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If I were in the shoes of an owner of a big center who absolutely HAS TO have additional instructors and DMs I would be between a rock and a hard place. Either I hire "illegal" instructors as freelancers, getting into trouble with the authorities, or I go with really poor locals who would in no time destroy the reputation of my center and thereby my business. There was an egyptian instructor who asked for examption from the CDWS-exam on the reason that he can´t read and write - imagine that! I had to deal repeatedly with local DMs who didn´t have the first clue about guiding, environment - not to speak of diving theory (and customer DO ask questions!). Ask any feelancing egyptian DM complex questions and you would be horrified in the vast majority of cases. That´s not racism on my part, that´s experience!
If the foreigners are to leave, owners would be forced to hire Egyptians with a level of knowledge they would under no circumstances tolerate with foreign staff.
There is a point in tolerating illagal workers:
The point is, that if the industry suffers any more by new, foolishly implemented restrictions, there simply would not be more jobs for locals, there will be less because many centers will just close down or will not be able to survive. The call for "jobs for Egyptians only" will have exactely the opposite effect. That is not only bad for the Egyptians, it ruins the livelihood of many investors in the process. Some people should ask themselves, if short term gains are worth the long term losses...
I don't think the locals will tolerate illegal workers. As for ruining the industry on the long term, they don't see it that way. Well, in my humble opinion, the end result will incur some losses, but not as huge as you might think. The Red Sea resorts are not based upon the diving industry. People will eventually survive.
Start building your own local, loyal staff. And start it right now. Train the untrained, and don't wait for "initiatives". This way you'll be ready when no one else is. Otherwise blame no one but yourself.