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Globalization and Human Capitalcomparable with those witnessed during thepetroleum boom. It would therefore beunwise to expect Arab oil-producingcountries to continue to absorb the surpluslabor force of other Arab countries such asEgypt, Jordan and Yemen. The movementof labor will be limited and concentrated inthe highly skilled labor category, and thenonly in a few fields where no substitution bynational or Asian labor is possible.In addition, recent empirical evidence on theEgyptian labor market shows a tendencytowards using foreign labor, especially thosewho are highly skilled and capable ofdealing with new advanced productionmethods. Foreign labor in Egypt is mainlyfrom Asia, given high quality performanceand work ethic. This phenomenon isnoticeable in the construction and medicalservice sectors. There is also an increasinginflow of unskilled labor from Sudan,Ethiopia and Eritrea, working mainly in jobsrelated to domestic services.We might therefore conclude that contrary tofirst impressions, globalization will increasinglyput constraints on employment and on laborforce mobility, with the exception of smallnumbers of the highly skilled who constitutea special class of workers.The Spread of Poverty and SocialExclusionIn spite of the assertion that there is nodirect relationship between the impact ofglobalization on the labor market andpoverty, it appears that the complexinteraction between the forces of change islikely to have a negative impact on thestandard of living of the majority of theEgyptian labor force. Poverty is essentiallya process of social exclusion that preventslarge categories of citizen from acquiringeconomic, human and social assets. If, assome economists believe, the increasingopenness of the Egyptian economy hashelped, through different mechanisms,reinforce the phenomenon of exclusion overthe last ten years, one could argue that inEgypt, as a developing country, globalization,by definition, will help integrate only asmall elite into the process of productionand capital accumulation of the globaleconomy. These few beneficiaries, or thelabor “aristocracy”, enjoy a higher standardof living than that attainable by the averageincome level. Further, the number of thosemarginalized and excluded from theproduction and income cycles is on theincrease, to the extent that poverty isassociated with economic and socialexclusion.Social Policies Supporting theLabor MarketIn view of the negative spin-offs ofglobalization, the GOE has recognized theneed to pursue new social policies that aimto mitigate adverse effects, especially on thepoor and vulnerable groups in society.These policies vary in their nature, objectivesand in the groups benefiting. The main linesof the social policies proposed are thefollowing:Short-Term PoliciesIn the short run, two main types of programcan be distinguished. The first cover theestablishment of appropriate social safetynets, while the second focus on thedevelopment and efficiency of employmentoffices to more effectively match unemployedjob seekers with available job vacancies.The Social Safety Net. The term ‘socialsafety net’ (SSN) is widely used in theliterature dealing with ERSAP indeveloping countries. Most empirical studieshave shown that the implementation ofERSAP programs not only deepens theseverity of poverty, but also generates newgroups of poor, whose standards of livingdeteriorate as a result of the programs.Thus, the SSN has become an additionalcomponent to the two main elements ofreform, namely the stabilization programand the structural adjustment program, inorder to give these programs a human face.There are three main components toEgypt’s SSN. The first is consumer foodsubsidies. The second relates to the SocialFund for Development (SFD), establishedto provide financial assistance, and createjob opportunities, for certain categoriessuch as female-headed families, laborreturning to Egypt after the Gulf war, andworkers hit by privatization programs. TheThe movement oflabor will be limitedand concentrated inthe highly skilledlabor category.Poverty is associatedwith economic andsocial exclusion.Egypt Human Development Report 2000/2001 - 101