Much of the current debate around therecent economic crisis in the Arab Republic of Egypt hasfocused on unemployment. Although unemployment is animportant marker of labor market health, the jobs problem inEgypt precedes the recent crisis and is manifested markedlyin other labor market metrics. Indeed, the link betweengrowth and unemployment in Egypt is weak, particularly formen. This chapter argues that the reason for this weak linkis partly related to decades of flawed industrial policiesthat have discouraged investment in employment-generatingactivities. Industrial policies, including those implementedin the mid-2000s, were never focused on mitigating marketfailures to promote the emergence of fast-growing,high-productivity firms. Instead, they have worked topreserve insider privileges, leading to growth in sectorsthat are not labor intensive. Policy makers therefore needto look beyond supply-side focused labor market policies toaccelerate employment growth.
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