This chapter examines some of the most pressing challenges facing the Egyptian labour market. It assesses the impact of FDI on job creation, the quality of job opportunities created, particularly in relation to wages and the inclusion of women, and skills development. The analysis offers a comparative perspective between different sectors of the economy and regional counterparts, with a focus on the period from 2013 to 2023.
FDI Qualities Review of Egypt
Connecting Foreign and Domestic Firms for Productivity and Better Jobs
Abstract
The creation of quality jobs is critical to improving living standards and ensuring sustainable, inclusive growth. In Egypt, however, the link between economic growth and employment has historically been weak, primarily due to the large public sector and insufficient investment in labour-intensive sectors of the economy (World Bank, 2022[1]; OECD, 2024[2]). As a result, unemployment rates remain high, and labour force participation is low, particularly among young people and women. While nominal wages have increased in certain sectors over the past five years, alongside hikes in the minimum wage, real wages remain relatively low (ILOSTAT, 2024[3]). Despite an increase in the pool of educated workers, significant skills mismatches continue to pose challenges. These mismatches—where workers are either underqualified or overqualified for their jobs—result in increased costs for businesses, particularly in terms of reduced productivity and higher recruitment and training expenses. Addressing these issues will be crucial to improving both the quality of jobs and the efficiency of the labour market, which in turn can support broader economic development. The 2025 National Economic Development Narrative focuses on boosting sectors with high employment multipliers and job creation opportunities.
Foreign Direct Investment (FDI), particularly through greenfield projects, has made significant direct contributions to employment in Egypt. Between 2013 and 2023, greenfield projects generated 275 598 jobs, marking a notable increase from the 165 390 jobs created in the previous decade. A substantial portion of these new jobs were in the manufacturing sector, although the sector’s relative importance for job creation has declined over the past ten years. In contrast, there was a notable rise in job creation in renewable energy and information and communication technology (ICT), both in absolute terms and as a proportion of overall employment growth. This shift reflects the growing importance of these sectors, which could play a key role in shaping Egypt’s future labour market and economic landscape.
While Egypt outperforms its peers in terms of the absolute number of jobs created through FDI, it has one of the lowest job creation intensities, meaning the number of jobs created per billion dollars of greenfield investment. In absolute terms, construction is considered among the most labour-intensive sectors, generating substantial employment through large-scale infrastructure and real estate projects. When measured relative to FDI inflows, the job intensity of the construction sector is considered modest. Between 2003 and 2023, Egypt generated only 1 100 jobs per billion dollars of greenfield FDI, ranking last among peer economies. This is well below the OECD average of 2 100 jobs and the MENA average of 1 600 jobs. The low job creation intensity can be attributed to the concentration of greenfield FDI in sectors with lower labour intensity, such as energy and oil (see Chapter 1). Furthermore, the intensity of job creation by FDI in Egypt has declined over time, from 1 700 jobs per billion dollars of FDI in the period 2003-2012 to just 900 jobs per billion dollars in 2013-2023, placing Egypt below both the MENA and OECD averages. However, there has been notable growth in job creation intensity within certain sectors, particularly in software and IT services, which could signal potential areas for future FDI-driven employment growth.
FDI can also influence the quality of job opportunities created within an economy. In Egypt, wage levels in foreign firms are similar to those in domestic firms, despite the higher productivity levels typically associated with foreign investors. This wage discrepancy may be attributed to the concentration of foreign investment in low-skilled or low-innovation-intensive sectors, as well as the presence of economic rents that do not necessarily translate into higher wages for workers. Furthermore, women face even greater challenges in accessing quality jobs. Opportunities for women, whether as employees, managers, or business owners, are often limited in both domestic and foreign firms. This gender disparity highlights the need for targeted policies and reforms to improve women's access to high-quality employment, which could play a key role in fostering more inclusive economic growth. The 2025 National Economic Development Narrative includes policy actions to improve women economic empowerment.
The contribution of FDI to skills development in Egypt could be enhanced. Greenfield FDI is predominantly concentrated in less skill-intensive sectors, such as energy, construction, and oil. The construction sector can nevertheless play a role in absorbing both skilled and semi-skilled labour, particularly during periods of accelerated public and private investment in housing, roads, logistics, and energy infrastructure. Even in manufacturing sectors that attract a significant share of greenfield FDI, such as textiles and apparel, and metals, the proportion of skilled workers is generally low. The chemical sector stands out as an exception, as it both receives a substantial share of greenfield FDI and tends to be more skill-intensive. Furthermore, while foreign and domestic firms in Egypt hire skilled workers at similar rates, foreign firms are far more likely to provide formal training. This disparity suggests that the broader domestic workforce may not be benefiting as much from the skill development opportunities associated with FDI, highlighting the need for targeted policies that encourage greater skill-building initiatives, especially in sectors with higher growth potential.
There has historically been a weak link between economic growth and employment in Egypt. Despite strong overall economic growth, Egypt continues to face significant challenges in generating employment, particularly inclusive opportunities for youth and women. According to the World Bank (2024[4]), the adult employment-to-population ratio in Egypt stands at 39.6%, slightly below the regional average of 40.2%, and far below the OECD Member country (57.4%) and global (57.2%) averages (Figure 2.1, Panel A). National sources place Egypt’s adult employment-to-population ratio at 44.2% for 2024, at a slight increase from 43% the year prior.1 Much of this gap is driven by low participation rates among women and youth aged 15 to 24, where both Egypt and its region exhibit low employment levels.
While youth and female unemployment rates have declined in the past decade, they remain more than double the national average (Figure 2.1, Panel B). Furthermore, the types of jobs women are more likely to occupy are often more precarious. Estimated rates of vulnerable employment, defined as jobs where individuals are either own-account workers or contributing family workers, are higher for women (28%) compared to men (23%) (World Bank, 2022[1]). Additionally, widespread informality in the labour market means that many jobs are low-paid and characterised by poor working conditions (OECD, 2024[2]). Addressing these challenges requires a comprehensive approach that includes policies to enhance job quality, reduce informality, and promote gender equality and youth inclusion in the workforce.
Note: Panel A is based on data from the World Bank which was harmonised for international comparability. The Central Agency for Public Mobilisation and Statistics places Egypt’s adult employment-to-population ratio at 44.2% for 2024.
Source: World Bank (2024[4]).
As in much of the MENA region, the private sector in Egypt competes with a large public sector for employment opportunities (OECD, 2021[5]). The public sector in Egypt plays a significant role in both output and employment, with the employment share standing at around 18% in 2023. This proportion is relatively higher than in many other emerging countries (Figure 2.2). However, this share has decreased in recent years, falling by approximately 7 percentage points over the past decade. This decline follows the introduction of new hiring restrictions in the early 2010s, which were part of efforts to reduce the size and cost of the public sector in Egypt (OECD, 2024[2]).
Source: ILOSTAT (ILO, 2024[6]).
Furthermore, much of the private sector’s growth has been led by less labour-intensive activities (World Bank, 2022[1]). Egypt’s largest sectors by employment are agriculture, forestry, and fishing; trade and vehicle repair; and construction. Employment growth over the past decade (2012-2022) has been most rapid in construction (averaging 12.1% per year) and utilities (averaging 6.6% per year), however. Rising exports have contributed to employment, particularly in labour-intensive industries such as textiles, apparel, automotive components and consumer electronics. Although exporters as a whole still represent a modest share of total employment, reflecting the prevalence of capital-intensive activities (Berg, Robertson and Lopez-Acevedo, 2022[7]), these labour-intensive export sectors demonstrate the potential for export activity to generate jobs, especially for medium- and low-skilled workers. This suggests that more diversified growth – which could be fostered by attracting new kinds of investment – is needed to generate new employment opportunities. This need is made more pressing by the rapid growth of Egypt’s working-age population anticipated in the coming decades (OECD, 2024[2]).
Wages in Egypt are low and have not grown in recent years. In fact, at about USD 0.8 in 2023, average hourly earnings in Egypt have declined in nominal terms from a high of USD 1.1 in 2019 and are lower than in many similar economies elsewhere in the region and around the world (Figure 2.3). While recent global disruptions resulting from the COVID-19 pandemic and the Russian war of aggression against Ukraine have certainly had a negative effect on wages, particularly on real wages due to inflationary pressures, longer-term structural factors are also relevant. Extensive informality drags down wages. Approximately 21% of employees earn low pay, which is defined as just two-thirds or less of the median wage. Informal workers are overrepresented among these employees (OECD, 2024[2]).2
Source: ILOSTAT (2024[3]).
Notable inequalities in earnings are also found across sector, region, and gender. Public sector workers earn more than private sector employees (CAPMAS, 2022[8]). Wages are higher in urban areas and somewhat elevated in Upper Egypt than in Lower Egypt. Women earn less than men across all levels of education, and this gap only increases with higher levels of educational attainment (CAPMAS, 2022[8]). The gender wage gap is significant. Even after accounting for a range of personal characteristics including sector of employment, education, years of experience, and region, a 20% unexplained monthly wage gap remains between men and women (ILO, 2024[9])
The availability of a well-educated workforce, particularly among young people, has increased in Egypt due to the improvement in educational attainment. Egypt's educational attainment at all levels (primary, upper secondary, post-secondary) is comparable to peer countries (Figure 2.4). However, the Egyptian labour market does not always encourage an efficient match between workers and roles (OECD, 2024[2]). According to a 2024 policy brief by the Economic Research Forum (ERF), overeducation – when a worker has a higher level of education than is required for their job - is prevalent among both vocational secondary and university graduates in Egypt. Specifically, 19% of university graduates and 60% of vocational secondary graduates self-reported being overeducated. The study also finds that overeducation is associated with lower job satisfaction and wage penalties compared to well-matched peers (Economic Research Forum, 2024[10]).
Source: World Bank (2024[4]).
FDI influences employment in host countries through both direct and indirect channels. Direct impacts stem from employment within foreign-owned enterprises, while indirect effects arise from the broader economic adjustments triggered by the operations of these firms within the host economy. The employment-generating potential of FDI is often sector-specific; for example, investments in capital-intensive industries, such as resource extraction, typically create fewer jobs compared to investments in more labour-intensive sectors like manufacturing. Greenfield investments generally yield positive direct employment outcomes, as new establishments require workforce integration from the outset. In contrast, Foreign Mergers and Acquisitions (M&As) of domestic firms can result in mixed employment effects. In the short term, M&As are often associated with job losses, as they commonly involve restructuring and workforce reductions. However, over the medium to long term, M&As can foster job creation, driven by enhanced operational efficiencies and productivity gains. Indirect effects on employment among domestic firms may occur through local businesses imitating labour-saving techniques used by new entrants or increased demand for their output that leads to employment growth, among other channels (OECD, 2019[11]).
Greenfield FDI is an important driver of job creation in the Egyptian economy. Over 2013-2023, 275 598 jobs were created directly through greenfield projects, a large increase over the 165 390 created in the previous decade. This figure is significant considering that it only provides a partial picture of the employment impact of FDI, as it does not consider employment generated through other FDI entry modes or new hires in existing foreign affiliates. The sectoral contribution of greenfield FDI to job creation has changed over these two periods, however. The share of all jobs created directly from greenfield FDI inflows declined in manufacturing from 47.5% over 2003-2012 to 41.1% over 2013-2023, just as that in construction declined from 24.6% to 11.4% (Figure 2.5, Panel A). In place of these, a greater share of jobs has been created in energy and extraction, ICT, and transport and storage. Renewable energy, in particular, has seen a large increase in the share of jobs created from FDI, from 0.1% over 2003-2012 to 14.5% over 2013-2023 (Figure 2.5, Panel B). Employment is also created indirectly as a result of foreign investment, though the evidence suggests that in Egypt, the extent of this may be relatively small for the total scale of inflows received (Adouelfarag and Abed, 2020[12]).
Note: Capex and jobs are estimates.
Source: FDI Markets (2024[13]).
While Egypt performs relatively better than its peers in terms of the absolute number of jobs created through greenfield FDI (or the number of jobs created relative to population), the distribution of this investment is less conducive to broad-based job creation. Specifically, greenfield FDI in Egypt tends to be concentrated in capital-intensive sectors, such as oil and construction, which are less labour-intensive compared to other sectors like manufacturing or services, when measured relative to FDI. In absolute numbers, the construction sector is, however, responsible for an important share of the workforce. As a result, while the volume of FDI inflows is notable, the employment outcomes may not be as significant in terms of job creation across the broader economy.
The intensity of job creation – measured as the number of jobs created per USD billion in greenfield investment – declined from 1 700 over 2003-2012 to 900 over 2013-2023 (Figure 2.6). Over the entire twenty-year period, Egypt with 1 100 jobs ranks last among peer economies, below the OECD average of 2 100 jobs and MENA average of 1 600 jobs. This should not be surprising, given the profile of recent inflows of greenfield FDI into Egypt, which have been highly concentrated in a few capital-intensive sectors, such as energy and construction (Figure 2.7). These investments do not directly generate large numbers of jobs and often lead to limited linkages formed with the domestic economy, which could lead to indirect employment generation in domestic suppliers. The MENA region also saw a decline in the intensity of job creation through FDI, likely also due to large investments in capital-intensive sectors such as energy and construction.
Note: Capex and jobs numbers are estimates.
Source: FDI Markets (2024[13]).
Note: Capex and jobs are estimates. Job creation intensity refers to the number of jobs created per USD billion in greenfield FDI.
Source: FDI Markets (2024[13]).
The intensity of job creation through FDI is not a static characteristic of economic sectors, but is subject to change as a result of technological developments, changes in the business environment, and shifts in demand, among other factors (Saurav, Liu and Sinha, 2020[14]). Indeed, global trends are also affecting the intensity of employment generation through FDI; technological change and structural shifts in the composition of investment around the world are leading to fewer jobs being created for a given amount of investment (Box 2.1).
In Egypt, some technology- and capital-intensive sectors have large increases in the employment generated relative to foreign investment. Between 2003-2012 and 2013-2023, FDI job creation intensity increased strongly in software and IT services (170% increase), engines and turbines (137% increase), and building materials (132% increase) (Figure 2.8). These sectors receive lower shares of FDI, however; together, they account for less than 1% of Egyptian FDI inflows over 2013-2023 (Financial Times, 2024[13]). Also relevant to overall employment generation in Egypt, changes in job creation intensity were mixed across the sectors that are major attractors of FDI; between these two decades, the intensity of job creation in renewable energy increased by 41% but decreased in construction and in coal, oil, and gas by 45.9% and 58.0% respectively.
Note: The size of the bubble reflects the sector’s share in total FDI during 2003-2023. The energy sector is excluded.
Source: fDi Markets (2024[13]).
The job creation intensity of greenfield FDI declined in most world regions between 2014-2018 and 2019-2023. Across non-OECD Member countries, the number of jobs directly created per USD million in greenfield FDI fell from 2.9 to 2.6 between these two periods. South Asia is a notable exception to this trend, where it has increased by 23.6% owing to a significant growth in investment in labour-intensive software and IT services, communications and business services. To a lesser extent, the MENA region is the other exception; the job creation intensity of greenfield FDI has remained roughly constant.
Global trends are reshaping the linkages between investment inflows and employment. In particular, increasing automation and digitalisation in all economic sectors is reducing job creation intensity. Sectors that experienced a relative increase in FDI (e.g. renewables and semiconductors) have had, on average, a lower job creation intensity than sectors that experienced a relative decline in FDI inflows (e.g. real estate, the automotive sector and food, and beverages) (Figure 2.9). The energy sector in general is not very labour-intensive; it accounted for 35% of FDI in non-OECD countries between 2019 and 2023 but created only 4% of new jobs from FDI. Although investment in renewable energy and other areas supporting the green and digital transitions may not create as many jobs as older forms of investment, it has the potential to create higher-quality and more stable jobs.
Source: fDi Markets (2024[13]).
Egypt has attracted a growing share of FDI in renewable energy in the past decade (Box 2.2). Given its capital intensity, greenfield FDI in renewable energy tends to create fewer jobs than investment inflows in other sectors. Globally, less than 0.6 jobs per USD million are directly created through greenfield FDI in renewables, making it the sector with the lowest job creation intensity (OECD, forthcoming[15]). Thanks to its significant attraction of investment in renewable energy, however, Egypt accounted for 12.8% of jobs created globally from greenfield FDI in renewables over 2019-2023 (Figure 2.10). In addition, this investment has been sufficiently large relative to other inflows in the country, such that 21.3% of all jobs created in Egypt from greenfield FDI over this period were in renewables.
Source: fDi markets (2024[13]).
Just transition requires the creation of quality jobs in greener activities as lower-emission activities increase their contributions to economic growth. This has been a challenge in many economies, including among OECD Member countries, where workers displaced from shrinking GHG-intensive work face relatively large earnings losses. Re-skilling and upskilling policies are therefore critical in helping workers to adjust to the emergence of new lower-emissions jobs.
Additional skills are needed among Egyptian workers in order to attract the needed investment and to foster employment generation. These include knowledge and skills required to work with green technologies and infrastructure. Egypt’s Integrated Strategy for Sustainable Energy for 2008-2023 includes commitments to skill development, including through the creation of centres of excellence within the Ministry of Education and Technical Education in reforming technical education programmes. In addition to strengthening the relevance of these programmes, it will be important to develop and implement participatory and inclusive national strategies on skills and so establish an institutional framework for the effective governance of training and skill development.
Source: OECD (forthcoming[15]); AUC/OECD (2024[16]); ILO (2018[17]).
Quality jobs pay well, are relatively stable, and offer safe and supportive conditions for work. The OECD Job Quality Framework, for example, measures quality across three dimensions: earnings quality, labour market security, and the quality of the working environment (OECD, 2019[11]). Job quality has direct impacts on workers’ incomes, as well as indirectly affecting their health and productivity (Saint-Martin, Inanc and Prinz, 2018[18]). FDI inflows can affect the quality of employment by increasing wages and improving non-wage working conditions such as job security and labour standards, though these benefits may be unevenly distributed in the host economy or dependent on the characteristic of investing forms and local context (see, for example (Hijzen et al., 2013[19]), (Bloom, Van Reenen and Sadun, 2016[20])). Major issues regarding job quality in Egypt include depressed wages and gender imbalances.
Foreign firms operating in Egypt do not exhibit significantly higher wage levels compared to domestic firms, which suggests limited potential for these companies to exert upward pressure on wages in the host economy. Generally, foreign firms tend to pay wage premia because of their higher productivity, use of higher-skilled labour, larger size, or greater product market power. Larger wage premia tend to be found where a greater share of foreign investment is made in high-wage industries and wage premia tend to be smaller at the lower end of the wage distribution (OECD, 2019[11]). Despite a significant productivity premium (see Chapter 1), foreign firms in Egypt on average pay similar wages to domestic businesses; at 5.9%, the foreign wage premium in Egypt is negligible (Figure 2.11). The concentration of foreign investment may explain this apparent discrepancy, as most FDI is made in sectors with relatively high productivity levels despite not being skill- or innovation-intensive.
Foreign firms pay higher wages if index >0, 2023 or latest year available
Note: Data for Egypt refer to 2020. Data for other countries refer to years between 2015 and 2023.
Source: World Bank Enterprise Surveys (2024[21]).
Gender equality represents a critical dimension of both the quality and inclusiveness of employment. The impact of foreign firms on gender outcomes can be multifaceted. These firms influence gender dynamics not only through their direct employment practices but also via the value chains they establish with local enterprises, the competitive and imitation effects they generate among domestic firms, and the patterns of labour mobility between foreign and domestic businesses. By shaping these various channels, foreign investment can play a significant role in advancing gender equality in the workplace, although the extent of this impact will depend on sectoral and contextual factors (OECD, 2022[22]).
Despite broader trends, the direct impact of FDI on female labour force participation in Egypt remains limited, with foreign firms contributing relatively few opportunities for imitation or labour mobility effects within local businesses. While foreign enterprises in Egypt are somewhat more likely than domestic firms to employ female workers or have female owners, domestic businesses outperform foreign firms in terms of female representation in senior management positions (Figure 2.12). However, substantial potential remains to enhance women’s involvement in both foreign and domestic enterprises. Across key dimensions—such as workforce participation, management roles, and ownership—Egypt lags behind many of its peer economies, with female engagement rates significantly lower. Structural barriers, including gender imbalances in employment and entrepreneurship, the disproportionate burden of unpaid care and domestic work, and entrenched social norms, continue to limit women’s ability to contribute more fully to economic growth and development (OECD/ILO/CAWTAR, 2020[23]) (Box 2.2). To promote women’s entrepreneurship, Egypt could consider developing programmes that enable women-owned businesses to access export markets and expand internationally, while ensuring that existing technical programmes are monitored and evaluated for effectiveness (OECD, forthcoming[24]).
Note: Data for Egypt refer to 2020. Data for other countries refer to years between 2015 and 2023.
Source: World Bank Enterprise Surveys (2024[21]).
One of the chapters of the forthcoming Women’s Economic Empowerment Review, prepared under the OECD-Egypt Country Programme, provides an in-depth analysis of the impact of FDI on gender equality and women’s economic empowerment in Egypt’s labour market. The chapter also examines the institutional and policy frameworks that shape FDI’s influence on gender outcomes and identifies key reforms to enhance its positive impact. Key findings include:
Gender impact of FDI is limited and uneven: FDI has not fully translated into better gender equality outcomes. Most FDI flows into male-dominated sectors such as oil extraction, manufacturing, and ICT, where women’s participation is very low. This reflects broader legal, cultural, and societal norms that constrain women’s access to certain sectors and types of employment.
Geographic concentration risks to exacerbate pre-existing gender inequalities: FDI is concentrated in only 7 out of Egypt’s 27 governorates—mainly urban centres—accounting for 90% of greenfield FDI and 80% of the jobs it creates. Women face greater obstacles than men in relocating for work, such as limited access to safe and affordable transportation and accommodation. This geographic concentration further limits women’s ability to benefit from job opportunities generated by foreign firms.
Foreign firms offer better jobs, but gaps remain in leadership: Compared to domestic firms, foreign firms employ a higher share of women, particularly in sectors like garments. They also offer better working conditions, including higher average wages and more permanent contracts. They are less likely, however, to appoint women to top management roles—highlighting a leadership gap.
Fragmented institutional landscape and weak co-ordination: Investment policymaking in Egypt involves multiple institutions with overlapping mandates. However, co-ordination with gender equality bodies—particularly the National Council for Women (NCW)—is weak. Equal Opportunity Units (EOUs) exist in some ministries but lack co-ordination with each other and with the NCW. The NCW and gender-relevant ministries are excluded from high-level investment policy discussions (e.g. Supreme Council for Investment), limiting gender mainstreaming in investment policy.
Legal reforms provide a foundation, but gender impact is unclear: The 2017 Investment Law improved legal clarity and introduced a new tax incentive regime based partly on sectoral targeting. Some incentivised sectors (e.g. garments, chemicals) have significant female employment. However, there is no mechanism to monitor or assess whether these incentives improve gender outcomes.
Lack of transparency in investment promotion efforts: Entities in charge of investment promotion (GAFI, IDA, and SCEZ) focus on attracting investment in sectors relevant to women’s employment (e.g. textiles, healthcare, education). However, their strategies, objectives, and results are not publicly disclosed, making it difficult to evaluate their effectiveness or impact on gender labour market outcomes.
Weak implementation of international gender standards: Egypt was the first Arab and African country to adhere to the OECD Guidelines for Multinational Enterprises in 2007, but its National Contact Point (NCP) has only recently become functional and has begun engaging in promotional and awareness-raising activities. Egypt also participates in international investment agreements with gender provisions, but follow-through remains limited.
Skills development is a key driver of inclusive growth and a critical factor in improving the economic prospects of Egypt's population, particularly among vulnerable groups. As noted earlier, Egypt faces substantial challenges in addressing skill gaps within its labour market. Despite advances in educational attainment, significant mismatches between the skills possessed by the workforce and those demanded by employers continue to create inefficiencies. These mismatches impose costs on both domestic and foreign firms, hindering productivity and limiting the potential for sustainable economic growth.
In Egypt, greenfield FDI tends to be concentrated in less skill-intensive sectors, such as energy, construction, and oil. Even within manufacturing, industries that attract significant shares of greenfield FDI, such as textiles and apparel, as well as metals, tend to have a lower proportion of skilled workers compared to other sectors (Figure 2.13). A notable exception to this trend is the chemical sector, which not only receives a significant share of greenfield FDI but also boasts a relatively high proportion of skilled labour, highlighting a more skill-intensive nature of investment in this area. The construction sector can also contribute to absorbing skilled workers during periods of accelerated public and private investment in infrastructure.
Note: Leaders are defined as firms in the top decile of the log labour productivity distribution in each manufacturing industry. Firms with one worker are excluded.
Source: OECD MultiProd database (2024) and Egypt Economic Census 2017-2018.
In Egypt, both foreign and domestic manufacturing firms employ a relatively high proportion of skilled workers compared to similar economies. According to firms’ own estimates, skilled workers account for 75.7% of employment in domestic firms and 79.7% in foreign firms (Figure 2.14, Panel A). This similarity is not unexpected, given the comparable wage levels between foreign and domestic firms. Additionally, the overall composition of FDI inflows into Egypt tends to favour sectors that do not typically require high levels of education for a significant portion of their workforce. However, it is important to note that manufacturing firms with higher concentrations of skilled workers generally tend to be larger, more innovative, and more export-oriented than those with lower skill intensity (Abdelgouad, 2016[25]).
It is rarer for Egyptian firms to provide workers with continuous learning opportunities, while on-the-job training is much more common among foreign firms. Only 7% of domestic firms offered staff training programmes, below the OECD (42.6%) and MENA (13.9%) averages (Figure 2.14, Panel B). Foreign firms in Egypt are much more likely to offer formal training; 31.1% of these businesses do so, exceeding the regional average of 23.1%.
Note: Data for Egypt refer to 2020. Data for other countries refer to years between 2015 and 2023.
Source: World Bank Enterprise Surveys (2024[21]).
This difference is not unique to Egypt; foreign firms are often more likely to provide in-house training than their domestic counterparts in peer countries. There is some evidence that domestic firms exposed to foreign firms that provide training are motivated to do similarly, through a combination of competitive pressure and imitation effects (Blomström and Kok, 2001[26]). On the other hand, as a result of low levels of technological intensity, these imitation effects might be more limited among Egyptian businesses. In addition, on-the-job training is particularly important in innovation- and technologically intensive activities, as rapid change in these areas tends to be a motivator for firms to invest in continuous skill development (OECD, 2019[11]). Since many Egyptian firms do not operate in these areas (see Chapter 1), there may be less motivation to invest in training.
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