the impact of the global financial economic crisis on...

16.08.2010 Seite 103/12/10 Seite

The Impact of the Global Financial Economic Crisis on

Egyptian Labour Market – Further Reflections for TC

The Background

The Approach

Facts and Figures

Conclusion

Reflections on the Role of TC: Labour Market and Employment

16.08.2010 Seite 203/12/10 Seite

The Background

The first MKI-vetEP study and reflections on the effects of GFEC in Egypt was

undertaken in March 2009

The Main Challenges Remain as Follows:

Challenge to forecast and draw up strategies with regard to GFEC as

it must be seen as a complex macroeconomic phenomenon

Challenge to attribute changes in employment unambiguously and

causally to GFEC (fuel and food crisis? other constraints of economic

development?)

Challenges to rely on quantitative data

16.08.2010 Seite 303/12/10 Seite

The Background

Challenge to Rely on Valid Data – Examples:

Total Employment in Textile & Clothing Sector:

According to CAPMAS: 278,267

According to Industrial Dev. Authority: 400,384

Exports Textile & Clothing 2007 in US$:According to CAPMAS: 6,52 Mio

According to GOEIC: 2,34 Mio

Labour Force 2003: According to Ministry of Planning: 20,2 Mio

According to the World Bank: 26,7 Mio (Unemployment rate?)

16.08.2010 Seite 403/12/10 Seite

The Approach

To reflect and draw up conclusions on the impact of GFEC and it‟s

further implications on labour market and employment interventions,

this presentation relies on :

Studies available (see Annex)

Interviews with stakeholders and representatives of LM in Egypt

Media, press reviews (Employment Express of MKI-vetEP)

Plausibility considerations

16.08.2010 Seite 503/12/10 Seite

Are We Done with the GFEC??

16.08.2010 Seite 603/12/10 Seite

The Main Findings at a Glance

The effect of GFEC on Labour Market has to be observed on the long run

due to the different waves of effects on economy and LM (2014 etc.)

Impact of GFEC can lead to increased structural unemployment

(orientation towards informal sector, discouragement of seeking for

employment choose option to stay in educational system => 80/20)

GFEC affected mainly vulnerable groups of employment, women and youth

Economic growth must not reduce poverty (Source: M. Grossmann, 2009)

Employment structures: economic growth must not lead to increased

employment (value of GDP figures??)

16.08.2010 Seite 703/12/10 Seite

The Main Findings at a Glance

GFEC affected selected sectors of Egyptian LM, mainly Textile and

Clothing

Egyptian strategies to mitigate the impacts of GFEC have been relatively

fast and prudent. On the other side, they lack targeted and long term

strategies (mainly infrastructural projects, scarcely long term employment

intensive and productive sectors)

Well established manufacturing companies could rely on governmental

strategies, e.g. shift production orders from private to governmental order

(El Sewedi SAE)

And the good thing still...

Compared to other countries, the impact of GFEC on Egypt is still relatively

modest, due to it‟s less affiliation to the global financial market

16.08.2010 Seite 803/12/10 Seite

Egyptian Background - Some Figures

Source: CAPMAS 2008, Census data; ILO Key indicators of the Labour Market

16.08.2010 Seite 903/12/10 Seite

GFEC Effects on Employment -

Facts and Figures

2008 2009

Source: CAPMAS 2008, Census data; ILO Key indicators of the Labour Market

16.08.2010 Seite 1003/12/10 Seite

GFEC - Effects in Facts and Figures

Trade (major transmission channel of the crises)

Trade tripled between 2004-08

In 2009 it fall by 25%

Foreign Direct Investment*

Fall from 16,9 % of GDP 4%

*Egypt ranked as 1st country in Africa and 2nd in MENA in FDI (after Saudi Arabia)

16.08.2010 Seite 1103/12/10 Seite

GFEC - Effects in Facts and Figures

Tourism sector is particularly sensitive to external economic

uncertainty (Beside GFEC, H1N1 played a considerable role)

Tourism rate of growth 29,5% (07/08) 2009 6,0%

Decline in number of residents 2009 -16,3%

Negative impact of GFEC for all items: revenues, occupancy, liquidity,

investment etc. except wages!

Employment in Tourism in 2007:

No measurable decline

16.08.2010 Seite 1203/12/10 Seite

GFEC - Findings on Employment

Tourism sector is scattered over a wide range of economic activities

(Hotels, Restaurants, Shops, travel agents etc.) This is worthy to note with

regard to the limited validity of figures on hotel employment:

Red Sea, South Sinai: 74,0% hotel capacity / 64,0% of employment

Greater Cairo region: 18,8% hotel capacity / 28,9% of employment

Impact of GFEC on Tourism Sector in General:

51,3% of hotels asserted the existence of an impact of GFEC and

indicated an influence on their employment policy

Impact of GFEC is the same for all workers

(not biased against a particular group of workers)

16.08.2010 Seite 1303/12/10 Seite


Negligible impacts: Lay offs (permanent or non permanent)

Low impact: Reduction in non-pecuniary benefits, wages, compulsory

vacation

High impact: Reduction in incentive payments

Some Indicators on Tourism Employment

Tourism sector tend to permanent employment

Only 3,8% non-permanent employment

Wages: Male workers L.E. 840

Female workers L.E. 673

16.08.2010 Seite 1403/12/10 Seite


Some Indicators on Tourism Employment

Number of Female Employment in Hotels, Tourist Villages and restaurants

(% female)

CAPMAS, LFSS

2005 2006 2007 2008

Hotels, Tourist

Villages7,4 6,4 6,0 ?

Hotel, Rest. 2,5 4,1 3,3 2,4

16.08.2010 Seite 1503/12/10 Seite


Textile & Clothing

26.4% of total industrial production in Egypt

20,1% of industrial sector firms

T & C sector employs 415,333 workers which makes it the largest

industrial employer in Egypt (source: IDA 2010)

34.610 Job Losses

(IDSC reduced the decline due to reduction in production, slowdown of

the sector, especially the private sector growth which would have

happened anyway)

16.08.2010 Seite 1603/12/10 Seite


Impact on Textile & Clothing 2008 -2009: (Source: El Haddad, 2010)

Production - 21%

Domestic sales - 16%

Exports - 22% (year before -16%)

Impact on Employment 2008- 2009 (all of them in the textile sector NOT Clothing)

Total - 3,2%

Out of these:

Woman 3,4%

Informal 10%

81% of firms reported laying offs of illiterates, very low skilled workers

16.08.2010 Seite 1703/12/10 Seite


16.08.2010 Seite 1803/12/10 Seite


Main problems from Employers Perspective:

Scarcity of trained and educated workers 77%

“Youth has no desire to work in the sector” 70%

Low wages 60%

High resignation rates 40%

Working conditions (distance home-work) 31%

16.08.2010 Seite 1903/12/10 Seite

The GOE adopted a set of measures to counteract the potential adverse

implications of the GFEC like Fiscal Stimulus Packages to:

Promote economic growth

Support the labor market

Create new employment opportunities

➡The measurement of the outcome appears difficult due to

Data Limitations Revisited

Fiscal & Monetary Measures

16.08.2010 Seite 2003/12/10 Seite

Fiscal & Monetary Measures

Recommendations from IDSC:

Data improvement strategies.

Fiscal stimulus: permanent vs. temporary.

Alternative analytical framework (LP, CGE, stochastic control, etc.)

16.08.2010 Seite 2103/12/10 Seite

Summary of Recommendations to Mitigate

Effects of GFEC

16.08.2010 Seite 2203/12/10 Seite

Employment Strategies - MoMM/ILO 2010

To Implement or Foster Various ALMP Measures Through:

Public work programs

Support SME

Establishment of LMI Information system

Incentives for vocational training

16.08.2010 Seite 2303/12/10 Seite

Conclusions - or - What does that mean for

TC?

Effects of GFEC are obvious and tend to deteriorate further on the

difficult situation of Labour Market and Employment in Egypt and

other countries

To further intensively promote “Employment Issue” in it‟s urgency as part of

product portfolio of GTZ

To grasp the „chance‟ to further sharpen and profile TC approach and

improve the effectiveness of the different approaches

16.08.2010 Seite 2403/12/10 Seite

Reflection on the Role of TC in LM and

Employment

The Main Challenges are:

1. How to tackle the complexity of “Labour Market and

Employment‟ issue?

2. How to tackle LMI constraints

16.08.2010 Seite 2503/12/10 Seite

Reflection on the Role of TC in LM and

Employment

1. How to tackle LMI constraints?

To strengthen cooperation with entities/organizations already working

on development and improvement of LMI Systems (ILO, Ministerial

entities, World Bank etc.)

2. How to tackle the complexity of “Labour Market and Employment‟

issue?

Reduce complexity through:

Focused and selected area of intervention/approach

Improvement of “multi resort” approach

Improvement of dealing with „multi-stakeholder‟ settings

16.08.2010 Seite 2603/12/10 Seite

How to contribute an added value?

To look beyond figures and quantitative assumptions through

development of qualitative beside quantitative criteria

To diversify paradigms emerging different concepts and herewith

areas of interventions (e.g. the paradigm of „supply and demand‟)

Reflection from MKI-vetEP‟s

Point of View

16.08.2010 Seite 27

Strategies like

03/12/10 Seite

Classical ALMP and PLMP

Targeted educational

strategies

Labour

Market

Information

Systems

Quantitative

assumptions

and criteria Assumed circle

of

improvement

Some Reflections

16.08.2010 Seite 2803/12/10 Seite

Excerpt of some Case Studies:

Agro Tech - Private Company, El Fayoum (500 employees)

700 L.E. Basic salary plus contract, health insurance, accommodation,

transport, and meals)

Demand for Planting, Pruning, Harvesting: 50 permanent workers

- still not placed

EGP Agro Business, El Fayoum

- 800 L.E. basic salary plus contract, health insurance etc.

Demand for green house, grape, cattle: 11 permanent workers

- still not placed

El Sewedi SAE, 6 of October, Greater Cairo

700 L.E. basic salary (prob. period, contract after 6 month, training, insurance etc.)

- Demand new production line: 120 - 140 permanent worker

- placed after 6 month 33 employees

➡ High demand for work force (recruitment, retention

management)

➡ see slide19: study on Top Problems of Textile Industries

16.08.2010 Seite 2903/12/10 Seite

Conclusion of Case Studies:

➡ High demand for work force (recruitment, retention

management)

➡ see slide19: study on Top Problems of Textile Industries

16.08.2010 Seite 30

Strategies like

03/12/10 Seite

Classical ALMP and PLMP

Targeted educational

strategies

Quantitative

assumptions

and criteria

Labour

Market

Information

SystemsAssumed circle

of

improvement

Further Reflections

16.08.2010 Seite 31

Growing „supply‟ Tightened Labour

Market

e.g. Job Creation

Strategies based on

paradigm of

„supply and demand‟

Increased

Unemployment

LM provides high

employment potential

(unfilled vacancies)

Untapped potential of

educated Labour Force

(e.g. women)

Unused

potential

e.g. Job Quality

Strategies based

on paradigm of

„potential‟

16.08.2010 Seite 32

Problem or Deficit-Oriented

03/12/10 Seite

Some Reflections on „Supply and Demand‟

DemandSupply

fill the gap/deficit through

different strategies

16.08.2010 Seite 33

Expectations

Oriented towards mutual Expectations

03/12/10 Seite

Some Reflections on „Supply and Demand‟

Expectations

Improve the quality of

integration of mutual

expectations and potential

16.08.2010 Seite 34

Expectations

What can I do, to

better generate

income?

How can a find a

suitable work?

What means „work‟?

Potential Oriented

03/12/10 Seite

Expectations

What can I do to

better find suitable

workforce?

What can I do to

better keep my

workers?

„Employment Facilitation‟

= Support to meet the

mutual expectations

Some Reflections on Supply and Demand

16.08.2010 Seite 35

Expectations

What can I do, to better

generate income?

How can a find a

suitable work?

What means „work‟?

03/12/10 Seite

Expectations

What can I do to better

find suitable workforce?

What can I do to

maintain my workers?

based on QUALITATIVE

criteria with high regard to

CULTURAL settings

„Employment

Facilitation‟

Some Reflections on Supply and Demand

16.08.2010 Seite 3603/12/10 Seite

Summary of Reflections

To combine effectively „classical‟ approach (supply/demand) with

innovative concepts (qualitative criteria underlying baselines, potentials

and constraints of specific cultural settings)

To define a smart position („USP‟?) of TC (GTZ, BMZ) within the

landscape of the different stakeholders, which adds value to all the

different approaches and levels of interaction

16.08.2010 Seite 3703/12/10 Seite

Summary of Reflections

To build on assets, capable partners etc., the system is providing in itself

(ppp and public entities)

To build on already existing structures with high demand and high potential

for change and development e.g.:

Cooperation already active in field of „Employment and Labour Market‟

(e.g. MKI - DS entities, Chambers etc.)

Cooperation with reasonable entities out of private sector

(e.g. Qualified Industrial Zones)

Strong linkage with suitable policy concepts and developing entities

like CSR policies

16.08.2010 Seite 3803/12/10 Seite

Thank you very much for your

appreciated attention!

16.08.2010 Seite 3903/12/10 Seite

Abbreviations:

IDSC: The Egyptian Cabinet Information and Decision Support Center

CAPMAS - Central Agency for Public Mobilization And Statistics

GOEIC – General Organization for Export and Import Control

ILO - International Labour Organization

IMF – International Monetary Fund

AmCham – American Chamber of Commerce

16.08.2010 Seite 4003/12/10 Seite

Sources:

ILO 2010: Global Employment Trends, Jan 2010

ILO 2009: The global economic crisis and developing countries: transmission channels, fiscal and

policy space and the design of national responses, Iyanatul Islam, Employment Policy Department, ILO, Geneva

IDSC 2010: Implications of the Global Financial and Economic Crisis on the Tourism Sector in Egypt, Dr. MohayaZaytounAMCHAM/ILO, Arne Klau 2010: Impact of the Economic Crisis on Trade, Foreign Investment, and Employment in

Egypt

World Bank 2009: Global Monitoring Report

MKI-vetEP 2009: Effects on financial and economic crisis on employment in Egypt – conceptual considerations

and an analytical approximation

GTZ, Matthias Grossmann, Juni 2009: Afrika und die Wirtschaftskrise: mögliche Auswirkungen auf

breitenwirksame Entwicklung Herausforderung und Perspektiven für die Umsetzung der MDGs

IDSC 2010: Measuring the Impact of teh Egyptian Fiscal Stimulus Package

SELLER /GTZ, Okt. 2009: Ergebnisbericht der SELLER Task Force zur Finanz-und Wirtschaftskrise in

Südosteuropa, Südkaukasus und Zentralasien

Amirah El-Haddad, Ass. Prof, Cairo University, 2010: Effects of the Global Crisis on the Egyptian Textiles and

Clothing Sector: A Blessing in Disguise?

ILO Dec 2009: The Global Jobs Pact in Egypt

Roundtables on Mitigating the Impact of the Global Economic Crisis on Egypt‟s Economy and Labour Market

during 2009/10

Interviews with: IMC, IDSC, German Chamber of Commerce, CEO‟s & HR Manager of Egyptian companies and

Egyptian Job Seekers, 2009/10

the impact of the global financial economic crisis on...

Documents