Egypt

Implications, Challenges and Recommendations

Overview

Egypt’s labour force grew by an estimated 54% between 2000 and 2016. At 49.6%, labour force participation is on par with the Middle East and North Africa average, but is significantly lower than the sub-Saharan African average of 70.3%. The low participation of women in the labour force (22.9% compared to male participation of 76.2%) explains the low overall participation rate. Correspondingly, males make up 79.3% of the employed.

Almost a third of the employed work in the public sector, compared to only 13.5% who work in the formal private sector, and 40% who work in the informal sector. There is a clear preference of employees to secure public sector employment, and employees working in the public sector work fewer hours and earn more pay on average than their private sector counterparts.

The country has a well-educated labour force, with 37.5% of the labour force having completed a secondary education, and a further 18.7% a tertiary qualification. Among the female labour force, 28.6% have a tertiary qualification. Nonetheless, unemployment is high among the educated. The country’s overall unemployment rate has increased from 9% in 2000 to 12% in 2016. Forty percent of the unemployed have a technical secondary school education and a further 27.9% have some form of tertiary qualification. One in five university graduates are unemployed.

The youth are particularly hard-hit by unemployment. The unemployment rate of those between 15 and 24 is 33.4%, compared to the unemployment among over-25s of 7.7%. Unemployment is also severely skewed toward women. Where 29% of young men are without work, 45.7% of young women are. Similarly, 4.5% of men over 25 are unemployed, compared to 18.7% of women in the same age bracket.

Workers’ rights are not protected in Egypt. The country scores 5 out of 5 for workers’ rights on the Global Rights Index 2016, indicating that unfair labour practices are widespread and commonplace. The government fails to recognise any unions or federations other than the traditionally recognised and largely government-affiliated ETUF. In recent years, workers have increasingly been denied their right to strike for better working conditions or higher pay, and have often faced arrest or dismissal when engaging in industrial action.

Egypt also scores low on talent competitiveness, ranking in the bottom third on the Global Talent Competitiveness Index 2017. It scores poorly for its ability to attract, enable and grow talent in particular.

For policymakers

The largest problem facing Egypt at the moment is the disproportionately high unemployment rate among youth, women and the educated. This needs to be tackled with a multi-pronged approach. Given the high percentage of university graduates that are unable to find work, there is a clear mismatch between the demand for the skills they are receiving at universities and those required by the labour market. The government should engage with higher education institutions and companies to establish the skills required in the labour market. To close this skills gap, the government needs to develop strategies where youth are steered in the direction of technical and vocational studies.

However, at the same time many graduates are likely unable to find work because there is very limited work in the private sector, which currently provides an inhospitable environment for small businesses to grow and hire more employees. Policies to make doing business easier for small businesses and start-ups must be fast-tracked. These will include addressing skewed regulatory frameworks that advantage larger, established businesses and disadvantage small businesses.

The government must also implement strategies that will encourage youth and female participation in the labour force. One of these strategies can involve the enforcement of regulations whereby companies are required to employ a certain percentage of youths and women. In addition to this, the government can offer incentives to companies that young people, women and young women (the segment of the population most affected by unemployment). One example of this is the youth wage subsidy South Africa implemented to encourage companies to hire young people. The state should also consider offering childcare services for mothers who wish to work.

The government needs to review both the high share of the labour force it employs and the discrepancy between the public and private sector in terms of the number of hours worked and the pay received. The state should recognise that the future of job growth lies not with it, but in the private sector. As a result, it must consider matching public sector wages and hours to those in the private sector to make the latter more competitive in the market for labour, and to reduce Egyptians’ strong preference for working in the public sector.

For HR practitioners

Organisations have a responsibility to communicate more strongly with the country’s educational institutions the nature of skills they require to ensure that qualifications obtained will secure graduates employment. In the meantime, companies will need to take on more of the responsibility for training new staff adequately. They should do this through increased internship, learnership and mentorship programmes. They should focus these on educated young people and women.

Furthermore, smaller businesses should actively lobby government to modify the regulatory environment in a manner that will make business easier, and make them more likely to hire more staff. Larger, more established companies also have a responsibility to refrain from anti-competitive behaviour, even if this it to a degree government-sanctioned. Only this way can the country benefit from its currently under-utilised talent pool.

A professional approach to talent management is required

Organisations in Africa, both private and public, must adopt a professional approach to managing and developing talent in their organisations.

Professor Steve Bluen, in his ground-breaking book Talent Management in Emerging Markets, proposes the following talent management model, which could be adopted by Egyptian organisations:[156]

Figure 5.8
Source: Bluen, 2013[157]
Figure 5.8: Talent Management Model

Below is an extract from the model. In some instances, it has been modified and adapted with permission from Knowledge Resources for organisations in Africa and Egypt specifically.

A. Linking the talent strategy to the business strategy

The sole purpose of a talent strategy is to support the organisation to achieve its strategic objectives. For this reason, it needs to be derived from the corporate business plan and must be measured in terms of its contribution to the achievement of an organisation’s goals. Several approaches to ensure business talent strategic alignment are proposed:

1. Link the talent strategy via delivering capability requirements
For a talent strategy to be relevant, it must be anchored in the capability requirements for delivering on the business strategy – currently and into the future. In addition, to be effective, the talent strategy must align to the culture and maturity of the business.

2. Link talent strategy via talent pools, especially for multinationals
A useful way of linking the talent strategy to the business strategy is to identify a global talent pool (in the case of MNCs) comprising those jobs that are crucial. All incumbents occupying those jobs are included in the global talent pool, as are any other employees with rare and/or critical skills. In this way, the talent team focuses on the health of the global talent pool and ensures that the business has the requisite talent to achieve its objectives.

3. Make talent management part of a total management system
Talent management can be enhanced by having a total management system that focuses on strengthening both the people and the work systems (technical, commercial and operating) to reflect an aligned and consistent working model.

4. Clarify talent management roles
Line management should “own” talent management, however in many developing countries management expertise in general is low. Human Resources should therefore ensure that line managers are suitably equipped to make serious talent decisions. It is also critical that HR function at a professional level. Employees need to take ownership of their own career development and take the necessary steps, with the support of line management and HR, to realise their potential while delivering on performance.

5. Become a genuine employer of choice
There is no single “silver bullet” for success in talent management. Instead, if an organisation wants to be competitive in attracting, retaining and deploying high-calibre talent, it needs to create the right environment and adopt an aspirational total employment offering and employment value proposition that will be attractive to its target talent market.

6. Recruit for potential, not just to fill vacancies
To win the war for talent and cater for unpredictable talent demands, recruit for potential rather than solely to fill vacancies. This is particularly true in developing countries where education systems do not necessarily deliver the quality of HR that is required.

7. Adopt a proactive diversity approach
An attraction criterion should be the quality of diverse talent, therefore it is important to cast the recruitment net as wide as possible rather than restricting it to particular groups. In emerging markets, women are a neglected supply of talent. To tap into this valuable source, ensure that there are no gender biases in talent practices.

B. Employing and managing expatriates

8. Recruiting expatriates
Be specific about choosing the right people to undertake international assignments. Do not assume that a person who is successful in his or her home country will thrive in a host country, or vice versa. Emerging market challenges are different from home country challenges; because each person is distinctive, one size does not fit all. Instead, customise talent decisions to cater for each person’s specific strengths, needs and family circumstances.

9. Select the family, not just the expatriate
When choosing an expatriate, the selection process should cover the expatriate candidate, his or her partner, and their accompanying children. The family will need to adapt to the host country thus they need to be screened.

10. Overcome resistance to accepting emerging-market assignments
Several measures have been used successfully to overcome employee resistance to accepting emerging-market assignments:

  • Offer attractive and globally competitive expatriate packages.
  • Include successful completion of an emerging-market assignment as a promotion criterion.
  • Include global mobility as a criterion for membership of the global talent pool.
  • Ensure effective reintegration post assignment.

11. Agree in advance the terms and nature of the expatriate assignment
There are three main reasons for introducing an expatriate assignment: (a) to fill positions where suitable local talent is not available; (b) to develop leaders; and (c) to transfer knowledge. Decide which of these needs are being satisfied when creating an expatriate role. Thereafter, when sending expatriates on assignment, decide beforehand whether they are to be transferred to the host country permanently or if they will return to the home country post-assignment and take up another role.

12. Learn the host-country language
By learning the local language, expatriates enhance their ability to perform effectively and demonstrate goodwill. In Egypt the business language is English, and a sound working knowledge thereof is essential.

13. Introduce expatriate families to the country early
Before accepting the assignment, expatriates and their partners should be sent on a “look-see” visit to understand what the assignment entails. Then, before embarking on the assignment, expatriate families should attend an enculturation programme that covers the areas needed for successful adjustment, including politics and government, work, economic matters, family relations, social relations, and ideology (ways of thinking, principles, values, customs and religious beliefs). This facilitates adjustment and allays the family’s fears.

14. Implement two-way introductions to the MNC in host countries
Educate local employees about the ambitions, values, culture and ways of working of the global business. Where appropriate, send them on visits to the MNC headquarters so they can gain an appreciation of the larger group they have joined. Simultaneously, educate expatriates about local conditions, customs and practices.

Challenges in employing expatriates in emerging markets

According to Prof Steve Bluen in Talent Management in Emerging Markets, multinational corporations have addressed the talent gap by recruiting expatriates to fill senior roles in emerging countries (this scenario also applies in Africa).[158] This, in turn, creates its own challenges. Factors such as political instability, corruption, high crime rates, poor governmental or societal infrastructure, hostile commercial and labour laws, and “foreign” cultures, customs and practices reduce the attractiveness of emerging market (including Africa) countries as expatriate destinations. In addition, expatriate cost to company is extremely high – estimated to be between three and four times a person’s home salary. Expatriate failure rates are also high (between 10 and 80%) and it is estimated that 27% of expatriates leave the company in the first year of returning home, with a further 25% leaving the following year.

C. Managing performance

15. Cultivate a good work ethic
In Egypt, commitment and discipline among the youth workforce is one of the main areas where employers indicate that employees could improve.[159] Managing performance is therefore a priority.

16. Link performance management and talent management
A seamless approach to goal setting, goal reviews, identifying competence and performance gaps, individual development plans, and performance-related remuneration helps enhance career development and performance.

17. Link performance management and reward systems
Performance is the desired behaviour for which employees are compensated, thus an evaluation of employees’ job performance is vital for HR management and for the organisation. In an ever-changing business world, performance management serves as an effective tool for identifying, retaining and developing talent. In addition, reward and remuneration are closely allied to performance management and play a fundamental role in attracting and retaining talent.

18. Keep performance management simple
A golden rule is to keep performance management (and the reward system) simple and easy to explain and understand. A performance management system must be realistic and measurable and have attainable standards and objectives, as well as the necessary performance counselling and provision to allow employees to reach the desired level of performance.

19. Optimise performance appraisal information
The three comprehensive benefits of using performance appraisal information are the following: firstly, it assists in making HR decisions regarding matters such as salary increases, incentive payments, and promotion and demotion decisions; secondly, it helps to identify employee strengths and development areas; and thirdly, it informs employee career planning, including further learning and development. No single performance appraisal method is suitable for all jobs and situations; instead, a combination of methods is suggested.

20. Link performance management and development
By consistently focusing on the development of employees, performance management supports employees’ efforts to improve. Development is an extremely effective retention strategy – it can be more valuable than higher remuneration, because it keeps employees’ skills competitive. In addition, employees feel as though they are part of the team and believe that the organisation is investing in and caring for them, and this increases their commitment.

Excellent resources in this regard are:

21. Eliminate prejudice
There is no place for prejudice in any organisation. Ensure that, in every host country, there are HR policies and employment equity strategies in line with local legislation that are followed in order to eradicate prejudice. To ensure sustainability, develop a compelling business case for employment equity in each host country.

22. Avoid stereotyping and exclusive behaviours
Leaders should be mindful of the detrimental effects of stereotypes and generalisations with regard to individual performance and motivation. They should also endeavour to control their expectancy communications; inculcate a positive learning culture; be aware of exclusive behaviours and implement mechanisms to overcome them. Further, they should be prepared to speak out, if appropriate, when observing exclusive behaviours and to suggest ways in which things can be done differently. Staff should also be consulted about their perceptions of inclusiveness and support, and encourage them to put forward practical solutions to overcome identified barriers.

23. Maximise localisation
A major aim of staffing local operations is to reduce the number of expatriates and take a strategic decision to employ local people wherever possible. Adopt firm guidelines and targets around localisation and treat them with the same rigour as any other business deliverable. Employ expatriates sparingly – primarily to transfer skills and train local employees. An expatriate goal should be to identify their successors and train them to take over their jobs within a clearly defined time period.

24. Grow local talent
To address the skills gap, leading MNCs embark on extensive learning and development initiatives to speed up time-to-competence of talented local employees who have the potential, but not necessarily the competencies, to occupy key positions.

Develop Human Resource practitioners to a professional level

The Human Resource management fraternity plays a crucial role in the development and upgrading of talent, as well as in establishing sound industrial relations and improving management practices. The HR fraternity in Egypt, similar to most developing countries, needs to be developed professionally. Here are some pointers:

  • Upgrade and develop the capacity of the Egyptian Human Resource Management Association (EHRMA).[160]
  • Collaborate with organisations such as the South African Board for People Practices (SABPP)[161] and the Chartered Institute of Personnel and Development in the UK (CIPD)[162] in order to establish HR standards and competencies to fast track the development of HR practitioners.
  • View the Human Capital in an organisation as a strategic resource that needs to be invested in as opposed to an expense only.

Human Resource Management and Industrial and Organisational Psychology curricula at universities can be benchmarked against world-class programmes at educational institutions such as the University of Johannesburg’s Faculty of Management Department of Industrial Psychology and People Management (http://www.uj.ac.za/EN/Faculties/management/departments/hrm/Pages/default.aspx) and Wits Business School’s Postgraduate Diploma in Management (http://www.wbs.ac.za/programmes/degrees/pdm).[163]

  • Country Profile
  • Introduction
  • Broad Economic Indicators
  • Currency and Exchange Rate
  • Competitiveness and Ease of Doing Business
  • Foreign Investment and Largest Companies
  • Foreign Aid
  • Country Strategic Framework
  • Summary of Economic Conditions
  • Implications, Challenges and Recommendations
  • Population
  • Living Standards and Poverty Levels
  • Healthcare
  • Implications, Challenges and Recommendations
  • Qualifications Profile of the Population and Workforce
  • Levels of Schooling and Basic Education
  • Technical and Vocational Education and Training
  • Tertiary Education
  • Innovation in Egypt
  • Implications, Challenges and Recommendations
  • Labour Force
  • Employment by Sector
  • Employment by Skill Level
  • Employment by Occupation
  • Labour Productivity
  • Unemployment and Job Creation
  • Expatriates, Immigrants and the Egyptian Diaspora
  • Wage and Salary Trends and Social Insurance
  • Industrial Relations Framework
  • Labour Market Efficiency
  • The Fourth Industrial Revolution
  • Implications, Challenges and Recommendations

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