Created: 9/12/1977

OCR scan of the original document, errors are possible

Libya's racent border clashea with Egypt are likely to accelerate Prealdent Qadhafl'a plane to reduce the large Egyptian presence in Libya. Such neaaurea will worsen an alraady tight labor situation, threaten Libya's economic development program, and disrupt public services. There also willegative impact in Egypt, whose labor market will be unable Lo absorb all of the returnees. Impact on Libya

ear of threats by Qadhafl to expell Egyptian wrrkera, an exodus to Egypt has begun. Increasing tensions bstwean ths two countries encouraged the departura of about0 Egyptian workers on their own. Only those in sensitive government and military jobs were actually expelled. Same reports indicate that as manygyptiansincluding familiashave left Libya.

Manpower ahortageserious constraint on Libyan development plans even before the departure of the Egyptians. Largely because of shortsgss of skilled labor and management personnel, investment spending under the five-year planas been runningercent oehind schedule. Tho government has been unable even to process the paper work needed to Initiate many projects. Exacerbating the labor problem has been an effort to expand tbo military0en. Labor shortagea


ar* compoundedigh illiteracy rata, low ratea of famala participation,eneral Libyan disdain for urban work.

As in other Middle East oil countries, Libya relies heavily on foreign workers. Foreigners make up morehird ofan work force, and the share is likely to rise over the next decade despite the exodus of Egyptians, foreigners reportedly already account forercent of the skilled managers and civil servants. aw requiringercent of the employees of foreign companies to be Libyan nationals is rarely observed.

Egyptianast yearare by far the largest contingent. In addition, there reportedly ara more0 Italians, Yugoslavs, and Greeks working primarily ln the oil and construction industries.ast Europeans work under commercial contracts. Poland and Romania have been activeumber of individual projects, usually connected witli infrastructure. The Egyptian community in Libyaincluding families of workersprobably numbered moret its zenith last year, forming the backbone of Libya'sbureaucratic, and skilled work force. Egypt!<ns have tilled many technical and specialised jobsworkers on civil and military projects, teachers.


doctors* and civil servant*. Egyptian specialists alao have been involved in the various ministries responsible for preparing) the national budget, atatiatics, and planning.

It will be difficult for Libya to replace departing Egyptiansespecially construction workers whose skills are ln short supply throughout tha Middle Eaet. Professionals and civil servants who have specialised knowledge of the workings of the Libyan economy also would he difficult to replace. Turks, Pakistanis, and Europeans, often mentioned as possible replacements for Egyptians, generallyommand of Arabic, whichirtual necessity in Libya.


North African countriesMorocco, Algeria,

Tunisiawhich could provide Arabic-speaksrs, would be unable to provide tbe skills mix required. Qadhafl la ardently courting Tunisian laborers, hoping to bring in Tunisians worked for many yeare in Libya but were expelled in thehen an Anschluss with Libya fsll through. Impact on Egypt

Ths exodus of workers from Libya is likely to become an acute embarrassment to the Sadat government. workers, who are in short supply throughout the Arab world, can bo employed in Suos Canal Xone reconstruction projects or re-exported tc other OPEC countries. Returning

whits collar workers, on tha othar hand, will have to be

absorbed in the Egyptian bureaucracy, adding to rampant

underemployment and chronic inefficiency in the public sector. Under Egyptian law, all secondary school graduates must be employed, productively or not.

These returnees may also inersass Sadat's political problems, Accustomed to challengingslativsly high standard of living in Libya, rspstriated white collar workers will quickly become dissatisfied with the redundant tasks, low wagss, and congested living conditions to which they will be subjected in Egyptian cities. The dwindling ststus of Egypt's middle class will also comehock.eace and economic liberalisation have brought an Influx of nouveau rlche Arabs and Egyptians who have replaced upper level bureaucrats as tho socisl slits In Cairo. Competition among thess "fat cats" for accomodations and services have pushed the price of many comforts well above the level that tho average buresucrst can afford. Ths middle class is also losing economicallyis the lower classes, moet of whom are to receive wage increases upo offset tbo inflationary Impact of devaluationeduction in subsidies on consustsr goods.

Egypt also will loss remittances from workers in Libya as tbe exodus continues but the effect will be offset to a


large extant by continued emigration or Egyptian to higher wage Arab countries. Remittances should continue to increase, albeit more slowly than if the workers in Libya had remained in place.



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