**.4-**

12. Policies which retard the level and rate of growth of demand for labor have extremely serious consequences in a countly with significant un- and underemployment and a rapidly growing labor force. Regardless of fuiure developments with respect to Egypt's external debt, the 1990s are likely to be dominated by the problem of job creation. Because of a "mini-baby boom" in the aftermath of the October WUar of 1973, the growth of the labor force in Egypt will actually accelerate during tne cor .ng decade. Simply providing jobs for rnew labor market entrants will require the creation of an additional 4.5 million jobs in the 1990s. (ILO, 1991). If current unemployment rates (perhaps 10-15%) are to be reduced, if wom.en's labor force participation is to rise above its current low level (12% in 1986), and if (as is now happening), political events force large numbers of Egyptians working abroad to return, then the number of new jobs needed could be nearly 9 million. Given that the current labor force is about 14-15 million, this is an almost unbelievably daunt;ng task.

13. The picture is not brightened when one realizes that as much as 90% of all jobs created from 1976 to 1986 came from emigration and the expansion of government employment (Handoussa. 1988). 3 Given budgetary deficits and iegional developmnents, neither of these sources can continue to expand at anything like the previous rate. For various reasons, the agricultural sector iF most unlikely to create many new jobs in the coming decade (Richards, 1991). Accordingly, QnlJ a strategy of nManifactured export-led growth has a chance of solvig the employment problenm in Ev. Such a strate,,- will require an expanded role for the private sector, simply because of the latter's greater flexibility in responding to rapidly changing intemational market conditions. Developments in the higher education sub-sector should be judged on the basis of how well they contribute to the development of such a strategy.

14. A strategy of labor-intensive, manufactured exports, with a greater role for the private sector can both reduce the twin gaps and simultaneously create many jobs. To summarize the argument of this introduction, such a strategy makes sense both because of Egypt's resource endowment, and because of the origins of the current problems. The latter are, as sketclied above, the result of macroimbalances and wicrodistortions. These, in turn, have been generated by the previous strategy of state-led, import-substituting industrialization. This cannot meet the challenge of jobs and growth in the 1990s. Egypt must increase savings, reduce consumption, increase, exports, and raise efficiency, while maintaining a minimal "social safety net" to preserve domestic peace and stability. The economy must become more dynamic and competitive; such considerations, together with Egyp's relative paucity of natural resources and abundant labor, strongly suggest a strategy of private-sectos led manufactured export growth.

**3 The predse percentage Is highly sensitive to the (widoiy varying)** estimate **of** migration. For **domestic job** creation alone, the public **sector** generated some 1,235.000jobs or 55.8%. **It** we assume that **net** emigration from 1976 wes 1.25 million, then the public-sector-plus-migration shareof job creation b.toween the two census years was about 70%--stiii the large majority of **new jobs.**