The Plight of Egyptian Workers Abroad in the Face of Economic Crisis and Regional Change

The situation for Egyptians has become increasingly difficult since the beginning of 2024. The Egyptian pound has depreciated significantly against the dollar, reaching an exchange rate of over 70 pounds per dollar, compared to its year-long stability at 30.9 pounds. This has had a dramatic impact on the economic well-being of over 120 million Egyptians, many of whom already face challenging economic circumstances.

The recent difficulties stem from a combination of factors. More than a decade ago, political conflict and a popular revolution led to the overthrow of the previous regime. The Egyptian army subsequently assumed control of the country.

A recent report published by Bloomberg highlights that the current currency crisis in Egypt is the worst in decades and nearly brought the economy to the brink of collapse.  However, two significant financial injections have provided much-needed support. A $35 billion investment deal with the United Arab Emirates for development projects on the North Coast, and a $6 billion loan from the World Bank spread over three years, are helping to bolster the resilience of the Egyptian economy.

The Perfect Storm: Multiple Factors Compound Egypt's Economic Woes

The Egyptian economy has faced a confluence of challenges since the start of the Russia-Ukraine war, which disrupted global economic stability. The situation further deteriorated in the last quarter of 2023 due to escalating security concerns in the Middle East and heightened tensions in the Red Sea. These factors negatively impacted Egyptian revenues from the Suez Canal, as some shipping companies rerouted their vessels around the Cape of Good Hope.

Furthermore, recurring crises have hindered Egypt's export capacity. Exports have declined compared to pre-war levels, while imports have increased. Additionally, the devaluation of the Egyptian pound and investor confidence have led to an outflow of hard currency. Investors are hesitant to commit due to the discrepancy between the official (lower) exchange rate set by the central bank and the higher black-market rate.

Historically, the Egyptian economy has relied on a diversified income base. This includes exports, Suez Canal tolls, tourism, and foreign investment. However, the return on previous sources has reached a six-year low of $100 billion. Another crucial source of income – remittances from the estimated 14 million Egyptians working abroad – has also seen a decline. These expatriates, concentrated primarily in Gulf and other Arab countries (approximately 69%), along with those in Europe and the Americas, have traditionally been a pillar of the Egyptian economy. The recent currency crisis has made them more cautious about sending money back home, leading to a significant 10-year low in remittances. This decline, from $33 billion to $22 billion, has prompted some immigrants to consider relocating their families abroad, further impacting the Egyptian economy.

The Multiple Burdens of Egyptian Workers Abroad

The crises in the Arab region – particularly in Yemen, Libya, Syria, and Sudan – have significantly impacted Egyptian foreign labor markets. These conflicts have removed these countries from the list of viable destinations for Egyptian workers. Additionally, the lower wages offered to Asian laborers in the Gulf states create competition for Egyptian workers, further straining the Egyptian economy.

Mohsen sends regular remittances to his family in Egypt.

Mohsen, like many others, faces significant challenges. Working in Saudi Arabia for 3,000 Saudi riyals (approximately $800), he supports a large family back in Egypt. Living far away from his loved ones, he toils long hours in a restaurant to provide them with basic necessities. Dividing his meager salary between himself and his family adds another layer of difficulty.

Mohsen describes life as an expatriate as far from ideal.  He must manage significant living expenses, including housing costs, annual residency renewals, and fees paid to his sponsor, who facilitated his employment in Saudi Arabia.  The worsening economic situation in Egypt further complicates matters. Inflation has skyrocketed, making it even harder for him to send additional income to his family.

"The crisis in Egypt hasn't just been brewing for six months," Mohsen adds. "Since it began, food, vegetable, and fruit prices have been rising daily, leaving citizens bewildered.  Wages remain stagnant, and the government has yet to take any significant action."

Despite the hardship, Mohsen holds onto hope.  "I dream of a future where conditions in Egypt improve, and the economy recovers," he says. "A stronger economic climate would not only bring me great joy, but it would also significantly improve the lives of all Egyptian citizens, both at home and abroad."