Macro-Note Series

“Unemployment Note”

Unemployment Rates Marginally

Contracted by the End of 2021

February 23, 2022

Unemployment Rates Marginal Unemployment Rates

Retreatment in Q4 2021…
10 9.6
9.5
The latest unemployment figures for 9
8.5 8.1 8
Q4 2021 released by CAPMAS 7.8 7.7
8 7.5 7.4 7.5 7.4
7.3 7.2 7.3
7.5
showed a marginal retreat of about 7
6.5
0.1 percentage point to 7.4% down 6
5.5
from 7.5% in the previous quarter. And 5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
a slight increase by 0.2 percentage
2019 2020 2021
point compared to Q4 2020. Source: CAPMAS, Press release, Q4 2021

Female Unemployment Rates are Still Below Their Average Pre-Covid Levels…
Despite the Covid-19 global pandemic spillovers, female unemployment rates have
remarkably declined on average to approximately 17.5% in 2020, and 16% in 2021 compared
with 22% in 2019. However, it registered 17.8% in Q4 2021: which is 2.5 percentage points higher
than the previous quarter and one percentage point beyond the rates of Q4 2020.

Yet on a positive note, female Unemployment Rates by Gender

unemployment rates in Q4 2021 Covid-19 crisis
25 22.4 22.7 22.7 21.9
are still below their average pre- 18.9 17.8
20 16.2 15.2 16.8 15.9 15 15.3
pandemic levels. Whereas, male 15
8.5
unemployment rates, affected by 10 5.7
4.2 4.7 4.7 4.5 5.8 5.1 5.6 5.7 5.9 5.2
5
the crisis, peaked in Q2 2020
0
recording on average 6% in 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020 2021
and 5.6% in 2021 versus 4.8% in
Male Female
2019 prior to the pandemic.
Source: CAPMAS, Press release, Q4 2021

1
 Noting that in Q4 2021, the male unemployment rate decayed by 0.7 percentage point
to 5.2% against 5.9% during Q3 2021.
Unemployment Rates Relatively Rose Among the Less Educated In The Post-Covid Period...
The highest unemployment rates are counterintuitively perceived among the most educated
reaching 44.8% in Q4 2021 up from 41% in Q3 2021. Technical secondary graduates came in
second place where 32.2% were unemployed in Q3 2021. Furthermore, it is observed that the
less educated seem to be considerably affected by the pandemic, as their unemployment
rates have relatively surged compared to the pre-crisis situation: considering the case of less
than intermediate, and illiterate people (illustrated in the figure below).

Unemployment Rates by Educational Status

50
44.8 44.8
45 40.5
40 36
35 32.2
30
25
20
15
9.2
10 6.4 6.2 5.4 5.4
4 4.1
5 1.2 2.4 2.2
0
Illetirate Read & Write Less Than General/Azhari Technical Above University &
Intermediate Secondary Secondary Intermediate Higher

Q3 2019 Q3 2021 Q4 2021

Source: CAPMAS, Press release-Q4 2021, Labor Force Survey- Q3-2021

Participation Rates slightly inched up in Q4 2021...

Participation rates slightly inched up in Participation Rates (in %)

Q4 2021 to 43.8% versus 43.7% in Q3 2021 45 43.5 43.7 43.8
44 43.1 42.7
42.2 42.2 41.9
and 43.5% in Q4 2020. The female 43 41.6 41.9
41.1
42
participation rate went up by 0.5 41
40 38.9
percentage point registering 15.9% 39
38
37
compared with 15.4% during the 36
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
previous quarter.
2019 2020 2021

Source: CAPMAS, Press release-Q4 2021

2
 While male participation rate retreated in Q4 2021 by about 1 percentage
point reaching 69.8% down from 70.9% in Q3 2021.

Non-oil Private Sector Employment Dynamics …

Although employment in the non-oil private sector was severely affected by Covid-19
outbreak, particularly in Q2 2020, as shown in the graph below, it bounced back gradually
in Q3 2020 till Q1 2021. Yet, the rest of the year witnessed instability in the sector’s
employment conditions where the index decreased to 48.2 in the second quarter given the
repercussions of Covid’s new waves, and the state of uncertainty. Then, for the first time
since the beginning of the pandemic, it breaks the level of 50 amid Q3 2021 before it
returned to 49.5 in Q4 2021. Eventually, it’s safe to say that on average the employment
index in 2021 had closely recovered to pre-crisis records (comparing with 2019), and it is
expected to keep its recovery track, as will be explained later in this note.

Employment Developments in Non-oil Private Sector

(PMI Sub-index)
51 5.0%
50.4 50.3
Covid-19 outbreak
50 4.0%
49.5
49.1 49.1 49
48.9 3.0%
49
48.2
48 2.0%
48
46.9 1.0%
46.8
47
0.0%
46
45.4
-1.0%
45
-2.0%
44
-3.0%

43 -4.0%

42 -5.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020 2021

Employment (PMI Sub-Index) Growth Rates (in %)

Source: IHS Markit, Ministry of Finance

3
Private vs Public Sectors’ Employability and Gender Gap ...

When examining the proportional distribution of employees by sector and gender in Q3

2021, the private sector has the largest proportion including inside the institutions and
outside. However, the hiring gender gap persisted since 83.4% of private-sector employees
are men whereas 56.4% are females. That being said, empowering women in labor market
and entrepreneurship is one of the Egyptian government’s high priorities and among the
policies of the National Structural Reforms Program (NSRP).

Proportional Distribution of Employed Persons

by Sector & Gender in Q3 2021
120
0.1 0.2
100
27.8
80
48.6
Source: CAPMAS, Labor
Force Survey, Q3-2021
60 28.6
40 1.4
34.8
20 42
2.5
14
0
Male Female

Governmental Sector Public Sector

Private Sector (Inside Institutions) Private Sector (Outside Institutions)
Others

The Agricultural Employment Share Still in The Lead during Q4 2021...

Sectoral Distribution of Employed Persons

The agriculture, forestry, and fishing
in Q4 2021 (%)
sector had the major employment

Transportation & Storage 9.1 proportion with a share of 18.8% in Q4

Manufacturing 12.3 2021. While, the wholesale and retail

13.8
trade took second place as workers
Construction
accounted for 15.2%, followed by
Wholesale and Retail Trade 15.2
construction and manufacturing
Agriculture, Forestry and Fishing 18.8
attributing to 13.8% and 12.3%
0 5 10 15 20
respectively.
Source: CAPMAS, Press release, Q4 2021

4
Unemployment, Economic Growth, and Inflation Rate…

The unemployment rate is projected to be on the downward trajectory through the

upcoming three fiscal years to register on average about 6.6% during FY 2021/22
accompanied by the higher real growth rate of GDP by about 5.6% according to the VECM
estimates.

Annual Unemployment Rates Forecasts Annual GDP Growth Rates

8.00 7.28 7.31 7.29 Forecasts
6.54 6.62 6.58
7.00 8.00 6.88
5.47 5.51 5.49 6.69 6.79
6.00 7.00
5.575.90 5.52
5.00 4.34 4.36 4.35 6.00 5.14 4.74
4.00 5.00 3.92
4.00 3.23 3.23 3.23
3.00
3.00
2.00 2.00
1.00 1.00
0.00 0.00
Forecasts_VECM Forecasts_Multiple Avg. Forecasts_VECM Forecasts_Multiple Avg.
Regression Regression

FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 20/21 FY 21/22 FY 22/23 FY 23/24

Source: MAP’s estimates

Lower unemployment rate is expected to be associated with higher inflation rate (baseline
scenario), accounting for about 7.0% during the FY 2021/22. Since then, the inflation rate is
forecasted to tame out and be on the downward trend, implying better economic
conditions and more accommodated underlying fundamentals.

Annual Headline Inflation Rates Forecasts

8.00
6.95 6.99 6.97
7.00
5.58 5.79 5.69
6.00
5.00 4.58 4.58 4.51 4.58 4.35
4.18
4.00
3.00
2.00
1.00
0.00
Forecasts_VECM Forecasts_Multiple Avg.
Regression

FY 20/21 FY 21/22 FY 22/23 FY 23/24

5
Source: MAP’s estimates