Analysis in this policy note indicates arapid deterioration in employment opportunities for youngindividuals transitioning from school to work in Egypt.Despite substantial improvements in labor market outcomes inrecent years (in raising employment and participation and inlowering unemployment), unemployment rates in Egypt remainexceedingly high among youth entering the labor market forthe first time. A slow school-to-work transition remains themain reason behind high unemployment rates. Young entrantsto the labor market have become more educated than everbefore: the share of the working-age-population withuniversity education in Egypt has increased significantlybetween the years 1998 and 2006 (from 14% to 19% among menand from 9% to 14% among women). However, youth are unableto capitalize the time and resources invested in theireducation as the labor market is not providing enoughgood-quality jobs for them. To cope with scarce formal jobs,young-educated workers are opting to work in the informalsector and/or withdraw from the labor force, which iscontributing to a deadweight loss of recent investments ineducation.There are three key factors that seem to explainwhy school-to-job transition remains low in Egypt:investments in the private sector remain low and capitalintensive, new graduates are not equipped with the skillsdemanded by the private sector, and the public sector stillprovides incentives for educated individuals (mainly women)to queue for private sector jobs. There are several policyoptions used in the international context to further enhancethe performance of the labor market; such as enhancingemployability of new entrants, reforming the technical andvocational training system, and designing targeted programsaiming to boost labor demand.
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