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oh, the humanity according to hr experts, egyptian companies are squandering their employees’ potential by daliah merzaban the existence of a “rich pool of human resources” in egypt has been a mantra on the tongues of government officials for at least a decade. capitalizing on a country’s “human element” is a craze around the world, a byword for progress and economic development – and the basis of a vibrant field of business that has advanced immensely on a global scale. human resources (hr) development encompasses practically every way that governments, communities and businesses invest in enhancing people’s skills – by way of the education system, through national and ngo-run training schemes, or by creating “employee-friendly” workplaces where career development is part of day-to-day business. but the field of hr is still nascent in egypt, impeded by inflexible socialist regulations on education, employment and labor. only in recent years has real hr-consciousness penetrated the business arena. according to human-resources specialists, as egypt
scrambles to catch up to the global hr train, investment in this
area could breathe new life into the country’s sluggish economy. human misallocation “hr is very underdeveloped in egypt. as a complete field,
it has never been tackled,” said heba nassar, a cairo university
economics professor who specializes in hr development. while these strategies may have achieved social stability, the government’s rationale – to create employment through education – didn’t quite work. this approach has, in fact, set egypt back economically, nassar said. guaranteed jobs have resulted in “overstaffing and underemployment,” she explained, while free tuition has increased enrollment, but not without the grave economic price of “creating a larger mass of educated unemployed.” unofficial figures peg unemployment at between 12 and 20 percent, and some 60 percent of the unemployed are under the age of 30. moreover, the labor supply available is not in tune with market demand. “in a market-oriented economic system, first of all we have
to know what the market needs, and we have to orient our educational
training system around what the market needs,” nassar said.
and while thousands of frustrated young people look for jobs, egyptian companies continue to recruit managers and skilled employees from abroad. this paradox reflects problems in the education system. “egyptian
graduates don’t understand the meaning of working,” said
emil iskander, president of top business, an hr consultancy firm
in cairo. according to hr professionals, egypt’s private universities – including the american university in cairo (auc) and the four new universities in the suburbs – provide better preparation for the modern workplace. smaller classes, superior facilities, and more emphasis on research and in-class discussions than on traditional memorization and dictation all cultivate better job skills. at auc, undergraduates in business administration are specifically taught hr management skills. five years ago, the university also began offering a diploma in human resources for adults, said magda abdel fattah, auc’s associate director of hr. abdel fattah herself teaches a course on recruitment and performance management. “we’re looking into a multi-skilled work force. auc offers this broad horizon,” she said. but the fees for auc and the other private universities make these institutions inaccessible to most families, who rely on free post-secondary education to move their children up the social ladder. nadia haridi, managing director of the consulting firm hr first international, said the bulk of local university graduates lack creativity, critical thinking skills, and innovative and independent thought – qualities that are essential for a company to be efficiently run and competitive. compared to countries like india and the philippines, haridi said, egypt is “lagging behind big time” in terms of hr development. “despite poverty and overpopulation, [these countries] are certainly making strides in developing hr. maybe we can learn from these models.” nassar, meanwhile, praised the efforts of east asian countries,
such as korea and singapore, to invest in human capital as an “engine
for growth.” “they were far behind in economic indicators
[compared to egypt] in the 1980s,” she said. “now look
at them.” hr help wanted hr departments have become commonplace in companies, big and small, around the world. any issue related to the employee – whether it’s recruitment, hiring, drafting contracts, distributing salaries and benefits, planning evaluations and training, terminating employment or counseling – is an hr affair. haridi, of hr first, said that when she returned to egypt in 1995 after living for 30 years in canada, “hr management was practically non-existent” in egyptian businesses. she came to open a leadership development firm and immediately tried to incorporate western hr values – like transparency – into corporate visions. this, she now admits, was over-ambitious in a place where most companies were run autocratically. “don’t speak until you’re spoken to, don’t make mistakes” – that’s the attitude that runs through the bulk of traditional egyptian businesses, she said. like it or not, hr specialists need to adapt to the local business mentality, she said. only then can local companies be persuaded to change their ways. top business’s iskander also noted that bosses in egypt “stay away from their employees.” “there is a gap between the management and the employee,” he said, adding that hr management consultancy firms like his are helping to “close this gap.” hr management rests on the idea that if you have happy, satisfied and competent employees, working in a safe and nurturing atmosphere, company productivity and customer satisfaction will fall into place. according to haridi, hr-savvy companies implement just and fair employee policies across the board. traditional companies, she said, often follow illogical policies, such as basing salaries of new employees on their previous wages – which may be over- or undervalued, and are often not in line with other employees’ wages. this, in turn, leads to ill feelings and confusion among co-workers. aside from wanting good salaries, haridi said that employees thrive in a constructive and encouraging work atmosphere, where there is room for advancement and training for new skills. hr professionals hope to inject this sort of mentality in to companies around the country. but hr advice doesn’t come cheap. usaid-subsidized management training courses have popped up in recent years, but otherwise, career development programs often run into the thousands of pounds. this month, hr first is holding a two-day management training course for around £e 2,800. despite the cost of hr investment, iskander said, companies are realizing the valuable returns they get from working out well-defined strategic goals, strong values and ethics, and career-development options that secure long-term employee loyalty. “if you consider the rate of globalization, and now that multinational companies are penetrating into egypt, we need to develop human resources,” he said. “i don’t see that a company without human resources [management] can succeed in this market.”
when foreign investors consider setting up shop on local soil, they often have a key question on their minds: “what about employee rights?” “after reviewing the general investment rules, that is the first thing they ask,” said ashraf ihab, a senior partner at the shalakany law office who specializes in labor law. ihab said egypt’s current labor law is “90 percent in favor of employees” – something that dissuades foreign investors from putting money into egypt. “this law should consider foreign investors,” he said. old, inflexible socialist legislation also hinders efforts to develop effective hr strategies, which rely on a flexible employer-employee relationship, he said. the unified labor law, under discussion since 1994, is poised to dismantle egypt’s long-established employee-favorable policies. the draft law, which supersedes laws 137/1981 and 91/1959, confronts numerous hr-related issues: the right to strike, employee wages, lockouts, workers’ compensation and – most importantly for hr professionals – the right to lay off or fire unproductive staff. debate over the draft has pitted advocates of free-market economics against labor activists who cling to socialist protections. currently, a standard employee contract in egypt spans one year, with a three-month probation period. at the time of renewal, the employer can legally choose not to renew the contract, but from then on, the worker’s employment lasts indefinitely, until retirement age. unless an employee commits a “grave default” – such as breaching contract obligations, disclosing company trade secrets or coming to work drunk – he or she cannot be terminated, ihab said. many of ihab’s clients are employers wishing to terminate an employee’s contract due to poor performance – to little avail. “the law does not allow for this,” he said. instead, the employer must go through the conciliation committee at the ministry of manpower & training, which is “99 percent in favor of the employee.” the case is then presented before a summary court, where a judge will typically designate a generous severance package based on salary from the date of dismissal to the end of the legal case – around 5 or 6 months, ihab said. under the draft law, employers gain the right to fire or lock out their employees. disputes related to layoffs or dismissals will be referred to a five-member committee including two judges. hr consultants still say it shouldn’t be so complicated. in their view, an employer should be able to terminate a contract, follow reasonable, clearly outlined compensation rules, and not have to “tippy-toe” around legalities. “if the employee is not fulfilling his duties, why should i still keep him on the payroll? is that not why you’re hiring them?” haridi said. but, as ihab noted, “the matter of employees is very sensitive here in egypt,” and reforming laws carries risks of social instability. the lawyer, who reviewed a draft of the new labor law five years ago, said its passage had been stalled due to the competing interests of businesspeople, organized labor and the government. restricting the right of all companies to terminate workers’ contracts helps the public sector get away with retaining all of its redundant and inefficient labor, ihab said. yet government efforts to sell off state-owned companies are hindered by the same reluctance to tinker with the status quo. public sector workers form 25 percent of the labor pool, according to government figures. however, a transitional period of layoffs is the short-term prerequisite
for future prosperity, according to abdelaziz boutaleb, an hr development
and vocational training specialist at the international labor organization
(ilo) in cairo. “that’s a trend. you have to upgrade your
public enterprises. so you have to get rid of some workers and improve
overall efficiency,” boutaleb said. along with letting companies shed their dead wood, this would also mean giving workers full rights to form unions and engage in collective bargaining. under the draft law, employees theoretically gain the right to strike, but only with the clearance of trade-union officials, who normally have close ties to the government. critics like nassar wonder if the final law will be too vague,
and too open to corruption, to make any real improvement. right
now, parliament is discussing the unified labor law article by article.
ihab predicted that a finalized draft would appear by june. a few good people while mps chew over the labor law, jobseekers with the best training – and certification beyond their formal education – have already pulled way ahead in the job race. boutaleb, at the ilo, highlighted the importance of “lifelong learning,” involving pre-employment and post-employment training schemes that encourage people to excel. “now, we have more and more competition in the job market. you always have to update your skills and your knowledge,” he said. “when you are on the job, you have to try to maintain yourself in that position.” for many professional, administrative or service-oriented jobs, employers are demanding some level of computer literacy. but with deficient it training at primary, secondary and post-secondary levels, jobseekers have to look elsewhere to build their skills. ayman el dessouki, director of the professional training program at the ministry of communications & information technology (mcit), said hr development has been a key goal of the ministry since it was set up in 2000 with its sweeping plan to make information technology (it) an engine of economic growth. propelling the economy forward demands a strong base of computer and internet skills, el dessouki said. “increasing the level of technical competence will reflect on the level of this market in comparison with international markets,” he said. through mcit’s basic it awareness program, around 40,000 people with various levels of education are now being trained every year in three-month long courses covering word processing, data entry, spreadsheets and internet skills. the ministry also funnels £e 50 million each year into its professional it training program, which puts 5,000 to 6,000 carefully selected university graduates through intensive six-month training programs in basic it, presentation skills and a choice of around 16 different it specialties, including e-business, microsoft system engineer certification, networking and database administration. with the curriculum determined by multinational it companies like microsoft, ibm and lucent, graduates gained internationally recognized qualifications. this year, mcit is launching an additional program for 2,000 people who already have strong computer skills to help them gain specialized it-related knowledge for accounting, graphics, hardware or maintenance – essential for modern office systems. enhancing the population’s it competence will not only bring
egypt up to par with international standards. it will also, dessouki
said, “stabilize the salaries of it professionals,” for
whom local companies often have difficulty in deciding appropriate
pay scales. r u ready to be exploited? as awareness of people-oriented investment continues to expand in egypt, the use of hr lingo can be heard in every government, educational and corporate corner. “the human element in any organization is crucial,” auc hr director abdel fattah said. “the growth and the success of any organization depends on its people, and on how much management values this resource.” abdel fattah is one of the founding members of the egyptian human resources management association (ehrma), an ngo started up in 2000 to promote hr values – things like “mentor planning,” “performance development,” “employee counseling” and “volunteerism.” ehrma has 280 members, including hr managers and specialists from multinational companies, the private sector and the government. multinationals – the most sought after places of work – are fairly well developed in the realm of hr management. but otherwise, the discipline has failed to penetrate the public or private sector to any significant degree. “frankly speaking, our customers are multinational firms,” iskander, the top business consultant, said. while the reluctance of public sector companies to change comes as no surprise, private sector business owners also question the benefits of hr management. with most local companies, “there is no vision for what they are going to do in the future,” iskander said. during times of recession, he said, employee training is the first thing employers choose to cut. instead, “they could use the recession period to develop their employees.” haridi added that business owners regard training as dangerous ground, thinking that if they invest too much, another company will steal the skilled employee. many it managers, in fact, tell tales of investing in training for promising young technicians, only to see them poached by the competition. still, haridi said, more employers are coming to see that hr management is necessary to stay competitive. “they know it’s coming. they’re thinking of it,” she said. nassar, the cairo university economics professor, added that hr could not develop in isolation from broad national policies, including export strategies, the educational system and legal reforms. egypt must address a wide range of issues in order to make good use of its abundant labor supply. while she can speak at length about deficiencies in hr development, nassar is optimistic about one thing. when it comes to the “human element,” egyptians are industrious, productive and intelligent – a rich pool indeed. “our people, when they leave [egypt], they are the best people abroad,” nassar said. “we have the capability. we just need to capitalize on that.”
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