IMF Hails Strong Growth in Egypt’s Labor Market
Source: www.export-egypt.com 7/18/2018
With nearly 100 million people and a geographic location that provides excellent access to important foreign markets, Egypt has immense potential, International Monetary Fund (IMF) Mission Chief for Egypt Subir Lall said in an article titled “Egypt Moving Forward: Key Challenges and Opportunities”.
“Over the next five years, around 3.5 million young Egyptians are projected to join the labor force. Absorbing these new entrants into the labor market will be a challenge.
"However, this also creates a tremendous opportunity for faster growth—if Egypt can support the emergence of a strong and vibrant private sector to productively employ this emerging generation of workers,” Lall added, according to the article published on the IMF website.
“Over the past several decades, the private sector in Egypt has been less dynamic and outward-oriented than in peer countries, with a small share of firms able to compete outside the domestic market,” he noted.
“To foster greater private sector development and export-led growth, the authorities have broadened the structural reform agenda under their program, initiating reforms to improve the efficiency of land allocation, strengthen competition and public procurement, improve transparency of state-owned enterprises, and tackle corruption,” he clarified.
“With the economy now stabilizing, Egypt’s challenge is to modernize its economy to better take advantage of its potential. An essential element of that process is to ensure the best allocation of resources to generate higher growth, and remove price distortions that impede markets from functioning efficiently,” he said.
“As Egypt begins to modernize its economy and make it more competitive, it will also need to continue to bring down public debt to a level consistent with long-term sustainability,” he added.
“The challenge is to ensure that the most vulnerable segments of society are protected during this process, and that fiscal resources are safeguarded for spending on health and education,” he stressed.
“The shift away from a social protection system based on energy subsidies is crucial in moving toward a better-targeted and more effective social safety net,” he underlined.
“The 2018/19 budget will continue to replace poorly-targeted energy subsidies with programs that directly support the poorest households through expanded cash transfer and food subsidy programs.
The authorities have strengthened programs like food smart cards, and more than doubled the amount of assistance provided through these cards,” he added.
“The government has also strengthened social solidarity pensions, and the Takaful and Karama cash transfer programs. Takaful is an income support program for families with children, and Karama is a social inclusion program for persons who cannot work, specifically the elderly and people with disabilities,” he uncovered.
“These efforts are also being supported by reforms to improve the efficiency of government spending and tax collection to ensure that pro-poor spending and investments in health and education are protected.
"More broadly, the faster creation of private sector job opportunities and the integration of women into the labor force as part of the authorities' inclusive growth strategy is expected to steadily improve living standards, including for lower-skilled workers,” he concluded.