Working Papers

Employment Intensity of Growth in the Egyptian Economy, with a Focus on the Manufacturing Industries

Publication Number: ECESWP130-A

March, 2008

Author : Naglaa El-Ehwany and Nihal El-Megharbel

Type : Working Papers

The employment-intensity of growth is an important issue that merits in-depth study and analysis in the case of the Egyptian economy as it directly impacts economic policymaking. With that in mind, the study sets out to identify the sectors and sub-sectors in which output growth generates more jobs. It also sheds light on the extent and significance of the structural transformation in the pattern of generating value-added and employment in the Egyptian economy since the 1980s; the aim is to find out whether it was a positive transformation similar to that which accompanied growth in developed economies. Finally—given that the manufacturing sector is the backbone of sustainable development, and that the service sector is capable of generating enough jobs—the paper seeks to identify the sub-sectors that generate permanent and decent jobs, and hence deserve support. To achieve these objectives, the study reviews the conceptual framework and application of the employment intensity of growth and employment elasticities of output. It also analyzes the link between employment growth with output, and productivity growth. The study then moves on to measure employment elasticities of overall economic growth during 1980/81-2004/05 as well as in six major sectors over the same period to analyze both the job-creation capability of these sectors, and the significance of structural transformation. Finally, the study estimates the employment elasticities of output growth in nine manufacturing sub-sectors to identify their job-creation capability compared to their relative share in investments, and the relationship thereof with economic policymaking.