Egypt struggles as joblessness soars

Until he lost his job earlier this year, Emad Saqr used to oversee six shops selling souvenirs dotted around different hotels in the Egyptian Red Sea resort town of Sharm el-Sheikh.

The owner had to shut them down, Mr Saqr explains, because he could no longer afford the high rents charged by the hotels which had made sense during the boom years before the 2011 revolution.

Now the 34-year-old, married with two small children, has returned to his home town of Alexandria, where the family is living off his savings supplemented by gifts of food from his parents.

“I feel like I was someone who used to be very rich and has become poor all of a sudden,” he says. “If you open my wardrobe, you will find that all my clothes are brand names. But now I feel all has been lost. I owe instalments on my car until 2015. I think I will sell it and make do with public transport.”

The latest official figures show that unemployment in Egypt has risen to 13 per cent in the last quarter of 2012, up from 12.5 per cent in the third quarter.

This translates into a loss of 162,000 jobs across the economy.

In comparison, unemployment on the eve of the 2011 revolt, which toppled Hosni Mubarak as president, was 8.9 per cent according to the government statistics agency.

Out of a workforce of 27m, the agency says, there are now some 3.5m jobless people.

But the official figures tell only part of the story, experts argue.

Samir Radwan, a labour economist who served as Egypt’s first post-revolution finance minister, says the real unemployment rate is bound to be higher because official figures do not factor in the informal economy in which a third of the workforce is employed.

“I never took the unemployment figures very seriously,” says Mr Radwan. “We know there are questions of credibility over whether they are correctly calculated or not. We never see the raw data and it makes a huge difference, for instance, if you add new graduates as unemployed or not. Some years in the past, they omitted them.”

But no one is quibbling with the fact that unemployment is rising, a trend which is supported by anecdotal evidence and which, economists say, is a logical outcome of the economic slowdown since the revolution.

Growth in 2012 was 1.9 per cent whereas in the few years immediately preceding the uprising, it ranged between 4 to 7 per cent.

Ashraf al-Araby, the planning minister, said last week that the government was aiming for a growth rate of 3 per cent in the current fiscal year ending in June 2013.

But to soak up some 700,000 new entrants to the job market every year, without even significantly denting the backlog of the unemployed, the economy needs to grow by 7 per cent and above.

Mr Radwan describes as a “time-bomb” the high rate of joblessness among people under 30, which is 74 per cent according to government figures.

“I expect unemployment to increase because there are no signs that the economy is picking up,” says Mr Radwan. “Already some 1,500 [business] establishments have shut down.”

The slowdown in the economy is starkly illustrated in the revenues of key sectors such as tourism.

Tourism in 2012 brought in $10bn, an improvement over the previous year, but still below 2010 when revenue was $12.5bn.

Mostafa Salah, who works as a travel agent in Sharm el-Sheikh, says his company has made more than a third of the employees in his branch redundant.

“We are just working to keep customers coming, not for profits,” he says. “We are doing it in the hope there will be an improvement in the future.”

Political uncertainty in Egypt since the revolution has scared foreign investors away, slowing down job creation. It has also disrupted existing sectors that are traditionally big employers such as construction and textiles.

Hossam Gabr, who heads the Investment Zone [an industrial park] in the northern city of Port Said, says that out of 35,000 jobs in the zone, mainly in textiles, some 4,000 have been lost over the past two years.

“I reckon that 10 per cent of our factories have had to shut down for various reasons,” he says.

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