On occasion of the pandemic: Reflections on Egyptian labour migration

To face up to the COVID‐19 pandemic, firms closed their doors and global value chains that connected countries and economies were disrupted. The supply of goods and services contracted, resulting in a comparable contraction in demand for them. Demand for labour, which is derived from demand for goods and services, subsequently dropped. This applied to national labour in domestic labour markets and globally to migrant labour in countries of destination.

Since the 1970s, international labour migration performs two main functions in the Egyptian economy. It is an external outlet for the growing Egyptian labour force, which reduces pressures on the domestic labour market. It also is a source of financial remittances in hard currencies. In turn, these remittances carry out two functions. They help families that receive them meet their livelihood needs. This first function of remittances acquired increasing significance over the years and particularly since 2016 after the $12 billion loan agreement with the International Monetary Fund (IMF) aimed at helping reduce the budget deficit, which meant large cuts in public expenditures and rising poverty rates. The second function of remittances is their contribution to the balance on current accounts, which closes the gap resulting from the chronic deficit in the Egyptian balance of trade. In the last five decades, tens of millions of Egyptian migrant workers left for employment abroad for periods averaging six years and returned to their country. Their main destinations were countries of the Gulf Cooperation Council (GCC), Libya and Jordan. Europe became a minor destination for Egyptian migrant workers in the last 30 years. Egyptian migration to North America and Australia was of the settlement type.

In the GCC countries, the pandemic coincided with the collapse in oil prices and consequently in oil revenues, which are the main determinant of their demand for migrant labour. The drop in this demand was thus magnified. It is unknown how many, but most certainly millions of workers either lost their jobs and returned to their countries of origin, or did not, and experienced wage cuts or delays in payments (Abella, 2020). Egyptian migrants were among these millions. The combined impact of the pandemic and of the drop in oil prices on Egyptian migrant workers extended to Jordan, their second destination at present behind Saudi Arabia. The impact on Jordan originates first in the public health measures it government adopted, and second in the consequences of the economic situation in the GCC economies for the Jordanian economy. These consequences are transmitted through both the shrinkage in the GCC demand for Jordanian goods and the effects of the said situation on Jordanian migrant workers in the Gulf. These workers’ financial remittances activate the Jordanian economy.

Like for other countries of origin, precise figures about the impact of the pandemic on Egypt are lacking. Data on returnees are not available. Neither are data on migrant workers remaining in countries of destination, who lost their jobs, or experienced wage cuts or delay in payments. One helpful development was the increase in financial remittances sent by migrant workers to their families in Egypt in the second quarter of 2020, as reported by the Central Bank of Egypt. This increase conforms with theory, which posits that migrant workers increase the sums they remit in times of crisis to help their families weather the hardships they experience. Another possible explanation for the increase is that travel restrictions constrained migrant workers to resort to banking channels and money transfer agencies, which resulted in reduced informal remittances. Egypt was not alone. Remittances similarly increased to other countries, such as Bangladesh, Kenya and Pakistan. However, in October 2020, the World Bank expected a drop in remittances to Egypt to US$ 24.4 billion in 2020, from US$ 25.5 billion in 2019. For all low‐ and middle‐income countries, the World Bank expected a drop in remittances of 7 per cent in 2020, followed by a further drop of 7.5 per cent in 2021 (World Bank, 2020).

These expectations present an opportunity to discuss the future of Egyptian labour migration so as to ascertain whether it can be counted upon in the future to perform the functions it has carried out in the past. Two factors were identified above that reduced the employment of migrant workers in the Gulf countries in times of the pandemic: public health prevention measures and the drop in oil prices. Certain analysts consider that demand for labour in the Gulf will bounce back to its erstwhile level as soon as the pandemic is over and the oil prices progressively recover in tandem with the resumption of the activities of the global economy. In what follows, these two factors will be discussed along with another three that also contribute to determining demand for labour in countries of the GCC. These are the purposive drive of these countries to adopt high value‐added methods of production, policies of labour force nationalisation, and attitudes towards migrants in general, which are at times tainted with xenophobic discourses.

In respect of the first factor, the public health prevention measures cannot be completely discounted in the medium and long terms. The Intergovernmental Science‐Policy Platform on Biodiversity and Ecosystem Services (IPBES), a panel of experts established by the United Nations, in a report published at the end of October 2020, cautioned that in the future ‘pandemics are likely to be more frequent, deadly, and will spread more rapidly, unless we stop the widespread destruction of our environment’. This cautioning raises larger questions about the future and shape of globalisation. But, importantly, it portends that nation‐states will repeatedly decree close downs to protect their citizens, which should affect foreigners living in their territories and in particular migrant workers and their countries of origin.

The second factor is about the oil prices in their relation to economic activity. In spring 2020, some experts considered that such as economic activity rapidly contracted after the pandemic was declared, it would recover with the same speed when the virus was brought under control. As a result, demand for oil, its prices and revenues, the main determinants of demand for labour, would increase. This was a way too optimistic view. The virulence of the virus subsided during some of the nine months since the pandemic was declared and yet the economic activity did not resume at its previous pace. In fact, the incidence of the virus varied between countries, which logically adopted differential prevention measures thus hampering the functioning of global value chains, as pointed out above. A further cause makes it quite difficult for oil prices to recover to their former high levels: advance in techniques to extract shale oil has resulted in a glut in the market.

The third factor is the intended adoption of high value‐added methods of production that are capital‐ and knowledge‐intensive. It is completely rational that the oil‐exporting countries rely on their abundant factor of production, capital, rather than on their scarce one, labour. Capital should allow them to recruit the knowledge that they miss in their labour markets. From the vantage point of countries of origin, however, this means that fewer of their workers would find jobs in the GCC countries. It is true that high value‐added methods of production do not mean that demand for low‐skilled workers will totally disappear. It is equally true that Egyptian migrant labour in Oman and the United Arab Emirates (UAE) is high‐skilled but as a whole this is not entirely the case in other Gulf countries. The outcome is that a greater reliance on capital and knowledge should reduce demand for migrant labour, including Egyptian labour.

The fourth factor is the policies for the nationalisation of labour forces, such as the so‐called Saudization and Kuwaitization. The objective of these policies is to address the unemployment of nationals in the Gulf. Research in countries of destination, in Europe and the United States, has refuted the claimed causality between labour immigration and natives’ unemployment. Labour markets are segmented, migrant and national workers occupying different occupations. This is the reason nationalisation policies have been unsuccessful. Yet, in the future, they may have some effect, even though limited, which should reduce demand for migrant, including Egyptian, labour.

The fifth factor is the upsurge in the xenophobic discourse that at times targets Egyptian migrant workers, such as recently witnessed in Kuwait. So far, this hate discourse has rapidly receded. Yet, it could not be excluded that it results in a contraction of demand for Egyptian migrant labour.

Jordan, the second destination of Egyptian migrant workers, lives its own economic crisis at present. In the Gulf, its migrant workers are impacted by factors similar to those affecting their Egyptian colleagues. Therefore, the Jordanian demand for Egyptian labour could be expected to contract. Terms and conditions of labour in Jordan could also deteriorate, pushing Egyptian workers to return to Egypt.

The conclusion to draw from the brief analysis above is that labour markets in the Gulf and Jordan cannot be counted upon to absorb the same flows as in the past of Egyptian migrant workers. In any case, these flows represent diminishing ratios of the rapidly growing Egyptian labour force. As evidence for this conclusion, it may be useful to signal that according to the World Bank estimates, outward remittance flows from Saudi Arabia dropped by 17 per cent between 2015 and 2019, that is the year before the pandemic. This could only mean that migrant labour contracted, its disposable income diminished or both. In the best of cases, labour migration to the Gulf will not grow at its same previous rates.

To face up to this evolving situation, in Egypt as in other comparable countries of origin, a composite employment policy that generates decent jobs in the domestic labour market is required. This policy should contribute to producing goods and services for the Egyptian market as well as for exports that engender hard currencies, thus making up for the reduction in financial remittances or for their growth at lower rates than needed.

An additional observation is in order. Labour migration is selective. Demand in countries of destination is for specific occupations in determined sectors. Adoption of high value‐added methods of production means that demand for highly‐skilled workers, including, for example, for medical doctors, nurses and other medical professionals, will increase. Repeated pandemics in the future should generally raise demand for migrant labour in these occupations in the Gulf and in Europe. The COVID‐19 pandemic has reconfirmed in the last few months the existence of a significant deficit in medical occupations in most European countries. Migration, employment and education policies should take this into account, notably because Egypt already suffers from a high migration rate among medical doctors. The result is obvious. It is the difficulty of providing medical services in rural and poor areas.

Migration for employment will persist. Its drivers in countries of destination and origin, and in the functioning of the global economy, will not vanish. However, indications are that its efficiency in accomplishing the functions expected of it in Egypt will diminish.

The pandemic should be an opportunity to formulate sound and well‐considered policies that enable the Egyptian economy to carry out these functions.

PEER REVIEW

The peer review history for this article is available at https://publons.com/publon/10.1111/IMIG.12818.

DISCLAIMER

The opinions expressed in this Commentary are those of the author and do not necessarily reflect the views of the Editors, Editorial Board, International Organization for Migration nor John Wiley & Sons.