Economic Research Forum (ERF)

The Covid-19 pandemic and Egyptian migrant workers

How is the global pandemic affecting the many migrants from Egypt working in Europe, the Gulf and other Arab countries? This column looks at the challenges they are facing as well as their families back home, who are often highly dependent on remittances.

In a nutshell

The immediate impact of the pandemic on Egyptian migration and remittances depends on the destination countries; in the next phase – of co-existence with the virus – more variables will change, constantly affecting migration and remittances.

The crisis has highlighted the crucial role of migrant workers in supporting European economies; but many are forced to continue working regardless of the risk of exposure to the virus.

The situation of migrants in the GCC countries varies according to their working conditions and level of skills: those in jobs characterised by harsh working and living conditions are most at risk of infection.

Covid-19 is one of the greatest shocks of recent times, affecting the world economy on many levels. The focus on shocks to the macroeconomy, as well as to wages and the informal economy, has overshadowed something else greatly affected by the pandemic, namely international migration and remittances. (Effects of the pandemic on the internal migration of Egyptians and on asylum-seekers within Egypt will be discussed in future columns.)

International migration

Direct and indirect effects of Covid-19 on Egyptian international migrants depend on the destination of emigrants. Egyptian emigrants are highly concentrated in Europe as well as the GCC (Gulf Cooperation Council) countries and other Arab countries, mainly Jordan.

In Europe, approximately 900,000 Egyptian migrants are mainly concentrated in France, Germany, Italy and the UK. In the Gulf and other Arab countries, approximately 5.5 million Egyptian migrants are concentrated in Jordan, Saudi Arabia and the United Arab Emirates (UAE).

International migrants in Europe

In Europe, migrant workers are mainly in jobs that are most hit by the Covid-19 crisis, including agriculture, domestic and care work, the food industry, construction, tourism and transport. Many of these sectors need to continue operating to ensure the survival of the population. This has highlighted the crucial role of migrant workers in supporting European economies.

Migrant workers, especially undocumented migrants, are the least protected workers in Europe. Problems include employment conditions, access to healthcare, unemployment or social benefits, public healthcare, housing and, on top of all that, their residency and work permits.

Employed in crucial sectors, migrants in Europe are forced to continue working regardless of the risk of exposure to the virus. Their residency and survival, especially undocumented migrants, depend only on their jobs. Losing their jobs means losing their only source of income, and with limited or no access to any social benefits, they are also risking their survival.

Therefore, there is no choice for them but to keep working, risking their health and that of those around them. The high cost of medical services (and the fear of sharing data about their undocumented status with governments) delay migrants from seeking help in case they get infected. At the same time, given the sectors in which they are most concentrated, workloads have increased and social distancing is not applied, exacerbating the health issues.

During the next phase of the crisis in Europe – which some call co-existence with the virus – issues related to social distancing and hygiene need to be enforced among everyone to minimise any further risks. Realising the role of the migrant workers in Europe, and their contribution to the limited functioning of the economy, together with the enforced measures in the co-existence phase, this could improve the situation of migrants in Europe.

In this context, residency and work permits become the main concern for migrant workers. Those who remained in their destination countries have been given an extension to the renewal of residency or work permits, given the closure of government offices. Those who returned to their countries of origin right before the lockdown are risking expiry of their residency and work permits prior to returning to their destination countries and potentially losing their jobs.

Last but not least, European governments, international institutions, NGOs and labour unions are highly concerned with the situation of migrants in Europe. They work on providing them with information and guidance. For those who lost their jobs, they try to provide them with some form of assistance to be able to live through the crisis. The communities where they live and their vulnerability is not only risking their own health, but in the next phase of coexistence is risking a second wave of infections if hygiene measures and social distancing are not implemented properly.

International migrants in GCC and Arab countries

The situation of migrants in the GCC countries varies according to their working conditions and level of skills. Those in jobs characterised by harsh working and living conditions are most at risk of infection. These overlooked conditions are now creating the most risk of spread of the disease among migrant workers’ communities, which could lead to it spreading across countries. This is especially concerning given that infections in the GCC countries are mainly among migrants and foreign workers.

At the same time, indirectly, through the effect of the lockdowns on the slowdown of business activities, demand for energy has slowed, pushing down oil prices. As oil is the main source of government revenues, the expected slowdown is expected to affect demand for workers in economic sectors other than the oil and gas sectors.

Layoffs and wage cuts are the immediate impact of the slowdown. This is not affecting new flows of international migrant workers, but the stocks are also expected to fall. In 2018 and 2019, new work permits for Egyptian emigrants were mainly issued by Saudi Arabia, Kuwait, Jordan, the UAE and Qatar. Those in Saudi Arabia alone formed roughly 48% of total new work permits issues in 2018, with the other four countries together forming around 45% of the total new work permits issued in 2018.

The slowdown in demand for workers – directly in the oil and gas sectors and indirectly in other economic sectors – is expected to lead to a slowdown in new numbers of migrants and even lead to the return of some migrants.

Migrant remittances

This economic slowdown is not only expected to affect the number of migrants, but also the economic impact of these changes in migration patterns. Remittances to Egypt were worth approximately $30 billion in 2019, the highest in Egypt’s history. Over 75% of these remittances originated from Saudi Arabia (39% on its own), Kuwait, the UAE, Jordan and Qatar.

The expected economic slowdown from falling oil revenues, which in turn result from the global economic slowdown driven by the lockdown and the spread of Covid-19, will negatively affect the size of remittances flowing to Egypt.

Remittances are the major source of foreign currency for the Egyptian economy, along with revenues from tourism and the Suez Canal (two major sources of revenues that are also seeing a severe drop). The lockdowns, border closures and general fear have stopped tourism altogether; and Suez Canal revenues have dropped significantly with the slowdown in trade, production and global demand.

Since remittances are used directly by recipient households, the drop is likely to affect their consumption patterns significantly. It could push some households, who are highly dependent on remittances, towards poverty.

In conclusion, the immediate impact of the Covid-19 virus on Egyptian migration and remittances depends on the area of destination. With the phase of co-existence with the virus, more variables will change constantly affecting migration and remittances.

Most read

Sustaining entrepreneurship: lessons from Iran

Does entrepreneurial activity naturally return to long-term average levels after big economic disturbances? This column presents new evidence from Iran on trends in entrepreneurship among various categories of firm size, sector and location – and suggests policies that could be effective in promoting entrepreneurial activities.

Financial constraints on small firms’ growth: pandemic lessons from Iran

How does access to finance affect the growth of small businesses? This column presents new evidence from Iran before and during the Covid-19 pandemic – and lessons learned by micro, small and medium-sized enterprises.

Happiness in the Arab world: should we be concerned?

Several Arab countries have low rankings in the latest comparative assessment of average happiness across the world. But as this column explains, the average is not a reliable summary statistic when applied to ordinal data. The evidence from more robust analysis of socio-economic inequality in happiness suggests that policy-makers should be less concerned about happiness indicators than the core development objective of more equitable social conditions for citizens.

The economics of Israeli war aims and strategies

Israel’s response to last October’s Hamas attack has led to widespread death and destruction. This column outlines the impact thus far, including the effects on food scarcity, migration and the Palestinian economy in both Gaza and the West Bank.

It’s too early to tell what happened to the Arab Spring

Did the Arab Spring fail? This column presents a view the consensus view from ERF’s recent annual conference in Morocco: careful analysis of the fundamental drivers of democratic transitions suggests that it’s too early to tell.

Arab regional cooperation in a fragmenting world

As globalisation stalls, regionalisation has emerged as an alternative. This column argues that Arab countries need to face the new realities and move decisively towards greater mutual cooperation. A regional integration agenda that also supports domestic reforms could be an important source of growth, jobs and stability.

Gender differences in business record-keeping and planning in Iraq

Only one in every ten informal businesses in Iraq is led by a woman. Yet as research summarised in this column reveals, those businesses are more likely to set budgets and sales targets, and to keep business records. This may be evidence of the role of social exclusion in motivating greater reliance on the formal bureaucratic system.

Self-employment in MENA: the role of religiosity and personal values

How important are individual’s values and beliefs in influencing the likelihood that they will embrace the responsibilities, risks and entrepreneurial challenge of self-employment? This column presents evidence from 12 countries in the Middle East and North African region on the roles of people’s religiosity and sense of personal agency in their labour market choices.

Reformed foreign ownership rules in UAE: the impact on business entry

In an effort to stimulate economic growth and diversify the economy, the government of the United Arab Emirates has recently implemented regulatory reform that allows 100% foreign ownership of companies operating in the country. This column examines the implications of the reform for entry of new firms in Dubai, using unique data on new business licences in the emirate.

Conflict and debt in the Middle East and North Africa

With the global economy is in its third year of deceleration amid declining inflation and oil prices, the Middle East and North Africa grew by just 1.9% in 2023, with a forecast for growth in 2024 at 2.7%. In addition to heightened uncertainty brought on by the conflict centred in Gaza, many countries in the region are also grappling with pre-existing vulnerabilities, including rising debt levels. This column summarises a new report that unpacks the nature of debt in MENA – and explains the critical importance of keeping rising debt stocks in check.