Roy Ryu Chair

Egypt continues to struggle with significant labor market problems — notably, low real wages, low female labor force participation (FLFP), and high informality. The possibility that the liberalization strategy pursued by the government in the last decades might either impose or reinforce harmful effects on local labor markets has been cited as a concern. Higher imports could affect labor markets in at least two ways.

In the 1990s, Egypt began implementing policies designed to boost trade. This was followed by another wave of trade liberalization in 2004. As a result, the tariffs tumbled, and trade rose significantly—almost tripling from 2000–2020—with exports increasing 196 percent and imports soaring 231 percent.

Therefore, higher exports are reflected in higher incomes or lower informality rates, and not employment figures. However, not all groups benefit equally from higher exports, as indicated by greater wage inequality as well as geographical and socioeconomic divergence. Thus, governments have a role to play and need to develop policies to better share the gains from trade.