Ahmed Al-Sayed El-Nagar is Chief Economist for the Al Ahram Center for Political and Strategic Studies, an independent economic and political think tank based in Cairo. Here, he talks with FRONTLINE/World reporter Amanda Pike about the extent of the unemployment problem in the Middle East, the Egyptian governments response to it, and danger posed a large population of educated, disaffected and idle youth.

FRONTLINE/World: How bad is the problem of unemployment in the Middle East?

Ahmed El Sayed el Nagar: The unemployment problem in Egypt and, generally speaking, in the Arab world, is one of the problems that will have substantial political, economic and social impacts on the region’s future. While the official number of unemployed is 17 million and represents 14 percent of the workforce in the Arab population, independent surveys find that number to be double -- that is, 35 million in the Arab world.

The problem of unemployment is not only the underutilization of capital and natural resources but also of human beings. These people have hate in their hearts because they have had the appropriate education, had parents who spent the money to educate them, and yet the government failed to create the jobs for these new graduates. Particularly because the number of unemployed youth (aged 15 to 40) represents 99 percent of the total unemployed, and the educated represent 88 percent of the unemployed. So we are wasting the money spent by the government and by their families on this young generation, and they remain unemployed for long periods of time.

In Egypt, who is most affected by this unemployment problem?

The question of who is most affected, whether in Egypt or in the Arab world, it is the educated middle class. As I said earlier, 88 percent of the unemployed are educated. And this is true not only for Egypt but also for the whole Arab region, and 99 percent of these people are under 40 years old. The young population of the middle, educated class is made up of liberal arts graduates and is unable to earn a decent living. So they become a burden on their families, who have to support them since we do not have unemployment benefits. As a result, the average income per person in these families is reduced, and they become poor. This means that, although they are middle class in educational and cultural level, they are actually in a poorer economic class.

Some Egyptian youth on the Corniche. The street is a popular hangout for young people that borders the Nile.

The youth -- it is good that they have hope, but as soon as they graduate, all these hopes are lowered or disappear. During their university years, they have hope to find a job upon graduation. But the reality of the Egyptian job market lowers these hopes. And the global economic crisis only further affects the Egyptian economy, since the remittances of Egyptian expatriates (50 percent of these came from the Arab Gulf) have been substantially reduced, due to the decline of oil prices from $147 per barrel last July to about $40 currently. Therefore, the salaries in the private sector in the Gulf region declined, and many Egyptians were made redundant.

The second source of incoming foreign currency into Egypt was from the United States (also remittances), which represented 32 percent of the total incoming funds. The United States has lost 4 million jobs in the last year and three months, and for sure, some of these were Egyptian workers. The loss of these funds meant loss of real estate investments that created jobs or created small enterprises for the families of those expats and, as such, had created employment. And then there is the loss of tourism due to the global economic crisis, which of course reduced the job opportunities in the tourism sector.

The government here should be creative and innovative to face this crisis. They could create jobs for the new graduates through several avenues. The country should reorganize/redirect public spending by creating new projects to absorb new graduates, then selling these projects, once completed and successful, to the private sector -- provided such projects are sold under strict control of the parliament, to avoid corruption. The government’s role is to help everyone who is ready to create such projects in preferred sectors to be profitable. Another area is to seek the financing they need through local or international organizations. The third area is to ensure that their product qualities are measured, so that they compete domestically as well as internationally.

Are you concerned that these young, educated and unemployed people might be vulnerable to influences like extremism?

The fact is that the unemployment problem has consequences. First, because they aren’t able to earn a decent living, they become a burden on their families, and their poverty increases. But the other issues are the dangerous social and political impacts. Crimes have increased tremendously. Egypt was known to be a safe country, where one could walk at any time in any place in Cairo. But now the situation is deteriorating, because it is a fact that these young unemployed (around 30 years old) develop hatred/aversion, not only to the government but also to the society.

The other issue is that those educated young people who are not aligned to the politics of the current government and are tied to a different political ideology will express their opposition to the government. This could lead the government to stop those using violent means, reporting that they are extremists.

Do you think the Egyptian government is concerned about this problem: that there is a young generation, without work, becoming bored and angry?

The real problem is that the government does not recognize the importance of the unemployment problem and its consequences. It is actually lowering the real numbers and believing the new numbers to be true. This creates a laxity in its governing and may really be the most complicated problem in Egypt. That the official statistics are incorrect and the government believes them does nothing to solve the problem. There is no strategy whatsoever in Egypt to solve the unemployment problem. We live in the hope that the private sector is creating jobs, that there will also be employment opportunities in other countries, and this will solve the problem. But if these countries face a downturn, the Egyptian expat workforce returns, and there is no solution.

But is the government worried about this lost generation?

The government looks at the consequences and believes that there is an increased political opposition, and therefore it increases the spending on this concern instead of spending on the unemployment problem. If the amount of spending on internal security is directed toward the creation of new projects to absorb the new graduates/new entrants into the job market, I believe this would ease the security challenges, since it will reduce violence, crimes and political extremism and create stability. This is if the government looks at it as a social problem. In other words, the issue is that government is concerned with the consequences of unemployment and not really with the unemployment problem itself.

The program “Injaz” calls itself a strategy to deal with unemployment. They go to the schools and teach young people business skills and critical thinking and how to become entrepreneurs. Is this a viable strategy?

Another problem is that the government believes that providing some training to the graduates will resolve the problem. This will not solve the problem at all. It provides some additional skills for small jobs and some technical skills such as using the PC or the Web. But if the new graduate has successfully obtained his diploma and taken all this additional training and still does not find a job, what will be the result? An increased hatred toward the government and the society.

The problem is not in the training; the problem is in the lack of real economic development: industrial, agricultural and service development that creates new openings. So the solution here is not through training but through the development of new projects, whether public or private, of small, medium or large scale.

My critique of Injaz is that they help people to develop skills, but they do not create jobs. If you help someone gain new skills, and then he doesn’t find a job, he will be depressed. It is very important to have such programs, but they must be tied to other projects that create jobs for those graduates.

Injaz says that they are teaching students how to create jobs for themselves after they graduate. Do you think it is realistic to expect young people who have just graduated to become entrepreneurs and start their own businesses?

I believe there is a problem if we think that every person can become a small, medium or big entrepreneur. This does not exist. There are some minds that are perfectly capable of performing very well in an environment where they aren’t an owner, just like in all large industrial corporations in the United States, Europe or other countries. It is not realistic to believe that every graduate can be an entrepreneur or in a partnership. This is neither realistic nor scientific. The reality is that an individual starts small and develops skills and comes up the learning curve working for other firms, whether these are owned by the government or by a small, medium or big businessman. Therefore, what is most important isn’t that a person can or can’t initiate his own business; the most important thing is the availability of jobs, because the one who can’t become a businessman must find a job.

How would you describe this generation of young people?

I believe that giving generations a name has not been common in Egypt. There was the name “Lost Generation,” given to the generation between two wars; “Angry Generation” or “Rejection Generation” or “Revolution Generation,” when the students were rebelling against the lost war. But the reality is that this generation is a “Forgotten Generation,” if we wanted to give it a name. This generation was lost from the country’s memory, and the government failed to put in place a strategy for employing this generation.