The newly set minimum monthly wage of EGP 7,000 (almost $138) is generally lower than what the private sector already pays workers in most industries in Egypt.
This week, the National Council of Wages (NCW) announced that the minimum wage for private sector employees would increase from EGP 6,000 to EGP 7,000.
According to the Ministry of Planning, Economic Development, and International Cooperation, this adjustment will benefit approximately 14 million workers.
The action came amid various protests held by employees in private-sector-owned factories to demand that management implement the minimum wage in their establishments.
Meanwhile, government employees and pensioners eagerly await the announcement of a social relief package that will be rolled out before Ramadan, as Prime Minister Mostafa Madbouly stated.
A well-studied decision
“The minimum wage increase is based on thorough studies done in the second half (2H) of 2024 and projections for 2025,” Alaa Al-Saqti, vice president of the Egyptian Federation of Investors Associations (EFIA), told Ahram Online.
He described the new wage threshold as reasonable, given expectations of inflation contraction, which would help stabilize prices and enhance workers' purchasing power.
On Monday, Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS) reported that Egypt’s annual inflation in urban areas slowed to 24 percent in January, down from 24.1 percent in December.
Meanwhile, the country’s core inflation, calculated by the Central Bank of Egypt (CBE), dropped from 2.2 percent in January 2024 to 1.7 percent in January 2025.
Core inflation also fell from 23.2 percent in December 2024 to 22.6 percent in January 2025.
According to Rania Al-Mashat, the planning minister, Egypt’s inflation rates are expected to decline further in the readings the CAPMAS and CBE will announce for February and March.
Challenges facing private sector
However, Bahaa Demetri, the chief of the Industry Committee at the National Dialogue, warned that current economic pressures could force many private sector companies to declare their inability to apply the new minimum wage formally.
He noted that the wage increase remains a directive rather than a mandatory obligation, adding that roughly 80 percent of businesses did not adhere to the previous minimum wage, which was set at EGP 6,000.
“This raises questions about the feasibility of enforcing the new wage threshold,” Demetri pointed out.
He also explained that increasing the minimum wage by EGP 1,000 (almost $20) could raise the maximum to EGP 35,000, significantly burdening private enterprises struggling to maintain stability.
The maximum wage is calculated as 35 times the minimum wage.
Private sector’s growing role
Al-Saqti highlighted that, for the first time, the increase in the minimum wage for the private sector was announced before a similar package to the state employees, reflecting this sector's growing importance in the Egyptian economy.
He clarified that the new wage floor mainly applies to entry-level workers, as most medium-sized and large-sized companies have been paying wages above the minimum for over two years.
Al-Saqti also noted that neighbouring countries such as Saudi Arabia, Iraq, and Libya are attracting Egyptian labour with doubled monthly salaries reaching EGP 15,000 (about $269).
This highlights the necessity of raising Egypt’s minimum wage to retain skilled workers and preserve labour market competitiveness, said Al-Saqti.
He also stressed that the increase in the minimum wage for the private sector reflects the government’s commitment to ensuring a decent standard of living for workers, whether they remain in Egypt or seek employment abroad.
Calls for investment incentives
Al-Saqti urged the CBE to cut interest rates by four percent in its upcoming meeting, which would lower factories’ borrowing costs, ease financial burdens on investors, and mitigate any negative impact of higher wages on production costs.
The first meeting of CBE’s Monetary Policy Committee (MPC) in 2025, scheduled for 20 February, will review the key interest rates in light of inflation rate trends.
The CBE hiked the key interest rates by eight percent in 2024, bringing the total number of hikes applied since March 2022 to 19 percent (1900 bps).
This aligns with its monetary tightening policy to contain the soaring inflation resulting from the Russian-Ukrainian war.
Al-Saqti also stressed the need for rigorous market oversight to prevent unjustified price hiking, especially since input costs have not changed significantly.
For his part, Demetri argued that labour costs represent only a tiny fraction of total production expenses, making price hikes unlikely.
He pointed out that ongoing stagflation has forced factories to reduce prices to stimulate sales and curb production capacity, keeping them competitive.
Private sector’s minimum wage evolution
Since January 2022, Egypt’s minimum wage has lost approximately $14 in value due to currency depreciation. Egypt has applied four waves of its fair local currency pricing policy against other hard currencies.
The private sector's minimum wage has been raised five times since January 2022. Yet, its value has dropped due to the devaluation of the EGP.
The minimum wage for private sector employees was EGP 2,400 ($152.28), with the USD rate being EGP 15.26/$1. It increased to EGP 2,700 ($91) in January 2023, when the USD rate recorded EGP 29.61/$1.
In July 2023, the minimum wage was raised to EGP 3,000 ($97), with the USD rate being EGP 30.85/$1. Six months later, in January 2024, it increased to EGP 3,500 ($113), with the USD rate being EGP 30.85/$1. Then, in May 2024, it was raised to EGP 6,000 ($194), with the USD rate registering EGP 30.85/$1.
Small retailers to gradually adjust!
Hesham El-Degwy, head of the Foodstuffs Division at the Giza Chamber of Commerce, noted that the new minimum wage in the private sector aligns with salaries already paid by factories, hypermarkets, and wholesale companies.
However, small retail shops across Egypt may struggle to meet these wage levels immediately. He expects them to gradually raise wages to keep pace with the new minimum threshold, added El-Degwy.
“That small retailers have been periodically increasing employee wages to match rising commodity prices, independent of official mandates,” he added.
“Despite their dominant role in production and trade cycles, these retailers employ only a small fraction of Egypt’s total workforce,” he explained.
25% discounts on staple goods!
El-Degwy reassured consumers that food producers and traders would not raise prices in response to the wage increase, particularly given the stability of the Egyptian pound against the dollar and the overall economic climate.
The official exchange rate currently stands at EGP 50.67 per $1.
He also highlighted traders' commitment to affordable prices, especially during Ramadan.
The annual "Ahlan Ramadan" markets will offer discounts ranging from 25 percent to 30 percent on essential goods.
Short link: