Starting on 1 July, the government began applying a series of measures aimed at increasing many people’s incomes, including a 60 per cent increase in the minimum wage and a 15 per cent increase in pensions.
This is the first minimum wage hike for state employees since January 2014, when it rose from around LE700 to LE1,200.
The aim of these procedures is to smooth the impact of another wave of price hikes following the application of a new phase of the cuts on subsidies on fuel, electricity, natural gas and water bills starting in the first week of July.
With the increase in the minimum wage, the salaries of all employees in different positions and ranks in government service will be increased over time to reach as high as LE7,000 per month for top positions.
State employees are also set to receive a raise of seven per cent or a minimum of LE75, while those not subject to the civil service law will receive a 10 per cent raise, also receiving at least LE75.
Moreover, all state employees will get an extraordinary bonus of LE150 to help compensate for inflation.
The pay increases will cost the state budget LE30.5 billion, while the total amount allocated for salaries in the 2019-20 budget is estimated at LE300 billion, up from LE270 billion the previous year. The total number of state employees is around six million.
Employees will enjoy the new salaries as of 14 July, according to a Ministry of Finance announcement. Employees normally receive their salaries between the 24th and 28th of each month, but an exception is being made over the next few months to enable people to purchase their needs for the Eid Al-Adha holiday scheduled for 12 August and the start of the school year in September.
The government’s decisions were taken in response to complaints about an increase in living costs over the past two years and concerns at more hikes in prices at the beginning of the new fiscal year in July.
The government has implemented a series of tough economic measures, including devaluing the Egyptian pound, slashing energy subsidies, and introducing a value-added tax, (VAT) to help meet the conditions of a $12 billion IMF loan. The measures have left many of Egypt’s nearly 100 million people struggling to make ends meet.
Ahmed Abdel-Aal, an employee at the Ministry of Culture, said he was hoping for more. “As long as the bonus is a percentage of the basic salary, the increase is expected to be very limited,” he said.
Abdel-Aal said that the increase in his salary would not cover the changes in prices after the fuel subsidies cut. He is expecting an increase of LE300 per month, while hikes in prices will mean his expenses are estimated to increase by LE1,000 for the same monthly period, he said.
Abdel-Aal said that expert advice to alter spending behaviour to help combat rising prices could only be applied on non-essential items and that it would not work on basic goods such as food, medicine, education and transport.
On the other hand, Soheir Abbas, a widow with three children, was happy. Abbas, who receives her husband’s monthly pension, was satisfied with the increase of 15 per cent on her LE3,000 monthly pension since it would help to cover her children’s needs.
Employees and workers in public-sector companies who are not subject to the civil service law were annoyed, however, since they are excluded from the salary increases.
In response, the heads of some syndicates, such as spinning and weaving, construction, engineering, pharmaceuticals, infrastructure and food industries, presented a memo to Prime Minister Mustafa Madbouli requesting the application of the extraordinary bonuses to employees in their companies.
Khaled Al-Fiqi, head of the Engineering Industries Syndicate, told Al-Ahram Weekly that the government should apply the increases to workers in public-sector companies since President Abdel-Fattah Al-Sisi had announced that the extraordinary bonus would be provided to all regardless of whether they were subject to the civil service law.
According to the government, workers and employees in public-sector companies under Law 203 have their own regulations for bonuses in addition to receiving an annual share of profits.
Al-Fiqi explained that it would be unfair to exclude workers in loss-making companies from extraordinary bonuses designed to compensate for inflation.
He said they had the right to the bonuses by law and would defend it. According to recent newspaper reports, according to Law 76/2019 employees who are subject to Civil Service Law 81/2016 will receive an annual bonus at a minimum rate, while starting from 1 July all employees, whether subject to the law or not, will get an extraordinary bonus estimated at LE150 per month.
*A version of this article appears in print in the 11 July, 2019 edition of Al-Ahram Weekly under the headline: Salary increases promised