Bloomberg News

Egypt’s Unemployed Target Mursi After Toppling Mubarak: Jobs

June 24, 2013

Mohamed Kamel and dozens of other engineering graduates have gathered outside Egypt’s Oil Ministry and a state-run energy company in Cairo for months, clamoring for jobs. During one of their demonstrations, he says, they were chased away by security guards wielding sticks and belts.

Kamel, 23, blames his unemployment on the regime of President Mohamed Mursi. On June 30, he plans to join nationwide protests marking the first year of Mursi’s presidency and demanding early elections. Kamel is among those who say Mursi has failed to create jobs or revive the economy, among the complaints that sparked the 2011 uprising ousting Hosni Mubarak.

“We are all frustrated and are in a bad psychological state,” Kamel said of his fellow job-seekers. “I will be demanding that this regime leave because it has proved to be a failure.”

More than 1 million people have swelled the ranks of Egypt’s unemployed since the first quarter of 2010, bringing joblessness to a record 13.2 percent in the same period this year. Eight out of every 10 jobless Egyptians are under 30, and more than a quarter of them hold university degrees or higher, official data show.

“Economic grievances pose the greatest threat to Mursi’s rule,” said Yasser el-Shimy, a Cairo-based analyst with the International Crisis Group, which tracks conflict around the world. Many unemployed youths feel “left out of this whole system, so they might increasingly resort to rioting and other forms of violence to make their voices heard, which ironically contributes to more deterioration in the overall situation.”

Jobless Youth

The newly elected Islamist rulers in North Africa, saddled with one of the world’s highest rates of youth unemployment, are struggling to live up to the aspirations of those who brought them to power.

Almost 17 percent of all Tunisians are unemployed, higher than the level in 2010, according to International Monetary Fund data. Unrest that year led to the toppling of Zine El Abidine Ben Ali. And while joblessness in Morocco has “steadily declined over the past decade, youth unemployment remains very high at about 18 percent,” the IMF said in a report last month.

In his bid to become Egypt’s first democratically elected civilian president, Mursi pledged to lure investments and bring joblessness to below 7 percent by 2016, according to his platform. In Tunisia, the Ennahdha party campaigned on a promise to bring unemployment down to 8.5 percent by 2016.

Bumpy Transition

The promises fueled already high expectations spurred by the revolts. In Egypt, a country where government jobs are seen as the best path to steady work, many Arab Spring protesters thought they’d see an explosion in employment.

After Egypt’s uprising, “I dreamed and my imagination led me to believe that salaries will increase, that those who are hungry will no longer be and that there will be social justice,” said Manar Shoukre, 23, who participated in the 2011 protests that led to Mubarak’s fall. Instead, she was laid off from a translation job shortly after that.

The bumpy transition to democracy eroded investor confidence and stifled job creation in a region long plagued with unemployment.

In Tunisia, an unidentified street vendor set himself ablaze in March, more than two years after a similar act by Mohamed Bouazizi triggered the so-called Arab Spring. “This is what’s happening to a young man from Tunisia because of unemployment,” the man, thought to be in his 20s, shouted before immolating himself. He later died.

Selling Clothes

Hakim Al Rajhi, 32, has a degree in law and humanities. To make a living, the Sidi Bouzid resident works in shops selling clothes or, occasionally, in construction. He’s been looking for a job that fits his qualifications since 2007.

“We revolted against Ben Ali because of poor social conditions but after the revolution it became worse,” he said in a phone interview. “I can’t get married” or meet his “smallest need,” he said. “The government’s ignoring our demands will lead us to one solution, which is a new revolution.”

Tunisia’s economic growth slowed to 2.5 percent in the first quarter this year, compared with 4.8 percent a year earlier. The country’s sovereign debt has lost its investment-grade status at Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.

The Egyptian economy is set to grow 2 percent this year, close to the slowest pace since 1992, according to the IMF. Cuts by the three ratings companies after the revolt pushed Egypt’s credit rating deeper into junk.

“The management of the post-revolutionary economy has been miserable,” former Finance Minister Samir Radwan said in a telephone interview. “The public sector is still the main provider of jobs.” He was appointed by Mubarak and continued to serve in the transition government.

Muslim Brotherhood

Mursi’s first year in office has been dominated by struggles with opposition groups, the military and the judiciary. Critics such as Shoukre say the president, an Islamist, is more focused on consolidating the power of the Muslim Brotherhood, which pushed his candidacy, than on tackling unemployment and other woes.

“Because the poor still have no place, we don’t want you,” reads a petition that a group called Tamarud, or Rebel, says millions have signed to withdraw confidence from Mursi.

Mursi’s supporters say strikes and protests undermine his efforts to stabilize the country and the president has dismissed talk of an early vote as “nonsense.”

Untrained Labor

“We have a real problem in Egypt because of unemployment, as the labor force is untrained,” said Cabinet spokesman Alaa el-Hadidi in an interview. He said the Ministry of Industry and Foreign Trade, for instance, announced 20,000 jobs but got just 13,000 applicants, about half of them unqualified.

The government has tried to calm the anger by pushing up public-sector wages over past two years. The result: A budget deficit projected at 11 percent to 11.5 percent this fiscal year, according to Investment Minister Yehia Hamed. It also converted hundreds of thousands of temporary government contractors into bureaucrats.

“The government cannot turn a switch and create more jobs,” said Ragui Assaad, a professor at the Humphrey School of Public Affairs at the University of Minnesota, by phone. He was involved in an Egypt labor-market survey for the Economic Research Forum with the government’s statistics agency. “In fact if they do that, as they have tried to create more jobs in the public sector, that has long-term negative consequences.”

Others are trying too. Education for Employment, a Washington-based nonprofit organization, offers training for young graduates from low-income backgrounds in the Arab world. It then seeks to find them jobs in industries such as retail, hospitality and banking, according to Chief Executive Officer Jamie McAuliffe.

Young People

“Since the Arab Spring there has been an increased focus on getting young people into the work force,” McAuliffe, who is also chairman of the World Economic Forum’s Global Agenda Council on Youth Unemployment, said in a phone interview. The placement rate -- about 3,000 people found jobs in the Middle East between 2006 and 2012 -- is almost 80 percent, he said.

Still, the planned June 30 protest is already heightening investors’ concern. Thousands of Mursi supporters massed in Cairo on June 21, with hardline clerics warning the president’s detractors against attempting to overthrow him. The turmoil prompted the military to say it might intervene to prevent the country from descending into an uncontrollable conflict.

Egypt’s benchmark EGX 30 stock index has plunged more than 17 percent this year, while the country’s credit risk surged to the highest level since 2008, data compiled by Bloomberg show. The government’s benchmark dollar bonds have also tumbled, sending the yield to a record high of 9.55 percent on June 21.

Public Sector

With private job creation stalling, Shoukre says she’s headed for the public sector. She says she left two other jobs in the private sector, one after her boss’s husband pursued her and the other after her paycheck was often delayed and the owner’s son bossed her around.

Her attempt to seek job security in a bloated public sector highlights the challenge officials such as Alaa Awad, adviser to the minister of manpower and immigration, say they face. When the government recently started a program to train people for work, only about 173,000 applied from more than 3 million people listed as job seekers in the database, he said.

“As soon as they find out that the jobs are for the private sector, they say, ‘No, we want a government job, we’ll wait for a bit longer,’” Awad said in an interview. “We are trying to change this mentality but it won’t happen overnight.”

IMF Negotiations

While Tunisia signed a $1.74 billion agreement with the IMF this month, Egypt has been struggling to secure a $4.8 billion accord, which officials say is key to luring back investors. Political bickering and unrest have made it harder for post-revolution governments to implement changes seen as unpopular.

Failure to improve the lot of the young may backfire, said engineering graduate Kamel, who said he supported the Arab Spring protests but didn’t take part.

“I got high grades in high school, studied hard at university and served my country in the army,” he said. “How come then that after all of this, my country says it has nothing to offer me? If there’s no real solution, there will be chaos. The people will take to the street and demand their rights.”

To contact the reporters on this story: Mariam Fam in Cairo at mfam1@bloomberg.net; Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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