The Impact of Recent Macro and Labor Market Policies on Job Creation in Egypt

Abstract

This chapter analyzes the impact of recent macroeconomic and labor market policies on job creation in Egypt. The government undertook several reform measures to boost economic growth, increase investments, and raise the competitiveness of the Egyptian economy. However, the Egyptian economy is still suffering from major shortcomings, such as an unfavorable business environment, poor export performance, severe fiscal imbalance, and low levels of investment. In addition, labor market policies have so far been unable to address the mismatch between demand and supply or to resolve other market failures. The impact of active labor market policies and regulations has been limited, reflecting poor policy design and lack of coordination between macroeconomic and labor market policies and regulations. Moreover, macroeconomic and labor market policies were not adequately coordinated to serve the objective of job creation. This chapter states that in order to increase employment, a national employment strategy should be designed with the objective of creating more jobs, especially in those sectors with the highest employment elasticity.