The textile and clothing (TC) sector has not escaped the slowdown in Egypt in response to the crisis. But it has been in decline since 2001 in response to a changing global environment. Exports, which have been surviving on account of the Qualifying Industrial Zones (QIZ) and Euro-Mediterranean Partnership agreements, have been hit hard by the crisis. Domestic sales are in decline as a result of liberalization, and non-QIZ exporter—unprotected by the agreement—have been turning to the domestic market in competition with non-exporters. If domestic sales continue to decline, without being offset by growth in exports, the industry will continue to decline. To deal with the crisis, short-run mitigation policies can be considered as ensuring banks credit, and paying social insurance for workers in distressed firms. But the sector is suffering from inherent structural problems resulting in high costs. In other words, the crisis has exacerbated the shrinkage of an already struggling industry, so a longer run strategy is needed beyond the crisis response, comprising moving up the clothing industry value chain, conditional export incentives, skills upgrading and undergoing comprehensive institutional reform.
Having developed behind protective barriers, the textiles and clothing industry (TC) has been of particular importance to Egypt, notably its contribution to employment, value added, and foreign exchange earnings. In 2008, the industry accounted for 26.4 percent of industrial production, total value added of LE 33.5 billion [
This paper presents the findings from a survey of TC firms and workers collected in September, 2009
The paper is divided into five sections. The second highlights the main historical events and circumstances that shaped the TC industry before the crisis. The third briefly describes the survey instrument. Major survey findings about the implications of the crisis, particularly pertaining to social dialogue and employment as well as the restructuring of the sector, are presented in the fourth section of the paper. Finally short, medium- and long-term policy recommendations are discussed in the final section.
The history of Egyptian textiles falls into two periods: protectionism from the thirties to the seventies and gradual liberalization thereafter. During the 1930s and 1940s, the production of cotton textiles was increasing at a modest rate, growing more rapidly in the following two decades. Exports, mainly cotton yarns and fabrics, were directed to the Eastern European Bloc through bilateral barter agreements [
Growth was maintained throughout the nineteen seventies, as part of Egypt’s public-sector-led, inward-looking import substitution development strategy (1952–1971) based on centralized ownership and a command economy. Most notable was the tight control of the cotton market for over twenty years. Until the late nineteen eighties, the government-run textile industry was the sole purchaser of Egyptian cotton. Much of what was purchased was generally secured at lower than international prices, to be spun by local mills, in order to be used in the production of largely subsidized fabrics and clothes sold at “social prices”
The industry began to change with the reversal of the state-led development strategy beginning with the open door policy in the early 1970s, but more so in the early 1980s when the government terminated the earlier subsidy to clothing sold to the mass domestic market, which represented about 80 percent of public sector weaving companies’ production [
On the other hand, the pace of privatization has been very slow. Public, vertically integrated, large-size firms dominated the manufacture of the textile group over a long period of time, their share slowly shrinking in favor of the private sector. In 2006, the public sector accounted for 73 percent of cotton ginning and pressing and for 31 percent of fabric production and a negligible amount of garment production. This trend has halved the public sector’s share in TC from 39 percent in 1997 to about 20 percent in 2006 (Table
Public sector share in TC production (1997, 2006)*.
1997 | 2006 | |
---|---|---|
Cotton ginning and pressing | 87% | 73% |
Manufacture of textiles except cotton ginning and pressing** | 43% | 31% |
Manufacture of wearing apparel; dressing and dyeing of fur*** | 18% | 0% |
Gross TC public sector production | 39% | 22% |
Source: Author’s calculation based on central agency for public mobilization and statistics (CAPMAS), annual statistical book, various issues. *Original data are available for fiscal years. Calendar years are used as an approximation. Year 1997, for example, is originally 1996/1997, where the fiscal year runs from July 1st to June 30th. **International Standard Industrial Classification (ISIC) Revision 3 code 17. ***ISIC code 18.
Two more major events have shaped the current status and structure of the Egyptian TC industry, namely, Egypt’s accession to the WTO in 1995 and the end of the Multi-Fibre Agreement a decade later.
Egypt’s accession to the WTO initiated further liberalization of the sector. Egypt lifted a 30-year import ban on TC in 1998 for textiles and in 2002 for clothing, both in compliance with its WTO commitments. Nevertheless, the ban was initially replaced by prohibitive tariffs
Successive tariff reductions, the phasing out of the MFA, and the downsizing of public sector firms have jointly driven the trends shown in Figure
TC Evolution (1997–2008).
Egyptian producers are unable to compete with lower cost overseas producers, especially those in China, losing market share at home, shown by the dramatic decline in domestic TC sales. Domestic producers’ sales have halved in the four years between 2000 and 2004 falling from $6 billion to $3 billion reflecting the fact that foreign competitors are driving Egyptian TC firms out of the domestic market
The end of the quota system since January 2005 could have had severe consequences for Egypt’s ability to penetrate export markets, since the country is brought into direct competition with China, India, Pakistan, Bangladesh, Indonesia, and even Turkey, which were quota constrained under the former MFA. But the effects have been moderated by the Qualifying Industrial Zone (QIZ) protocol (December, 2004) with the US and Israel, and by the Euro-Mediterranean Partnership agreement (as of 2005) with the European Union (EU) both of which allow Egyptian textile products duty—and quota-free access to these markets conditional on rules of origin
TC exports have been growing rapidly: by 23 percent during 2000–2004 as input prices fell following yarn and fabric tariff reductions and double that growth rate (41 percent) between 2004 and 2007 on account of these major agreements (Table
TC production, imports, and exports (2000–2008).
2000 | 2004 | 2007 | 2008 | |
---|---|---|---|---|
Level (US$ millions) | ||||
TC production | 7659 | 4900 | 6520 | #N/A |
TC exports | 1435 | 1768 | 2489 | 2634 |
TC imports | 807 | 1365 | 2595 | 4642 |
Growth rate (%) | ||||
TC production |
|
33% | #N/A | |
TC exports | 23% | 41% | 6% | |
TC imports | 69% | 90% | 79% | |
| ||||
Ratio of imports to exports | 0.6 | 0.8 | 1.0 | 1.8 |
Source: Production: IDA [
But as shown by Figure
TC Trade Balance (Exports minus Imports, 1997–2008).
Why are Egyptian producers losing domestic market share? Why are the sector’s imports double its exports? The sector is “relatively” uncompetitive. The lack of competitiveness arises from several sources, which can be divided into production or direct costs and transaction cost.
Private firms have been opening up since liberalization and are more likely to be exporters. But the country’s cost structure is not favorable. Wage costs, which account for about 30 percent of a garment’s FOB price, are higher than in competitor countries (Table
Despite greater flexibility around employment practices such as the facilitation of the firing process afforded by the unified labor law of 2003
Unfavorable cost structure: labor cost.
Wage per hour in US$ | Equivalent to LE | |
---|---|---|
Egypt | 0.82 | 4.5 |
China (mainland) | 0.48 | 2.6 |
Sri Lanka | 0.46 | 2.0 |
Pakistan | 0.37 | 1.5 |
Bangladesh | 0.28 | 1.5 |
Vietnam | 0.28 | 1.5 |
Source: Adapted from World Bank [
Second is the inefficiency of the state-owned sector. Having enjoyed high levels of protection, firms in this sector produce high-cost, low-quality products. Continued public sector dominance of the spinning and weaving industry limited the extent to which producers were responsive to consumer preferences and burdened that sector with overemployment, inferior technology, operational inefficiencies, and low levels of capital utilization. Substantial public investments have not been made in the spinning and weaving sector for many years. For example, most machinery used by public sector firms is more than 15 years old [
As a result of these distortions and inefficiencies, other direct costs such as fabric costs are also relatively higher for Egypt than any of its competitors [
Labor productivity for manufacturing activities: given in Egyptian pounds for each pound spent in annual wages.
Three factors have eased transaction costs in Egypt: (1) recent Ministry of Finance reforms facilitating and streamlining customs and investment
Nevertheless, private companies still face high transaction costs, through lengthy import and export procedures, customs and low port transparency and inefficiencies, handling costs and port charges, and other nontariff barriers (NTBs). For example, handling costs are higher in the port of Alexandria than in Haifa, Israel, or even Izmir, Turkey. Port charges are also higher in Alexandria than Turkey [
Additionally, formal channels for dispute resolution mechanisms between firms in the industry are limited and inefficient [
Two new data sets—a firm questionnaire covering 275 TC firms and a worker questionnaire covering 5,383 TC workers—were collected in September, 2009. The following two sections briefly describe the questionnaires and sampling design.
The firm survey comprised six modules: basic firm data, firm activity, production, sales, exports and employment; trends after the crisis; job opportunities, and future plans. Table
Firms were sampled based on a combination of two sample frames provided by the Egyptian Federation of Industries
Stratified sampling was used to ensure sufficient large sized and exporting firms. The resulting geographical distribution of sampled firms was very similar to that in the sample frame (Table
Sample firm distribution by location.
No. and % of firms in the sample | No. and % of firms in sample frame | |||
---|---|---|---|---|
Greater Cairo | 181 | 66% | 820 | 70% |
Alexandria | 60 | 22% | 253 | 22% |
El-Sharkyia | 34 | 12% | 99 | 8% |
| ||||
275 | 100% | 1172 | 100% |
Source: Author’s calculation based on Egyptian federation of industries sample frame and IDSC sampling design.
Sample firm distribution by activity, market orientation, and ownership.
Activity | Market orientation | Ownership | Total | |||||
---|---|---|---|---|---|---|---|---|
Textiles | Clothing | Exporting | Nonexporting | Public sector | Private sector | |||
QIZ | Non-QIZ | |||||||
No. of firms | 97 | 178 | 53 | 40 | 182 | 6 | 169 | 275 |
% | 35% | 65% | 19% | 15% | 66% | 2% | 98% | 100% |
Source: IDSC TC firm questionnaire [
Sample firm distribution by firm size*.
Small | Medium | Large | Total | |
---|---|---|---|---|
No. of firms in the sample | 125 | 115 | 35 | 275 |
% | 45% | 42% | 13% | 100% |
Share in real weighted production | 5% | 10% | 85% | 100% |
Source: IDSC TC firm questionnaire [
The worker questionnaire was divided into five modules: basic characteristics, work conditions, skills and training, job satisfaction; and crisis effects. The sample was stratified by four size categories: less than 10 workers, from 10 to 100, from 100 to 1000, and larger than 1000 workers (Table
Sample worker distribution.
Firm category (no. of workers) | No. of sampled firms (1) | No. of workers sampled from each firm in category (2) | No. of sampled workers in category (3) = (1)*(2) |
---|---|---|---|
Less than 10 | 100 | 5 | 500 |
10–100 | 101 | 20 | 2020 |
Greater than100–1000 | 63 | 40 | 2520 |
More than 1000 | 11 | 50 | 550 |
| |||
Total | 275 | 5590 |
Source: IDSC worker survey sampling note [
There was a substantial decline in production, domestic sales, and exports between 2008 and 2009 (21 percent, 16 percent, and 22 percent, resp., Table
Sample estimates for production, sales, and exports (2004–2009).
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |
---|---|---|---|---|---|---|
Level (LE millions) for 265 firms* | ||||||
Real production | 2511 | 2263 | 2298 | 2099 | 2034 | 1604 |
Real sales | 1183 | 1158 | 1132 | 1203 | 1011 | 854 |
Real exports | 1038 | 1013 | 1164 | 1081 | 970 | 755 |
Growth rate (%) | ||||||
Real production |
|
2% |
|
|
|
|
Real sales |
|
|
6% |
|
|
|
Real exports |
|
15% |
|
|
|
Source: Author’s calculations based on IDSC firm questionnaire data [
Both textiles and clothing have been hit by the crisis (Table
Sample estimates for production, sales, and exports by activity and market orientation (2008-2009).
Activity | Market orientation | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Textile | Clothing | Exporting | Non-exporting | Total | ||||||||
QIZ | Non-QIZ | |||||||||||
2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | |
Level (LE millions) | ||||||||||||
Real production | 1135 | 938 | 899 | 666 | 1096 | 733 | 593 | 545 | 345 | 326 | 2034 | 1604 |
Real sales | 794 | 651 | 217 | 203 | 323 | 164 | 349 | 381 | 339 | 310 | 1011 | 854 |
Real exports | 321 | 174 | 649 | 581 | 716 | 547 | 253 | 208 | 0 | 0 | 970 | 755 |
Growth rate 2008-2009 (%) | ||||||||||||
Real production |
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Real sales |
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|
|
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Real exports |
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|
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|
Source: Author’s calculations based on IDSC firm questionnaire data [
Amongst exporters, production in QIZ firms has fallen by one third, driven by sharp declines in both domestic sales and exports (Table
Both large and small firms have experienced substantial declines. Small firms (less than 50 workers) have lost a substantial part of their domestic market (−35 percent), though production has only fallen by 20 percent (Table
Sample estimates for production, sales, and exports by firm size and ownership (2008-2009).
Size | Ownership | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Small | Medium | Large | Public | Private | Total | |||||||
2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | |
Level (LE millions) | ||||||||||||
Real production | 107 | 86 | 177 | 156 | 1750 | 1362 | 254 | 272 | 1780 | 1334 | 2034 | 1604 |
Real sales | 67 | 43 | 104 | 91 | 840 | 720 | 217 | 246 | 794 | 608 | 1011 | 854 |
Real exports | 38 | 33 | 72 | 62 | 861 | 661 | 13.6 | 14 | 956 | 741 | 970 | 755 |
Growth rate 2008-2009 (%) | ||||||||||||
Real production |
|
|
|
7% |
|
|
||||||
Real sales |
|
|
|
13% |
|
|
||||||
Real exports |
|
|
|
4% |
|
|
Source: Author’s calculations based on IDSC firm questionnaire data [
The declines in production, domestic market sales and exports in the year of the crisis have mainly been concentrated in the private sector (Table
Sample estimates for production, sales, and exports by ownership (2008-2009) without public sector outlier (firm # 136).
Public | Private | Total | ||||
---|---|---|---|---|---|---|
2008 | 2009 | 2008 | 2009 | 2008 | 2009 | |
Level (LE millions) | ||||||
Real production | 83 | 63 | 1780 | 1331 | 1863 | 1397 |
Real sales | 49 | 41 | 794 | 608 | 1011 | 650 |
Real exports | 10 | 9 | 956 | 741 | 970 | 750 |
Growth rate 2008-2009 (%) | ||||||
Real production |
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|||
Real sales |
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|||
Real exports |
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|
Source: Author’s calculations based on IDSC firm questionnaire data [
In order to be able to judge the extent to which the crisis has contributed to the decline in the year 2009, we need to follow the sample back a few years. According to the sample, the sector has been steadily shrinking since 2006 (Tables
Public sector sample estimates excluding outlier for production, sales, and exports (2004–2009).
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |
---|---|---|---|---|---|---|
Level (LE millions)* | ||||||
Real production | 128 | 144 | 123 | 107 | 83 | 63 |
Real sales | 51 | 90 | 73 | 67 | 49 | 41 |
Real exports | 21 | 20 | 17 | 14 | 10 | 9 |
Growth rate (%) | ||||||
Real production | 12% |
|
|
|
|
|
Real sales | 77% |
|
|
|
|
|
Real exports |
|
|
|
|
|
Source: Author’s calculations based on IDSC firm questionnaire data [
Private sector sample estimates for production, sales, and exports (2004–2009).
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |
---|---|---|---|---|---|---|
Level (LE millions)* | ||||||
Real production | 2372 | 2100 | 2147 | 1857 | 1780 | 1334 |
Real sales | 1122 | 1050 | 1030 | 1003 | 794 | 608 |
Real exports | 1017 | 993 | 1146 | 747 | 956 | 741 |
Growth rate (%) | ||||||
Real production |
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|
|
|
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Real sales |
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|
|
|
|
Real exports |
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|
Source: Author’s calculations based on IDSC firm questionnaire data [
In contrast, export demand has substantially dropped for the private sector due to the crisis (Table
In summary, it is likely that shrinkage in the
Tables
TC Evolution (1997–2008): In Real Terms.
There has been a 3.2 percent decline in employment amongst firms in the sample (Table
Sample job losses by gender and employee formality status (2007–2009).
Formal | Informal | Females | Males | Total | |
---|---|---|---|---|---|
Job losses | 1,464 | 202 | 721 | 945 | 1,666 |
Share in job losses | 88% | 12% | 43% | 57% | 100% |
% Change in employment 2007–2009 |
|
|
|
|
|
Total sample employment in 2007 | 50711 | 2112 | 21148 | 31675 | 52823 |
Share in total employment in 2007 | 96% | 4% | 40% | 60% | 100% |
Source: Author’s calculation based on firm questionnaire [
All job losses have been in textiles, not clothing. Clothing has experienced a modest growth in employment (1 percent) (Table
Sample job losses by activity, market orientation, and sector (2007–2009).
Clothing* | Textile | Public | Private | Exporters | Nonexporters | Total | |
---|---|---|---|---|---|---|---|
Job losses | −295 | 1,961 | 849 | 817 | 425 | 1,241 | 1,666 |
Share in job losses |
|
105% | 51% | 49% | 26% | 74% | 100% |
% Change in employment 2007–2009 | 1% |
|
|
|
|
|
|
Total sample employment in 2007 | 30541 | 22282 | 4440 | 48383 | 38994 | 13829 | 52823 |
Share in total employment in 2007 | 58% | 42% | 8% | 92% | 74% | 26% | 100% |
Source: Author’s calculations based on firm questionnaire [
Qualifying Industrial Zone (QIZ) firms, which are responsible for more than half of total sample employment, have actually created jobs (335) between the two years, despite the crisis (Table
Sample job losses by detailed market orientation (2007–2009).
Exporters | Nonexporters | Total | ||
---|---|---|---|---|
QIZ | Non-QIZ | |||
Job losses |
|
760 | 1,241 | 1,666 |
Share in job losses |
|
46% | 74% | 100% |
Percentage change in employment 2007–2009 | 1% |
|
|
|
Total employment in 2007 | 27183 | 11811 | 13829 | 52823 |
Share in total employment in 2007 | 52% | 22% | 26% | 100% |
Source: Author’s calculation based on firm questionnaire [
Firms solely serving the domestic market are responsible for three quarters of all losses (Tables
Nonexporters appear to have had excess labor, making it easier for them to purse job losses in response to the crisis. In 2007, non-exporting firms employed 35 workers per real unit of output whilst exporters employed 12 less, that is 23 workers for each unit of output. Thus, despite less relative decline in production for nonexporters (by 5 percent only compared to 24 percent for exporters, Table
With respect to firm size, large firms account for the bulk of job losses (77 percent, Table
Job losses by firm size (2007–2009).
Small | Medium | Large | Total | |
---|---|---|---|---|
Job losses (in sample) | 98 | 285 | 1283 | 1,666 |
Share in job losses | 6% | 17% | 77% | 100% |
Percentage change in employment 2007–2009 |
|
|
|
|
Total employment in 2007 | 3165 | 6409 | 43249 | 52823 |
Share in total employment in 2007 | 6% | 30% | 64% | 100% |
Source: Calculated by author based on IDSC TC firm questionnaire [
Based on the above, we will assume in the following analysis that all public sector job losses are independent of the crisis, being part of a planned government strategy to liquidate the public sector and lay these workers off
Real private sector production has declined by 25 percent in the year of the crisis (Table
Overall job loss estimate in the industry attributable to the crisis (2007–2009).
(1) | (2) | (3) | (4) | (5) | (6) | (7) |
---|---|---|---|---|---|---|
|
(1)-(2) |
|
(4)*(5) | (5)-(6) | ||
Real private sector production growth rate | Private sector job loss estimate | |||||
2008/2009 | Average |
On account of the crisis |
Percentage of overall growth reduction |
Overall job losses | On account of crisis | Liberalization effect |
| ||||||
|
|
|
73% | 814 | 594 | 220 |
Source: Author’s calculation based on IDSC [
The remainder of the job losses (220 given in column 7) is to be blamed on growing imports gradually replacing domestic production, a trend that had already started before the crisis. We may call that the effect of the sector’s liberalization. In summary, the crisis is responsible for a large part, precisely three quarters (column 4), of the slowdown of the sector.
There has been restructuring in response to the sector’s liberalization, the QIZ agreement, and possibly also in response to the crisis. Notably, there is evidence of a modest substitution effect whereby exporters have increased their, already significant, share in the domestic market, rising from 63 to 68 percent from 2004 to 2008, thereby increasing it from 63 to 68 percent (Table
Domestic market sales distribution in the sample by export orientation.
2004 | 2005 | Growth rate (2004/2005) | 2006 | Growth rate (2005/2006) | 2007 | Growth rate (2006/2007) | 2008 | Growth rate (2007/2008) | 2009 | Growth rate (2008/2009) | |
---|---|---|---|---|---|---|---|---|---|---|---|
Level (in real LE millions) | |||||||||||
Non-exporters |
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Exporters | |||||||||||
QIZ exporters |
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Non-QIZ exporters |
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Total exporters |
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Domestic market share (%) | |||||||||||
Non-exporters | 37% | 37% | 36% | 32% | 33% | 36% | |||||
Exporters | |||||||||||
QIZ exporters | 43% | 40% | 42% | 38% | 32% | 19% | |||||
Non-QIZ exporters | 20% | 23% | 22% | 30% | 35% | 45% | |||||
Total exporters | 63% | 63% | 64% | 68% | 67% | 64% | |||||
| |||||||||||
Total | 100% | 100% | 100% | 100% | 100% | 100% | |||||
| |||||||||||
Memo item: |
|||||||||||
Real domestic sales |
1183 | 1158 | 1132 | 1203 | 1011 | 854 |
Source: Author’s calculations based on IDSC firm questionnaire [
This restructuring may be explained by at least two factors. First, exporters are more than 1.5 times more efficient compared to producers serving the largely protected domestic market. According to the sample, average yearly productivity per worker is LE 43,590 per worker for export firms compared to only LE 28,864 for firms serving the domestic market. This higher efficiency allows firms to cut prices in the domestic market in order to capture market share
Indeed, 61 percent of exporters in the sample cut prices in response to the crisis, with an average price reduction of 18 percent. Given their growing market share, it is likely that exporters were already reducing prices before the crisis. Fifty-five percent of producers for the domestic market
The second factor is the export subsidy offered by the Export Development Fund, which ranges from 8 to 10 percent of total export value. The TC sector is the main beneficiary of incentives offered by the fund, obtaining around 58 percent of all fund assistance [
Yet a stronger restructuring trend has been particularly more pronounced within exporting firms. Producers in nonqualifying industrial zones (non-QIZ) have taken over the domestic market from their QIZ firm counterparts increasing their share by a quarter from 2004 to 2008, and by 13 percent in just one year (the year of the crisis). This trend has started not long after the ratification of the QIZ agreement. For example, in just one year between 2006 and 2007, non-QIZ firms have increased their domestic sales by about a half (46 percent) increasing their share by a third from 20 percent to 30 percent. Their sales increased again during the year of the crisis by 9 percent resulting in another 10 percent increase in market share. As a result, whilst non-QIZ firms capture about half of the domestic market (45) QIZ firms capture currently only a fifth of it (their share has declined from nearly a half (43 percent) in 2004 to 19 percent in 2009).
Enjoying no preferential access to the US market, especially after the expiry of the MFA, and facing reduced worldwide export demand, non-QIZ exporting firms find the still largely protected
QIZ/non-QIZ TC and total exports to the US (2005–2009).
2004 | 2005 | 2006 | 2007 | 2008 | 2008 (Jan–Oct) | 2009 (Jan–Oct) | |
---|---|---|---|---|---|---|---|
|
|||||||
Level (million US$) | |||||||
QIZ TC exports | 0 | 252 | 632 | 730 | 776 | 655 | 662 |
Non QIZ TC exports to the US | 580 | 375 | 187 | 145 | 139 | 119 | 98 |
Total TC exports to the US | 580 | 627 | 819 | 875 | 915 | 775 | 759 |
Growth rate (%) | |||||||
QIZ TC exports | 151% | 16% | 6% | 1% | |||
Non QIZ TC exports to the US |
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Total TC exports to the US |
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Level (million US$) | |||||||
Total QIZ exports | 0 | 266 | 644 | 740 | 872 | 733 | 706 |
Total non QIZ exports to the US | 1330 | 1825 | 1750 | 1640 | 1498 | 1234 | 1023 |
Total Egyptian exports to the US | 1330 | 2091 | 2393 | 2380 | 2371 | 1967 | 1729 |
Growth rate (%) | |||||||
Total QIZ exports | 142% | 15% | 18% | −4% | |||
Total non QIZ exports to the US |
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Total Egyptian exports to the US |
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Source: USITC [
As is evident from the above analysis, non-QIZ firms are indeed increasing their share in the domestic market, that is, the third explanation in the previous paragraph. Also, there is substantial evidence that FDI has risen sharply since 2005, following the QIZ agreement
Investment in TC by nationality (1995, 2007) in US$ millions.
1995 | 2007 | % change between 1995 & 2007 | |
---|---|---|---|
Domestic | 76 | 227 | 199% |
85% | 65% | ||
Arab | 2 | 49 | 2350% |
2% | 14% | ||
Foreign | 11 | 75 | 582% |
13% | 21% | ||
Total investment | 89 | 351 | 294% |
100% | 100% |
Source: GAFI [
Evolution of FDI in TC Classified into Arab and Non-Arab (1995–2007).
In summary, there is restructuring whereby producers unprotected by the QIZ agreement are turning to the largely protected domestic market. Moreover, about three quarters of the decline in private production and employment is attributable to the crisis. Contraction in domestic sales is largely independent of the crisis, whilst those in exports are directly set off by it. The remainder of the decline, however, is a more structural and gradual trend triggered by the changing global environment on the one hand and the sector’s own long inherent structural problems on the other. In real terms, the sector is in decline. The crisis has only exacerbated the contraction of an already struggling industry.
Fourteen percent of firms’ managers and CEOs responded that there had been substantial job losses when directly asked if they had laid off workers in response to the crisis
Virtually none of the firms reported consulting workers’ representatives/unions in relation to any measures undertaken in response to the crisis (Table
Employment procedures other than layoffs undertaken in response to the crisis.
Procedures undertaken in response to the crisis | % of firms |
---|---|
Cancel extra work in firm | 44 |
Stop new hiring | 23 |
Reduction in daily working hours | 9 |
Laying off temporary workers | 5 |
Cancellation of extra pay and allowances | 3 |
Productivity enhancing procedures | 3 |
Wage reductions | 2 |
Cancellation of monthly incentives | 2 |
Reduction of social and other benefits | 2 |
Granting open leave to permanent workers | 1 |
Increase in unpaid additional work hours | 0 |
Transfer of workers to other branches | 0 |
Transfer of workers to other firms | 0 |
Source: Calculated by author based on IDSC firm questionnaire [
Limited access to finance is perceived as the main effect of the crisis, followed by increases in production costs (according to 77 percent of respondents), then piling up of inventories (57 percent due to unsold production). Eighty-five of the firms have indicated that production costs have risen since September 2008 and an outstanding majority of those (92 percent) blame it on increases in costs of intermediate and raw materials.
Only 8 percent of workers have reported ever receiving training on the job. Seventeen percent of firms have already reduced investments in machinery and 8 percent have reduced the already modest amount of training, but three quarters of firms have reduced capacity utilization (Table
Reductions in expenditures in response to the crisis.
Frequency | % of Firms | |
---|---|---|
Reduced capacity utilization | 203 | 74 |
| ||
Cut expenditures | ||
On machinery and equipment | 47 | 17 |
On buildings | 37 | 13 |
On training | 22 | 8 |
On R&D | 17 | 6 |
Source: Author’s calculation by author based on IDSC firm questionnaire [
In line with the reduction in production, sales, and exports since September 2009, about 500 existing contracts have been cancelled in the sample with an overall value of LE 70 million (current prices). Most of the cancelled contracts (66 percent of them) were for garments. Some buyers have also been late in payments (reported by 14 firms) others have been particularly stringent when it comes to quality specifications (6 firms). On the suppliers’ side, suppliers have been demanding higher prices (17 percent of all sample firms), have reduced grace periods (15 percent), or have reduced contracted amounts (11 percent). Firms believe the government should give financial subsidies (66 percent of firms) and reduce the number of taxes levied (62 percent of firms) to ease the effect of the crisis on firms in the sector.
Not all surveyed workers had heard of the crisis (only 70 percent of the 5383 workers had done so). Forty-two percent of those (1600 workers or 30 percent of sampled workers) believe the crisis affected them. Income-related effects top the list (Table
Workers’ perception of firms’ reductions in expenditures due to the crisis.
No. workers | % | |
---|---|---|
Reduction in | ||
Income | 1070 | 67 |
Bonuses | 1043 | 65 |
Periodic salary raises | 823 | 51 |
Working hours | 614 | 38 |
Services firm provides to employees | 611 | 38 |
Paid holidays | 601 | 38 |
Fringe benefits (e.g., meals, transport) | 545 | 34 |
Giving unpaid leave | 463 | 29 |
Memo item: | ||
Total number of workers stating they are affected by crisis | 1600 | 100 |
Source: Calculated by author based on IDSC worker questionnaire [
The scarcity of trained and educated workers remains the top problem faced by firms in the industry (77 percent of firms). High resignation rates or turnover rates also represent a problem expressed by 40 percent of sample firms. More than half the firms of the sample thought that the youth have no desire to work in the sector mainly due to their belief that workers prefer desk work (as reported by 70 percent of firms), followed by low wages and salaries in the sector (60 percent of firms), and difficult work conditions such as large distance between work and home (31 percent).
On the other hand, based on the workers’ questionnaire, only a fifth of them state that they have problems related to their job in the TC sector. Not surprisingly, modest salaries and wages top their list of reasons (65 percent of those stating to have problems) followed by fear of financial crisis repercussions (23 percent), and worker layoffs (18 percent of them).
The downturn in the sector between 2008 and 2009 is largely driven by the crisis. But the sector had already been in decline on account of changes in the global environment
Policy has to tread a fine line between insulating the economy from the temporary effects of the crisis and avoiding overdistorting incentives. Exporting firms now moving into the domestic market are unlikely to abandon it even if export prospects pick up. So government measures are needed but should be tailored so as to avoid “excessively paying for inefficiency.” But provided some restructuring is efficient (since only the least efficient firms exit the market), policy should avoid “accelerated restructuring” due to massive job losses that are not outweighed by comparable job creation. Hence, we encounter a policy dilemma. What is to be done?
There has been a 3.2 percent decline in employment in the sample. Increased public expenditure on infrastructure may help in the short run. However, in the medium term efforts should be focused on improving labor mobility
The government may also undertake more direct interventions such as paying for the social insurance [
To counter the sharp contraction of manufacturing industries caused by the crisis, the government’s main focus has been directed towards boosting aggregate demand but should also be directed towards ensuring that credit is available to businesses that may only be temporarily liquidity constrained. The government of Egypt is aware of this need, having implemented two stimulus packages to date, with a third underway.
The packages rest on four pillars: (1) increasing public expenditure, mainly on infrastructure, (2) a two-stage reduction in interest rates, (3) providing various incentives to the private sector to stimulate investment and improve the business climate, and (4) increasing current expenditure of which a substantial part (LE 2.1 billion LE, i.e., 80 percent) goes to increase export competitiveness, an expense that is to be distributed by the Export Development Fund.
Egypt has a tight fiscal policy space, hence fear of mounting public debt and resulting inflationary pressures on the economy is at the center of a debate around the packages. In addition, the adequacy of the packages to compensate for the negative effects of the crisis is questionable. Nevertheless, the current temporary cut in customs duties and sales taxes on industrial inputs and capital goods may ease the pressure somewhat, and has a faster impact than does government expenditure, such as that on infrastructure, actual disbursements of which may be delayed for practical, administrative, and logistical reasons. Removing or substantially reducing sales taxes (for a preannounced limited period) may also boost domestic demand along with increases in infrastructure. Infrastructure programs should be targeted to alleviate supply bottlenecks, which can include public housing near industrial zones.
Efforts to increase the geographical diversity of Egypt’s TC trading partners need to be strengthened by increased competitiveness, resolving implementation problems under the Greater Arab Free Trade Area (GAFTA) and negotiating free trade agreements with new partners. Reviving stalled trade talks with the USA to first relax conditions on TC exporters currently applicable under the QIZ agreement, and second to lobby for better market access for non-QIZ exports, as many of these exports do not benefit from the US Generalized System of Preference (GSP) treatment under US trade rules
There should not be recourse to increased protectionism, but further reductions in tariffs should be implemented gradually. Since the phase-out of the quota system in 2005, Egypt has imposed a number of remedy actions though dealing with the genuine structural problems underlying the industry remains the most sensible policy route. Protectionist measures such as tariffs create a bias against exports by increasing the price of foreign competing products on the domestic market rendering the domestic market relatively more attractive for domestic producers and increases domestic market prices borne by domestic consumers.
Providing conditional and finite incentives
As a cotton producer with a substantial domestic market for final products, one might expect to see a large, competitive industry serving that market. And given that Egyptian cotton is amongst the world's best, a vibrant high-end export sector might also be expected. Unfortunately, neither of these is the case.
Egypt benefitted from the Multi-Fiber Arrangement (MFA). The country’s exports were not close to its quota limits, gaining from the fact that more competitive countries like China, Bangladesh, Vietnam, and even Turkey were constrained. With the tariff reductions required by Egypt's membership to the World Trade Organization (WTO), Egyptian producers are unable to compete with lower cost overseas producers, especially those in China, losing market share at home, and would have done so abroad were it not for continued preferential treatment, notably under the European-Mediterranean Partnership agreement entering into force in 2004 and the Qualified Industrial Zones (QIZ) arrangement with the USA and Israel, which came into force in 2005—nearly three-quarters of TC exports fall under these agreements. In spite of the fact that Egypt also benefitted from both the USA and EU applying safeguard quotas on China since 2006 (on 34 categories in the case of the US and 10 in the EU case since 2006)
There are four pillars of a strategy for the sector in order to capture further value added at home.
Move up the clothing value chain through targeting high end export markets characterized by higher value added export items, such as high end clothing, but with a focus on products for which Egypt has some specialized experience (e.g., carpets), and in simple products, such as linen, where the proximity to the raw material provides a cost advantage. The possibility can be explored of high-value exports using Egypt’s long-staple (LS) and extra long-staple (ELS) cotton but also through the use of new materials such as microfibers
It is true that world demand on Egyptian LS and ELS cotton has declined because of the advent of new materials (e.g., manmade fibers)
To reverse the situation so cotton is used at home, immense investments are required. Either the private sector undertakes these investments after the purchase of privatized spinning and weaving facilities or the government undertakes these investments prior to privatization. Each of these options, however, entails potential risks. For the former, the private sector has been engaging in the so-called “land cooling,” that is, leave their newly purchased facilities for some time—usually years—and later make a large capital gain on the sale of the land. Indeed, the current value of the spinning and weaving companies resides mainly in their real estate value given their poor technological status [
Other incentives should also be considered. Countries such as India support spinning producers who use cotton in their production through a number of methods including concessional interest rates, with government bearing the difference between the commercial and concessional rate. It also contributes to nearly 20 percent of the infrastructure of these firms [
The second pillar is the provision of “genuinely” conditional incentives. Conditionality remains necessary on many fronts. As the government increases export subsidies to deal with the financial crisis, it is vital to ensure higher levels of transparency and accountability in order to guarantee that those receiving the subsidies are those who are entitled to them without favoritism or nepotism. Tying performance to incentives is key to successful incentive structures. The subsidy should also be given on the value added portion and not on the final value of exports. Furthermore, support should be provided to those firms that are investing in fine cotton spinning technology, those that are placing themselves into competition with Japan and Italy similar to the path taken by Indian, South Korean, and Pakistani firms, to whom the country is now losing market share. These countries have become major importers of Egypt’s superior quality cotton. In other words,
Increasing productivity remains a key challenge for the coming years. An essential requirement to raising productivity includes improving the quality of education at all levels, adopting a clear and well-targeted training strategy, establishing a closer link between performance and pay, and last but not least enhancing and repairing the poor work environment and ethical standards.
A recent study about the clothing sector concluded that by addressing its productivity problems Egypt could increase its clothing exports by 25 to 40 percent [
Productivity can be enhanced by government investments in both infrastructure and improved governance. The government of Egypt announced that it will establish two industrial zones in Borg Al Arab and Sixth of October cities for textile production to become the biggest in the industry in the Middle East region. But, for competitiveness it is the institutions that matter, not just the physical infrastructure. Business in Egypt suffers from a bureaucracy that is both excessive and inefficient. It is excessive in that the degree and time required for business registration and other reporting requirements are beyond those necessary for a market economy and so constrain the growth of that economy. It is inefficient since government has been slow to adopt modern technologies, such as IT-based systems, or to reform the bureaucracy itself. A comprehensive institutional reform for all public institutions including government bureaucracy is warranted. Government employees need a change in their mindset if they are to contribute to Egypt's growth, rather than hinder it. The old ways, including carelessness, petty corruption, and control for control's sake, are deeply ingrained in the system. Improved incentives, both rewards and penalties, coupled with strict monitoring will help bring about this changed mindset, but more concerted and direct efforts may be needed given the depth of the problem.
There are numerous examples for data discrepancies in TC databases in Egypt. Employment is most palpable, for which there appears to be a discrepancy within the Central Agency for Public Mobilization and Statistics(CAPMAS’s) different data sources (Table
Employment in TC data discrepancies (2006).
Central agency for public mobilization and statistics(CAPMAS) | Industrial development authority | |
---|---|---|
Annual industrial statistics | Industrial information system | IDA |
278267 | 335477 | 400384 |
0% | 21% |
44% |
CAPMAS is the only source that provides
Every particular authority should report directly and digitally to CAPMAS and should share with it the responsibility of double-checking the data before they are made public. Search by firm ID can then be made available on all relevant data. Identities of companies remain confidential with each of the collecting authorities, but can of course be centrally traced. Issues of differing classifications of the various indicators amongst the different institutions should be resolved by following international best practice: the Harmonized System (HS) for trade data and the National Accounts’ International Standard Industrial Classification (ISIC) for production data. For any departure, concordance tables that match the systems to each other should be available and easy to obtain.
No accurate evaluations can be performed when the underlying data are inaccurate, and in turn no accurate policy recommendations can be drawn. The government of Egypt is indeed aware of data problems. As a step in that direction, CAPMAS has signed a deal with the GOEIC whereby they receive their data from GOEIC. A comprehensive information and data reform requires similar deals with all relevant institutions. It is essential that the management for all these institutions deeply believe in the importance of accurate and transparent information and at the same time possess the caliber to enforce data quality standards and issues of transparency.
Worker unrest has been growing. There were 137 protests in the TC sector in 2007 alone, compared to a total of 107 for the seven years from 1998 to 2004. Moreover, these strikes were not confined to public sector companies as had been the case in the 1980s and 90s. Strikes are based on demands for higher wages, benefits, and better working conditions on the one hand to more general political concerns (e.g., the relation between workers and the General Federation of Egyptian Trade Unions and the government). Public sector strikes have focused on protecting workers’ pay and conditions, including enforcing collective bargaining deals related to early retirement. But there have also been strikes against privatization altogether, such as that in the Qalyub Spinning Company, which was previously a branch of ESCO. Workers also demanded an independent trade union federation, which was behind protests in the Misr Spinning and Weaving facility in Mahalla al-Kubra (December 2006), the Shebin al-Kom Spinning and Weaving Company (February 2007), and Kafr al-Dawwar. Private sector strikes were against poor and worsening work conditions, layoffs, company or factory closures, increases in working hours, or reduction of wages, and to demand payment of delayed salaries, higher wages, or work injury compensation, and to object to penalties, mistreatment of workers, and low quality services [
Many of those recent protests have been effective. For example, workers’ strikes, along with opposition efforts in the parliament, successfully prevented the privatization of Delta Spinning and Weaving Company (2005) [
Although the new Labor Law has facilitated the firing process, firing costs remain high, at an average of 132 weeks of wages. Excessive social provisions may backfire by discouraging employers from hiring full-time workers formally [
Thanks are due to Howard White for a discussion of the content and Angie Mounir for excellent research assistance. The author acknowledges inputs and ideas from Arne Klau. She is grateful to the Information and Decision Support Center (IDSC), especially Maged Osman, Hussein Abdel-Aziz, Zakaria Abdel-Wahed, Mohamed Ramadan, Azza Ibrahim, and Ahmed Heibafor their cooperation and professionalism in conducting the survey. Thanks are also due to Hanaa Kheir-El-Din, Naglaa El Ehwany, Mohamed Kassem, Magdy Tolba and attendees of a roundtable discussion held at the Egyptian Center for Economic Studies (ECES) for comments and suggestions. She is also thankful to Yousef Qaryouti and Amal Mowafy of the International Labour Office/Sub-Regional Office for North Africa in Egypt. Any errors and omissions are the author’s responsibility. The usual disclaimer applies.
The survey was conducted by the Cabinet Information and Decision Support Center (IDSC).
In the form of price ceilings under, for instance, the “clothes provision for the people program” or what was termed in Arabic “Al Kesaa El-Shaaby” program.
That is, the peasant is subsidizing the factory and the factory is subsidizing the consumer (exact words of Mohamed Kassem, comment during ECES Roundtable, ECES Cairo, February 11th, 2010), a system with absolutely no regard for economic efficiency.
This happened via two channels. First, it artificially made the domestic market more profitable, creating an antiexport bias. Second, through limiting consumers” access to foreign products, the demand generated from the largely protected domestic clothing market was limited in terms of quality. With the exception of a minor high-end and a slightly larger middle-market, mass domestic demand came from the low (value) end of the clothing market. Accordingly, with fabric imports being largely constrained by high tariffs and cumbersome import procedures (e.g., duty drawback system and import temporary admission system, especially for those wishing to export clothes) high quality cottons—unable to be exported—were wasted on the production of low quality fabrics and clothing.
As it has been precisely summarized: “… the continuous production and distribution of subsidized cotton fabrics at such volume and subsidy, for almost 20 years, dealt a ruining blow to the commercial and development capabilities of the Egyptian textile industry,” [the quality of production suffered] … carelessly produced coarse yarns, spun from high-quality Egyptian cotton lint, were delivered to weavers, who in turn produced poorly woven fabrics to be carelessly bleached or printed and delivered to undemanding customers.” (Ministry of Agriculture and Land Reclamation and APRP in American Chamber of Commerce in Egypt 2001).
This is because these countries have positioned themselves to become giant textile and clothing manufacturing countries, not only in low-priced textile goods but also in all kinds of textiles. Their increased imports of Egyptian cotton reflects their investments in fine cotton spinning ability, which challenges the European fine cotton spinners for market share.
The number of companies under the Holding Company has fallen from 39 in 2002 to 33 by 2009 ([
Nine of which are Cotton Ginning, Pressing and Trading Companies, 23 are spinning and weaving companies and one produces spinning equipment. Two of these 33 companies have stopped production and 13 are in deep financial need [
Since the start of the privatization program until 2006 there had been 5 companies subjected to Majority Public offering, 3 were sold to anchor investor, 1 company was liquidated and 4 under majority sales to employee shareholding associations (ESA) and 5 under leasing [
For example, it imposed specific tariffs as high as $300 per item on more than 1000 categories of clothing when the import ban on clothing was lifted, and when the ban on textiles was eliminated, tariffs of up to 54 percent were imposed (on yarns and fabrics of cotton and man-made fibres (chapters 51, 52, 54, 58, and 60)) ([
Many of these producers have closed down to become importers from China (Magdy Tolba, comment during ECES Roundtable, ECES Cairo, February 11th, 2010).
An example is the case of Salmone El Omash village, 5 km outside Mansoura. Most inhabitants of this village have been working in the TC industry for more than 40 years. Factories now only operate a third of the year, their profits having been cut by half. They blame this situation on Chinese imports with prices far lower than their products’ [
Overall reduction in production could partly also be attributed to further devaluation of the pound against the dollar between 2000 and 2004 by 78 percent from LE 3.48 to LE 6.21.
For more information on the European Mediterranean Partnership agreement cf. El-Haddad [
Cotton lint, yarn and fabric exports lost a share of 1 percent in both US and EU markets, and carpets gained 2 percent in the EU but lost 1 percent in the US market. Note that cotton lint represents more than half of all cotton exports. See El-Haddad [
To figure out whether the clothing export sector is self-sufficient, a calculation of imported inputs versus exports would be warranted.
The new law gives employers more flexibility, in relation to the termination of contracts for reasons of force majeure or negative economic circumstances (such as the current crisis) and working hours, as well as allowing fixed-duration contracts and employment on probation for up to three months. Workers are guaranteed compensation of job termination and the right to strike peacefully in defense of their professional, economic or social interests. Nevertheless, most recent strikes are illegal. Under the labor law workers must acquire permission from the general federation to protest, which is controlled by the government [
For example, the General Authority for Investment (GAFI) becoming a one-stop-shop for investors in 2004.
Which means that firms in the informal sector are excluded.
Please refer to Appendix
Which are only half the value of clothing exports.
That is without a formal contract.
An outlier.
689 if sampling weights are used.
Without this firm, QIZ (clothing) firm job losses would be 354 (394) using sampling weights and 503 (995) without weights, that is, a negative growth rate of their employment by 2 percent (3 percent).
Precisely 2.9 calculated as 1241/(760 − 335).
(35/23).
(39/30).
That is, until public sector firms either stop production altogether or are privatized, in which case workers of these companies will be considered private sector ones.
A similar trend is noticeable in the tourism sector whereby travel agents, airlines, and hotels have reduced their local prices to replace foreign tourists by national ones to compensate for reduced numbers of international tourists [
Those still remaining as it is likely plenty have exited the market altogether, for which we have no formal count.
The cost of one job saved due to this policy roughly amounts to LE 257,694 (calculation performed based on sample data shown in Table
Note that in December 2008 the Government scaled up all export subsidies (ranging from 8 to 10 percent of total export value) offered by the Export Development Fund by 50 percent for a seven-month period until June 2009. This policy’s effect may yet again reinforce exporters’ ability to cross subsidize between the domestic and the export market, though the effect may appear with a lag, that is, in data for 2010.
Since MFN rates
Implying that investments have responded to the QIZ agreement.
However, domestic investment still represents the bulk of investments in the industry ($227 million of $351 million in 2007) though its share in total investment has been declining in favor of foreign investment (from 85 percent in 1995 to 65 percent in 2007).
Question 404 in the firm questionnaire: Did you undertake any of the following procedures in response to the crisis? (1) laying off permanent workers (i.e., those working no less than 8 hours a day 5 days a week) and (2) laying of temporary, seasonal, or part time workers.
Questions 307 and 308 asked about overall employment numbers broken down by gender and worker informality status in 2007 and again in 2009. These data were collected from the interviewee but double-checked using the firms’ books. The reason why the year 2007 was picked rather than 2008 is to use a complete year with no crisis effects whatsoever.
Maximum notice reported by about a third of the 24 firms who claimed to give notice is 4 weeks.
Refer to Appendix
Inefficient government policies and a lack of a clear strategy for its development rendering the sector uncompetetive were preconditions for this decline.
In a recent global ranking that measured labor market efficiency, Egypt ranked 134th out of 134 countries [
The Minister of Manpower and Migration approved subsidies from the Emergency Fund to 3,134 workers in ten private sector companies that were hit by the crisis. At least two of them are from the textile sector [
Only 9 percent of the firms report they have reduced working hours (Table
The Generalized System of Preferences (GSP) is a voluntary, unilateral, nonreciprocal system through which developed countries offer developing countries concessional access to their markets for some products produced by developing countries. Egypt benefits from nonreciprocal preferences under the Generalized System of Preferences (GSP) of Australia, Belarus, Bulgaria, Canada, Japan, New Zealand, Norway, the Russian Federation, Switzerland, and the United States [
The content of the previous paragraph relies heavily on ideas and suggestions from Arne Klau.
Again for a preannounced limited period. Conditionality will be discussed in more detail in the next subsection.
In order to provide both export incentives and financial liquidity, so as to counteract crisis borne liquidity constraints.
Which terminated in December 2008.
That is, TC exports still performed modestly even prior to the crisis.
On May, 26th 2009, it was announced that the Ministry of Trade and Industry is signing a plan to incorporate two governorates in Upper Egypt to the qualifying zones.
Since technological advances allow producing fine yarns from less expensive cotton lint.
Cotton liberalization and continuous price decreases, have also caused successive declines in the cotton crop for over 15 years. The area of planted cotton in 2008/2009 has declined by over a half (52 percent) campared to the previous season, from 225 thousand metric ton to 108, its lowest in 150 years [
The subsidy has reached 30 cents/pound in the 2003-2004 season [
What reinforces the matter is that public sector companies are vertically integrated companies which produce through the value chain, thus discouraging private buyers to bid for such huge entities.
I am grateful to Arne Klau for drawing this figure to my attention.
Rather than charging them a percentage of their sales or profits toward training as is currently the case.
Nevertheless, most of the recent strikes are illegal. Under the labor law, workers must acquire permission from the general federation to protest, which is controlled by the government.
The cost of one job saved, job losses, exports, and subsidies.
Total job losses for exporters between 2008-2009 | Total exports in million nominal LE 2009 | Average subsidy rate | Total subsidy in million nominal LE | Cost of one job saved (million LE per job) | Cost of one job saved (LE per job) | |
---|---|---|---|---|---|---|
Regular subsidy rate | 425 | 1218 | 9% | 110 | 0.258 | 257,694 |
Crisis subsidy rate | 425 | 1218 | 12% | 146 | 0.346 | 343,592 |
Source: Author’s calculation based on IDSC firm questionnaire data.