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Minimum wage in Egypt is irrelevant for poverty: ILO expert

Minimum wage legislation will not affect the huge numbers of workers employed by the informal sector of the economy, meaning that it will not be enough to tackle poverty

Ahmed Feteha, Tuesday 14 Jun 2011
Minimum wage
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The manner through which the government plans to implement minimum wage regulation in Egypt will have minimal impact on improving the poverty situation, argues Dorothea Schmidt, senior employment expert at the International Labour Organization (ILO).

“The LE700 that the government wants to set as a minimum wage in both the public and the private sectors shouldn’t involve that much debate," said Schmidt to Ahram Online on Tuesday, adding that large companies wouldn't be harmed by this step, as it implicates only a small increase in production costs.

Schmidt believes that informal workers are ignored by the new policies, as they do not tackle the wage conditions of those employed in the informal sector, a group with the lowest average wage rates in the country.

Statistics suggest that over 35 per cent of Egypt's labour is working in vulnerable jobs, lacking social insurance, health insurance, unionisation, etc. Informal employment in the private sector includes up to 75 per cent of total labourers.

Schmidt explains that women, a group that particularly suffers from injustice in the labour market, will have little benefit from the minimum wage legislation due to employment conditions.

"Out of every 100 women in Egypt, 20 are active in the labour market. Out of these 20 women only 10 are actually able to get jobs; out of these, only 2 are formally employed and will possibly benefit from the wage regulations," she adds.

"All these debates on minimum wage will not help improve living conditions of Egyptians," she concludes.

Schmidt explains that since the informal sector is very large and highly deregulated, it is unlikely to comply with any minimum wage regulation set by the government.

The ILO expert suggests working with the informal sector, assisting it to raise productivity, as an alternative way to improve living conditions for labourers in Egypt. 

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