The 1995/1996 Household Income, Expenditure - (PDF, 101 mb ...

IV.17
"sticky" downward; more rigid than they would be without certain practices,
such as indexation, which have little to do with real output. Much of the
distortion in the real wage in Egypt is due to the Ifovernment acting as too
large an employer, pushing the wage bill too high. When the costs of wages
get too high the use and intensity of labor compared to capital changes in
ways which hurt overall growth in the economy, and may contribute to
unemployment. In a macroeconomic context, higher productivity would serve
to smooth the functioning of the labor market. Since mismatched labor and
unemployment are high in Egypt, employers should invest in human capital
through training, and the government should remove the legislative barriers
which constrain labor mobility. The public sector should also continue to cut
back on its wage rolls, and allow the private sector more latitude in setting
real wage rates. In the meantime the government should send a signal that it
is serious about privatizing by reconsidering the size of benefits to its
employees, and by passing the unified labor law.
In a microeconomic context, the real gains in productivity should begin
in the agriculture sector. This means that secondary processing should be
developed and retained in the rural areas. Value added in agriculture must
not continue to flow into urban areas where it commands a lower marginal
value.
IV. Conclusion
This chapter began with estimates of labor force size, employment and
unemployment rates. The measurement of these variables is confounded by
nonstandard practices in Egypt. If CAPMAS adhered to best practices in labor
force surveys, official estimates of labor force size would be higher and
unemployment would be lower. Nonstandard definitions cause a downward bias
in the number of household income earners, notably housewives.
Beyond the question of double counting and missing counts of
employees, however, are two thorny measurement concerns: the extent of
underemployment and the size of the informal sector both impact heavily on
earnings. Underemployment, not just of labor, but also of the necessary
production inputs, is the root cause of low productivity in the country. The
next labor force survey should concentrate on measuring underemployment
better. The size of the informal sector may covary with the number of extra
jobs, and multiple income sources are more common in rural areas.
Agricultural activities provide more and varied opportunities for earnings, but
overall primary extractive work is not lucrative. Adjusting for inflation, real
wages in agriculture have not kept pace with inflation. Real wages of day
laborers have eroded only marginally less. Public sector wages are very high
compared to other worker organizations.
What characterizes an Egyptian worker who aspires to a career in the
well-paid public sector? For one thing, such a person earns a wage and is
probably, therefore "in the formal sector." What factors, then, contribute
positively to being a wage employee? Being young, married, and having lower
household income levels makes an employee more likely to be a wage earner.
16 1995/1996 preliminary actual wage expenditures are more than 27% of
total current expenditures, according to the Central Bank of Egypt (1996),
Table 5/1, p. 139.