Government looks into complete reform of Egypt wage system within 6 months

Marwa Hussein, Wednesday 28 Sep 2011

In the aftermath of widespread strikes, the government is proposing changes to the legislation regulating labour and wages, as well as a complete revision of wage structures

No official promises yet on wage increases. (Photo by Mai Shaheen)

The Egyptian government is currently studying ways to fix the wage imbalances in the country, and Ahram Online can reveal some of the main recommendations.

The first concerns a revision of the role of the Supreme Council of Wages, which was created in 2003 as the entity in charge of drawing up wage policies.

It is suggested that the Council be reformed and its role properly enacted, with enlarged powers allowing it to become the main player in this area.

The study suggests modifying the 2003 labour law to give more powers to the Council, and to change the make-up of the entity itself to include non-governmental organisations and independent unions.

A revision of all the legislation that affects wages is another idea the government is considering.

Commentators have said legislation could be cancelled, and the decisions that allow some entities to give special incentives to employees could be revised, along with the civil workers law. Special incentives would then be fixed by legislation rather than by executives.

Finally a complete revision of the wage structure is also being considered.

Two solutions are proposed to replace the complicated wage tables that determine the wages of civil servants. Currently their wages are made up of many different categories of bonuses and remunerations. A new wage table could be made up of only three boxes: basic wage, remuneration and total.

The government is also suggesting a minimum monthly wage of LE700 for public employees and LE800 for the private sector.

The setting of a minimum wage would also be accompanied by a rise in the exemption level for income tax, up to a monthly LE12,000 from the current level of LE9,000.

Wage structures in Egypt have long come under criticism for their complexity and unfairness. Those who earn a regular wage, and represent 60 per cent of the labour force, are widely reported to suffer many imbalances.

For example, the basic salary on which the bonus is calculated, as well as pension payments after retirement are only about 20 per cent of the total wage.

In addition, wage-earners doing similar jobs throughout the public sector often earn very different salaries depending on the ministry or administration they work for. Not only that, there is no unified law regulating wages in the government. The same holds true for the private sector.

Advocates have long called for the setting of a minimum wage but their demands have become more strident after the fall of Mubarak.

In addition to a national minimum wage, some professions are demanding an exclusive minimum wage because of the nature of their work. Egyptian teachers, who went on strike last week, were asking for a LE1,200 minimum wage, gradually rising to LE3,000.

In response to teacher demands, Egypt’s prime minister Essam Sharaf said he has asked the Ministry of Finance and the Central Authority for Organisation and Administration to fix a minimum and maximum wage within the next six months.

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