Egypt maximum wage finally set for July: Official
A long-awaited cap on public sector wages will take effect at the start of the coming financial year, say sources, but parliament is still debating the details
Marwa Hussein, Sunday 13 May 2012
Egypt's long-awaited cap on public sector wages will come into effect with the new financial year in July, six months later than promised by the country's rulers, an official has told Ahram Online.
"The bill in discussion in parliament will modify the military decree issued last year -- the implementation will start with the new financial year," said Safwat El-Nahas, president of the Central Agency for Organisation and Administration, last week.
In December, a decree from Egypt's ruling military set a national maximum wage at 35 times the minimum wage of a low-level employee at the same government body.
Parliament is currently debating revisions to the decree which will then be submitted to the lower house for a vote, El-Nahas explained.
The main modification to December's decree is the imposition of a monthly wage ceiling of LE50,000 ($8,300).
"We found that with no fixed ceiling the maximum wage of some officials can reach LE200,000 in some entities where the minimum wage is high. The actual decree permits large gaps between maximum wages in different public bodies," explained Saad Al-Hosseiny, MP for the Freedom and Justice Party and head of the parliament's budget and planning committee.
The new bill may also extend the maximum wage to all public institutions. December's decree excepted the Central Bank of Egypt (CBE), public banks and insurance companies.
"The maximum wage idea has seen some resistance from senior officials at public banks but this principle should be applied to the entire public sector and not only to the administration," said Abd El-Hamid Imam, an MP with the New Wafd Party.
Employers violating the LE50,000 total monthly income cap would potentially face a fine or prison sentence, and be forced to return all illegal payments, according to proposals.
According to Safwat El-Nahas, the number of high officials in public administration likely affected by the law is between 15,000 and 20,000, including ministers, assistants, governors, deputies and general managers.
"We are working on a database about all the leadership posts in the public administration. Each body should report the salaries and all other remunerations for its high officials," says El-Nahas said.
The idea of a wage cap -- touted by some as a means to achieve more equitable distribution of incomes -- remains controversial.
Unlike the minimum wage, capping income is not a common worldwide practice and is not part of the International Labor Organisation's(ILO) policies. The ILO, rather, advocates a progressive income tax to ensure more equitable pay.
"Maximum wage is not a common practice but it is a popular demand of the 25 January revolution," admits El-Nahas.
"It is a temporary solution to fix wages irregularities till a global reform of the wage structure and policy is ready. This will take some time."
For Saber Barakat, an activist and former trade unionist who advocates capping wages at 15 times the minimum, the proposed bill is unacceptable because it will not achieve its ostentible goals.
"The logic of fixing a minimum and a maximum wage is to limit the disparities and to control prices," he says.
"If the revenues collected by private sector executives remain without limits, their high purchasing power will push the price up and the poor will remain deprived of access to certain goods."
In place, he calls for a comprehensive reform of wages so that it is balanced across the entire public administration.
"The wage disparities between people performing the same work within the various departments are not acceptable," says Barakat.
He also criticises the fact that bonuses and allowances that Egyptian workers habitually receive are often in excess of their base salary, making a cap very difficult to calculate.
"I prefer to talk about rules and criteria rather than figures," he says. "If the high officials want to increase their wages, we are not opposed -- on condition we give lower-level employees a decent salary as well."
Disparities between wages in the public sector in Egypt are striking: some workers receive little over LE700 per month, while others in senior posts may receive amounts in excess of LE1 million.
While the difference between the basic salaries of junior and top-level public admin employees is about 1 to 5, allowances and bonuses for high officials are theoretically unlimited.