This paper analyzes the impact of recent macroeconomic and labor market policies in Egypt on job creation. It shows that reform measures undertaken by the government in the last two years (2005-06) to promote investment, boost exports and improve public finances have not increased employment adequately. Labor market policies did not correct for labor market failures due to the short-term nature of these policies and lack of coordination among them and with macroeconomic policies. To increase employment, the study emphasizes the importance of designing a national employment strategy with the objective of creating more jobs, especially in those sectors with the highest employment elasticity. The strategy should be made an integral part of Egypt’s national development plan. Both macroeconomic and labor market policies should be aligned with the objectives of the strategy.