Social Justice in Egypt from a Poverty Perspective

Analytical Overview on Social Justice in Egypt from a Poverty Perspective

21 June 2014

Context Poverty rates have increased steadily since 2000 despite achieving high economic

growth and employment rates in 2005-2010. Poverty is concentrated in Upper Egypt, rural areas, and frontier areas/communities.

Poverty rates decrease as education level increases.

The disparity between economic growth and poverty indicators is due to:- Low productivity rates - High inflation rates - Absence of social protection programs targeting the poor - Low quality of public social services

What is social justice?

Justice in income and wealth distribution? Justice in empowerment?Justice in the opportunity to compete?

Overview

Poverty rates have increased by 10 percentage points since 2000.

Poverty rates deteriorated during the period 2005-2010, despite achieving high economic growth and employment rates. (structural factors).

A large percentage of Egyptians live near the poverty line, hence are vulnerable to economic shocks and crises.

If the poverty threshold of EGP 3,920 per year per person increases by 20%, the poverty rate will increase by 20% to reach 46.3%.

2000/1999 2005/2004 2009/2008 2011/2010 2013/20120

5

10

15

20

25

30

16.7

19.621.6

25.226.3

Poverty rate (according to the national poverty line)

Economic growth rate

Unemployment rate

%

Source: CAPMAS, MOF and Dcode EFC

Poverty Characteristics in Egypt

Education

Low educational level remains the most correlated factor to poverty.

Although the incidence of poverty decreases as educational level increases, poverty appeared among masters and doctorate degrees holders for the first time in the year 2013, and has generally been increasing among university graduates.

على حاصلأو ماجستير

دكتوراه

على حاصلمؤهل جامعي

على حاصلفوق مؤهلالمتوسط

على حاصلالثانوية العامة

على حاصلمؤهل متوسط

يستطيع القراءة والكتابة

على حاصلشهادة

أو ابتدائيةاعدادية

أمAي0

5

10

15

20

25

30

35

40

4

913

16

21

3029

37

2008/09 2010/11 2012/13

(%) Poverty rates by educational level

Illiterate Primary or prepeducation

Reads andwrites

Intermediatedegree

Secondaryeducation

Above intermediatedegree

Universitydegree

Masters or doctoratedegree

Sources: CAPMAS and Dcode EFC

Geography Poverty is concentrated in Upper Egypt (75% of the poor).

Poverty rates are higher in rural areas relative to urban areas ( because employment is concentrated in agriculture and informal activities). However, poverty rates have decreased in 2012/2013 compared to 2010/2011 in Upper Egypt

Recently, poverty rates relatively increased in urban areas compared to rural areas due to the security and economic instability since 2011.

البحري الوجه حضر

البحري الوجه ريف

القبلي الوجه حضر

القبلي الوجه ريف

0102030405060

7.3

16.7

21.3

43.7

10.3

17

29.5

51.4

11.7

17.4

26.7

49.4

2012/13 2010/11 2008/09

Lower Egypt(Urban)

Lower Egypt (Ru-(ral

Poverty rates by geographical distribution

Upper Egypt(Urban)

Upper Egypt(Rural)

Source: CAPMAS and Dcode EFC

0

10

20

30

40

50

60

70

626056

4843

3732

30

22191817171513

11954

0

Poverty rates across governorates in 2013 (%)

National Average = 26.3%

Sout

h Si

nai

Red

sea

Suez

Dam

iett

a

Al-G

harb

ia

Al-Is

mai

lia

Alex

andr

ia

Al-D

akah

lia

Al-S

hark

iaAl

-Mno

ufia

Port

-Sai

d

Cairo

Kafr

El-S

heik

h

Al-B

ehei

ra

Al-K

alyo

ubia

New

Val

ley

Mat

rouh

Al-J

izah

Al-M

inia

Al-F

ayou

m

Beni

-Sue

f

Luxo

r

Asw

an

Nor

th S

inai

Suha

g

Qen

a

Assi

out

Poverty rates are concentrated in Upper Egypt and frontier areas, but even richer governorates witness poverty pockets

Source: CAPMAS and Dcode EFC

Geography

Structural factors leading to high poverty rates despite achieving high growth rates in previous years

Rising inflation rates, especially for food items which has a direct impact on inflation Rising employment rates in informal sector which is characterized by instability and low

productivity. Low productivity rates, and wages, and low government spending on public services.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%5%

10%15%20%25%30%

Average Annual Inflation (Urban) Average Annual Inflation in Food & Beverages

Energy subsidies

HealthEducationInvestments0%1%2%3%4%5%6%7%6.00%

1.40%

3.60%

2.30%

Government spending on selected key items (% of GDP)

1998 2006 20120

102030405060

Percentage of workers in the informal sector and temporary jobs

الرسمى غير القطاع الدائمة غير االنشطةInformal Sector Non-permanent activities

Source: CAPMAS, World Bank, MOF, and Dcode EFC

Selected socio-economic indicators(Egypt vs. peer countries)

Share of private expenditure on healthcare in Egypt is relatively higher than peer countries ($1000 – $2000 income per capita)

0 1000 2000 3000 4000 5000 6000 7000 8000 90000

10

20

30

40

50

60

70

80

Lower middle income

Arab World

Egypt

Out of pocket spending on Heath (selected middle income countries)

GDP per capita (constant 2005 US$)

Out

-of-

pock

et h

ealt

h ex

pend

itur

e (%

of t

otal

exp

en-

ditu

re o

n he

alth

)

Source: World Bank and Dcode EFC

Egypt’s government spending on Education is low relative to peer countries ( ranging between $1000 – $2000 income per capita)

0 1000 2000 3000 4000 5000 6000 7000 8000 90000

1

2

3

4

5

6

7

8

Lower middle income

Arab World

Egypt

Spending on Education as a per cent of GDP among selected middle income countries


Publ

ic s

pend

ing

on e

duca

tion,

(% o

f GD

P)


The percentage of vulnerable employment in Egypt is low relative to peer countries due to the large size of the public sector which employs almost one third of all workers

0 1000 2000 3000 4000 5000 6000 7000 8000 90000

10

20

30

40

50

60

70

80

90

100

Lower middle income

Egypt

Percent of vulnerable employment (selected middle income countries)


Vuln

erab

le e

mpl

oym

ent,

tot

al (%

of t

otal

em

ploy

men

t)


Per capita income is directly proportional to urbanization rate

0 1000 2000 3000 4000 5000 6000 7000 8000 90000

10

20

30

40

50

60

70

80

90

Lower middle income

Arab World

Egypt

Percent of Rural Population (selected middle income countries)


Rura

l Pop

ulati

on (%

of t

otal

pop

ulati

on)


International Experiences

• International experiences emphasized the importance of having a national vision and plan adopted by all national entities/ authorities in order to avoid fragmentation and misuse of available resources.

• Social security programs should cover all eligible individuals regardless of their employment status.

• Studies have shown that programs that aim at increasing the productivity of its beneficiaries and connecting them to the labor market lead to more effective and sustainable results.

• It is important to consider the social conventions and preferences as well as institutional capacity of each country on its own when developing social programs

• A positive relationship exists between the increase in per capita income and expenditure size, and hence the ability to achieve development goals and reduce poverty rates.

Recommendations

Recommendations

1. It is important to achieve high and sustainable growth and employment rates in order to avail job opportunities that exceed the number of new entrants to the labor market.

2- Providing job seekers with human development skills to prepare them for the requirements of the labor market by expanding professional and vocational programs training.

3- Working on the national level to decrease the inflation rates and especially prices of food commodities, which consume a major share of low income families’ expenditure and creating and mechanisms that avail food commodities to all citizens with affordable prices especially to the low income categories.

4- Adopting policies that help achieve justice in the distribution of income, generated surpluses and subsidies in a way that guarantees minimum income for low-income families as well as reward incentives linked to performance and productivity.

5- Special attention should be given to women empowerment programs and to raising women's wages and capabilities.

6- Developing an integrated social insurance network (by developing an accurate and consolidated database) targeting in particular the poor and low income categories.

7- Working on extending the scope of beneficiaries to cover all those who are eligible for support regardless of their employment status.

Recommendations

8- In the same context, it is required to guarantee the existence of programs that provide job training and skills in order to help the poor families move from being beneficiaries of social welfare to being active participants in the workforce and hence increasing the productivity of the labor market.

9- Mobilizing and reinforcing the capabilities of central and local authorities to provide citizens with high quality public services, especially with regards to health and education and hence decrease the need for private spending in those categories.

10- Capitalizing on linkages with the private sector, local communities and civil society organizations which have better knowledge of localities, especially with regards to low income and marginalized areas.

Recommendations

Recommendations

11- Beneficiaries should be engaged in the choice and evaluation of social security programs and the services provided to them.

12- Expanding the use of modern Information technologies (mobile phones, GPS, smart cards) in order to broaden and improve social services and develop programs with the lowest possible cost.

14- Using technology in developing mechanisms for the accountability and evaluation of the performance of social security programs.

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Advice is judged by results, not by intentions*

*Quintus Cicer 63 B.C

Economy & Finance

Social Justice in Egypt from a Poverty Perspective