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Tuesday, 18 August 2020

Egypt’s unemployment rate rose to a near two-year high in 2Q2020

Egypt’s unemployment rate rose to a near two-year high in 2Q2020, hitting 9.6% as the covid-19 pandemic forced businesses to shutter and put a damper on economic activity, according to official figures (pdf) released by Capmas yesterday. The jobless count stood at 7.5% in the same quarter of last year and was at 7.7% in the first quarter of 2020 before rising to 9.2% in April as the government’s precautionary measures to counter the spread of the virus came into effect.

September’s PMI and jobless figures will be the next significant indicator in whether there’s a pickup in employment now we’ve exited lockdown restrictions. July’s purchasing managers’ index showed that the labor market was still feeling the effects of the three-month lockdown, with employment continuing to decline during the month. Respondents to the poll said this was mainly due to companies not replacing ex-employees who had left voluntarily. The pace of hiring typically slows in August and resumes in September and October — fueled by hiring managers and jobseekers returning from summer vacation, by “use or it or lose it” budgeting at companies, and by the annual fall budget process.

Putting our Fake Economist™ hat on for a moment: Capmas shows the labor force contracting from 28.1 mn participants in 2Q2019 (covering both employed and unemployed people) to 26.7 mn in the quarter just ended. Capmas chalks it up to the pandemic, saying that people were either (a) reluctant to work and so dropped out of the workforce or (b) were unable to look for a job because of the pandemic.

Women and youth seem to have been particularly hard hit: Women’s unemployment fell nearly 6 percentage points to 16.2% (suggesting to us that a large number of working moms left the workforce to stay home and look after kids), while youth unemployment was at 60% in the second quarter compared to nearly 85% a year ago. Men seem to have higher expectations that they’ll return to work: Unemployment among men rose to 8.5% in 2Q2020 compared to 4.5% in the first quarter of this year and to 4.2% in the same quarter last year.

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