For the sixth time since 2022, private-sector workers in Egypt will be getting a raise to the minimum wage in March, when employees in privately owned entities will receive a minimum wage of LE7,000 instead of the previous threshold of LE6,000 introduced in May 2024.
“Raising the minimum wage stems from the government’s keenness to respond to current economic developments in a way that enhances social stability. The move is also consistent with international standards, as the International Labour Organisation [ILO] stresses the necessity of reviewing the minimum wage on a periodic basis to protect the purchasing power of families,” Rania Al-Mashat, minister of planning, economic development, and international cooperation, was quoted as saying in a ministry statement.
The minimum wage is determined through negotiations between company representatives and workers. The National Council for Wages oversees these discussions, which calculate the minimum income needed to cover the needs of workers’ families each month, taking into consideration the inflation rate.
The economic shocks that started in the aftermath of the Covid-19 pandemic and continued with the Russian-Ukrainian conflict followed by the Israeli war on Gaza and successive devaluations of the pound have resulted in unprecedented increases in the prices of goods and services over the last three or four years, feeding inflation rates, especially food inflation.
The government has also had to slash energy subsidies and increase electricity tariffs several times to reduce the fiscal deficit. Since 2022, to cushion these extra burdens, it has introduced four increases to the minimum wage for the public sector and five for the private sector.
Prime Minister Mustafa Madbouli said the minimum wage for the public sector would be raised in July as part of a wider social-protection plan. Next month’s raise is the first time the private sector’s increase has come ahead of that of the public sector.
Shaaban Khalifa, head of the Private Sector Workers Union, noted that according to Labour Law 12 of 2003, the minimum wage and periodic bonuses of private-sector workers, representing some 26 million workers, should be determined at the beginning of each calendar year as the financial years of most privately owned companies start on 1 January.
The salaries of workers in the government’s administrative apparatus, some four million workers, are included in the state budget, which extends over the fiscal year starting on 1 July.
However, Khalifa said that this had not been the case for the last two years as minimum wage levels had not changed at these times due to exceptional economic hardships. The new 17 per cent increase makes the overall hike in the private-sector minimum wage over the last three years worth some 191 per cent.
Khalifa said that what is more important than the size of the increase is the fact that the minimum-wage rise this time round does not include the employers’ share of workers’ social insurance payments, unlike the last 71 per cent surge which took the threshold to LE6,000 including the value of the employers’ contributions to workers’ social insurance.
A commentary by Alternative Policy Solutions (APS), an independent research group affiliated with the American University in Cairo, following the raise to LE6,000 showed that after deducting both the employee’s and the employer’s share of social insurance contributions as well as income taxes, the employee takes home only LE5,300.
“The LE7,000 figure is not large enough, but it has been accepted due to the current pressures on the economy as a whole as well as private companies,” Khalifa said.
He said that the international poverty level calculated by the World Bank comes to around $6 per day, which is equivalent to LE9,000 per month. “On the ground, this means that the private-sector employee has to work extra time to cover the minimum needs of his family,” he said.
According to calculations by the Egyptian Initiative for Personal Rights (EIPR), an NGO, in March 2024 the national poverty line for a family, updated for inflation, was LE7,180 per month, while the extreme poverty line, or only the ability to meet the basic food needs of a family of four, was LE5,962.
“These numbers have risen in recent months due to the continued rise in prices and the devaluation of the Egyptian pound. Therefore, the LE7,000 figure still falls short of the poverty line,” according to an EIPR commentary on its Facebook page.
However, 80 per cent of private-sector employees will benefit from the wage hike, Al-Mashat told the prime time TV talk show Kelma Akhira’s Lamees Al-Hadidi on Sunday.
Some observers believe that this percentage is exaggerated due to the fact that companies with fewer than 10 employees on their payrolls are exempted from the increases, a shortcoming that was also included in the previous increase.
“This exception is one negotiating compromise that the employees’ representatives had to make to convince the private sector to accept the most recent jumps in salaries: first, there was the 71 per cent hike from LE3,600 to LE6,000 and then this 17 per cent hike, which took the minimum wage to LE7,000. We are talking about an increase of more than 80 per cent in less than a year and half,” Khalifa said.
The problem with the exemption, according to the APS report, is that the bulk of private entities, putting the percentage as high as 97 per cent, employ fewer than 10 employees and thus are exempted from applying the increase.
The National Council for Wages’ latest decisions also include an annual periodic rise for private-sector employees of a minimum of three per cent of their social insurance wage, with a monthly floor of LE250.
The periodic increase, according to the labour law, should not be less than seven per cent, but the agreed-upon level is the best that the private sector can offer in the light of unprecedented increases in the costs of production, said Khalifa, who contributed to the negotiations.
He said that one of the gains of the negotiations with businessmen has been the introduction of a minimum hourly wage for part-time workers at LE28 per hour.
“This is the first time that a minimum level has been set for part-time workers, and it prevents the exploitation of those who don’t have full-time jobs,” he said.
A minimum wage is a globally recognised tool for protecting the wages of low-income workers. According to the ILO’s Global Wage Report 2020-2021, 90 per cent of ILO member states apply it.
The minimum wage in the Egyptian private sector has evolved since it was first approved in January 2022 to keep pace with ongoing economic changes. It started at LE2,400 and then rose to LE2,700 in January 2023, LE3,000 in July 2023, LE3,500 in January 2024, LE6,000 in May 2024, and LE7,000 in March 2025.
* A version of this article appears in print in the 13 February, 2025 edition of Al-Ahram Weekly
Short link: