The logic is that if the hands of business are untied, entrepreneurs will be able to make better investment decisions and will contribute to growth, job creation and stability. A transitional period of layoffs and high unemployment is the necessary short-term price for future prosperity, the reasoning goes. The current law makes many of them reluctant, which hurts the economy. The draft law simply adds a measure of balance to employer-employee relationships. But not everyone agrees with the free-market logic upon which the draft law is based.
Investment often goes into capital-intensive projects that create few jobs.
What the legislators who are pushing for the law don't realize is that the Egyptian economy doesn't have the institutions to deal with its consequences. In Europe, strong labor unions and unemployment compensation shield workers from mass layoffs and pauperization, notes Sheikh. But we have a crisis here in Egypt. Labor unions are historically weak and dependent on the state, and unemployment compensation is very difficult to secure. Theoretically, workers have six weeks of compensation, but getting it is so fraught with red tape that in effect, it's nonexistent.