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Labor woes in the Middle East, Part I

Labor woes in the Middle East, Part I

The global credit crisis is ripping through economies in the Middle East, forcing companies to announce hefty job cuts. Nowhere, not even the Gulf, has been spared.

December 14, 2008 10:34 by

the economy must expand by 7 percent annually to create enough new jobs for the 700,000-plus young people who join the labor market every year. The unemployment rate stands at 10 percent. Many Egyptians, like Moroccans, travel to Europe and the United States for work. And many may now be sent back, as firms there lay off staff. Like Morocco, Egypt also depends on the expansion of tourism – a particularly labor-intensive sector – to create jobs for those who stay.

“I expect there to be zero employment growth for next year,” says Simon Kitchen. “Tourism has been Egypt’s main job creator in recent years, but half of all tourists to the country [about seven million people] come from Western Europe. Another one million come from Russia and Eastern Europe, which are also now in trouble. I think many new hotel projects will be delayed, and we may see staff laid off after that. This would especially affect people from Southern Egypt, who rely on jobs in the tourism sector.”

The secretary-general of the Egyptian Hotel Association in Southern Sinai, Adel Shoukry, points to currency markets as the largest scourge. “Our biggest problem now is the fluctuation in exchange rates,” he says. “The euro has fallen against the Egyptian pound, and that has impacted revenues. None of our bookings for October and November have been cancelled, but we are not sure of December onwards. We do not expect any job losses over the next five to six months, but who knows? The situation could change dramatically.”

Europe’s economic downturn could, paradoxically, provide a spur for jobs in hotel construction, he says. “The longer the economic crisis persists, the more the prices of building materials will fall. So it’s a good time to finish off projects, which have already been started. The money has been lent. Developers have got the cash. So why not?”

First seen in Trends magazine.

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