Beware of the echo: the evolution of Egypt’s population and labor force from 2000 to 2050

ABSTRACT

I argue in this paper that although recent developments had temporarily reduced demographic pressures on the Egyptian labor market, such pressures will return with a vengeance in the next decade. The sizable echo generation born between 2005 and 2015 is the reflection of the large youth bulge generation born in the early 1980s; a reflection that was further compounded by rising fertility rates in the late 2000s and early 2010s. As the echo generation reaches working age, the net annual increase to the labor force will rise from 575 thousand per year in 2020–25 to 800 thousand per year in 2030–35, which will pose a major job creation challenge. This upcoming wave of new entrants will also be substantially more educated, with 50–60 percent having secondary or post-secondary education, and another third having university education or higher. To accommodate this upcoming growth in labor supply and absorb the stock of existing unemployed and discouraged workers, I estimate that employment growth would have to reach 2.7 percent per year, something that would require sustained GDP growth rates in excess of 6 percent per year. The quality of jobs created by the Egyptian economy would also have to improve substantially to satisfy the higher aspirations of the increasingly educated new entrants and curtail the rising rates of discouragement among female new entrants.

KEYWORDS:

• Population projections
• labor force projection
• Egypt
• Echo of youth bulge‌

Acknowledgement

The author gratefully acknowledges valuable comments and suggestions from Dr. Khalid Ikram as well as the excellent research assistance of Sohel Rana, Khandker Wahedur Rahman, and Hosam Ibrahim.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 I rely primarily on the medium variant projections of the 2019 revisions of the World Population Prospects (United Nations Department of Economic and Social Affairs Population Division, 2019), but conduct sensitivity analyses using the high and low variant projections as well.

2 Microdata from the Egyptian labor force survey is available from ERF’s Open Access Microdata Initiative for the years 2006–2017 (www.erfdataportal.com). Data for 2000–2005 were compiled by the author from data obtained from the Egyptian Central Agency for Public Mobilization and Statistics (CAPMAS).

3 See online appendix for the results of the high and low variants.

4 There are a few differences across variants in the trend of dependency ratios, except for a lower decline in overall dependency from 2025 to 2040 in the high variant and a more rapid decline in the low variant. The inflection points remain the same.

5 Similar estimates are available for the high and low variant projections in an online appendix.

6 Projections based on the high and low variant UN population projections are shown in an online appendix and, as mentioned earlier, only differ for the period after 2035.

7 Although some aggregated data are available for 2019, the detailed results for 2019 are not yet published. Also note that the labor force figures in the table may be slightly different from the estimates I presented earlier for the same year due to some smoothing over age and education groups that I undertook in my estimation approach.

8 Calculated from data provided in Krafft et al. (2019).

9 IMF. (2017). Arab Republic of Egypt: Selected Issues.