straining public finances. The Egyptian government is the largest employer in Africa with nearly 5.6 million employees. This is a ratio of one civil servant for every 17.8 citizens. Civil service salaries made up EUR 11 786 million out of the EUR 49 256 million 2017-18 budget. The government has frozen new hires for five years as part of a plan to reduce its employees by 38% within ten years.
The government’s family planning policies have not curbed the explosive growth rate. The United Nations Development Program (UNDP) estimates that two-thirds of the population was under the age of 29 in 2018, and the World Bank expects the population will reach 150 million by 2050.
This has caused a severe demographic transition. Egypt has been successfully reducing its previous high mortality rates, but its fertility rates have not decreased to the 2.1 range as was the case in other developing countries. According to the Egypt Demographic and Health Survey, the fertility rate even increased between 2008 and 2014 from 3 to 3.5 children per woman.
Although the Arab Republic of Egypt extends over 1 001 449 square kilometers, habitable area is concentrated on just 8% of the land affecting population density. Egypt’s population density by inhabitable area makes it one the most crowded in the world. Its cities are struggling to provide basic services for the ever-growing population.
National unemployment is declining from 13.3% in fiscal year 2012/2013 to 9.9% in fiscal 2017/2018. However, the International Labour Organization (ILO) estimates it reaches 31% amongst Egypt’s youth. The International Monetary Fund (IMF) expects the total labor force will increase 20% and reach 80 million by 2018.
The public and private sectors are barely able to generate jobs fast enough to keep unemployment low. This combination has accentuated the difficulties experienced by Egyptian youth and acerbated pressures to improve social well being. Additional social and economic policies are needed to enable the young population to enter the labor force and contribute to increasing national productivity and economic growth.
The Egyptian government’s strategy to solve the dilemma of unemployment is boosting local reforms which can attract FDI, fomenting exports, and focusing on national mega infrastructure projects in infrastructure, and urbanization projects such as the New Administrative Capital and other megacities.
Entrepreneurship is another successful path to enter the job market and the formal economy. It can improve livelihoods, empower youth, increase tax collection and make a substantial social contribution. However, barriers limit the ease of starting a business including limited access to finance, and a lack of training opportunities.
European Union Engagement: The European Union’s engagement with Egypt increasingly focuses on supporting inclusive growth, youth employment, and entrepreneurship through programs like the “EU Facility for Economic Growth and Job Creation” and the “EBRD’s Small Business Programme.” However, much more is needed to ensure educational and vocational training opportunities prepare Egyptians to enter the job market. Vocational training, in particular, is an area that will help provide new career pathways, boost employment, and entrepreneurship. Additional European Union engagement in fomenting these would have a positive impact on youth and job creation.