Pining for the public sector: Egypt workers tell of privatisation woes

Marwa Hussein, Thursday 6 Oct 2011

The recent renationalisation of four Egyptian firms has emboldened workers at formerly state-owned enterprises who long for the stability and security that was sold in the name of the free market

Egypt workers
Egypt workers (Photo: Ibrahim Mahmoud)

For the 4,300 workers at Arab Polvara's factory in Alexandria, returning the textile company to public ownership seems to be their lifes' dream.

"Are you willing to give the state your 5 per cent share so we can go back to the public sector?" yells one employee at a massed group of his colleagues.
The answer from the crowd comes back loud and clear: "YES!"
After an Egyptian administrative court returned three privatised companies to the state in September, workers at other formerly state-owned enterprises are reconsidering their positions, eyeing what they believe are the overwhelming advantages of the public sector.
The three companies renationalised two weeks ago -- Tanta for Linen, Shebin for Spinning and Al-Nasr Company for Steam Boilers and Pressure Vessels -- are not the only ones that have seen ownership disputes in the eight months since the overthrow of former president Hosni Mubarak. A similar legal verdict returned retail institution Omar Effendi to the public sector in May.
But it is Egypt's beleaguered textile sector that is seeing some of the most fervent calls for nationalisation from workers; a trickledown effect of years of neglect by industry owners and increasingly damaging competition from the international market.
Workers at Arab Polvara Spinning & Weaving Company, who have held three sit-ins since Mubarak's ouster in February, are the latest to raise the demand. Previous demonstrations highlighted nine specific changes needed to improve working conditions, but the open sit-in that began on Sunday 2 October focuses on just two: an increase in employee salaries and the renationalisation of the company.
Protesters have even made a proposition to Arab Polvara's private investors, who own more than 80 per cent of the company.
“They can sell one of the company factories and unused land to pay back shareholders. Workers own about 5 per cent of the company but we will give our share to the [government-owned] holding company for spinning and textile which still owns 17.5 per cent," a spokesman for the workers suggested. 
By contributing their shares to the holding company, the latter would need to acquire just over 25 per cent more of the shares to give them a majority, allowing them to become Polvara's main decision maker.
Instability: the workers' worst nightmare
In discussion with workers of the recently renationalised companies, Ahram Online heard the same argument for public ownership time and again: a preference for stability over fear of the future.
Workers at  the three companies returned to the state this year, as well as Polvara, all believe the former owners were seeking to liquidate their investments and cutback on the labour force.
In all four cases, investors partly sold company assets like land, equipment and factories. 
"Under the public sector there was stability. After privatisation, they started selling the equipment and closing factories, displacing workers," said Ragab El-Shimy, a shopfloor worker with Shebin for Spinning.
Workers at other companies agreed.
"We had nine factories working at full capacity [under state ownership], now we have only two," said Abdel-Aaal Mahmoud, an employee with Tanta for Linen. The investors who own part of Polvara have already sold two factories.
Even the granting of one of the much-touted supposed benefits of private ownership -- higher wages -- has failed to satisfy employees at the Al-Nasr Company for Steam Boilers and Pressure Vessels. Despite pay rises, workers say they would rather see their employer return to the public sector where they felt more secure.
"We are getting better wages but the administration policy is unfair. Not only that, they wanted to dismantle the factory and sell the land to make a resort," said Adel Qorani, repeating a persistent claim that private owners seem more intent on stripping and selling assets than sustaining the businesses to which they are ostentiably committed. 
After September's court ruling, Nasr Company workers were paid salaries for that month and told to collect their October salaries from the state, according to several employees.
All four companies also saw labour cutbacks when they were sold to the private sector, despite agreements signed by investors to guarantee workers' rights.
In 2008, Arab Polava had more than 10,000 employees against 4,300 today. Likewise, Tanta Flax and Oil employed 1,700 in 2005 but now has only 200 permanent workers and another 400 on temporary contracts.
Remaining workers think it's only a matter of time before they join the long list of redundancies.
"There was an article in the sales contract stipulating that the investor should keep the workers, but many of were forced into early retirement and Eisha Abdel Hadi, minister of manpower at the time, supported the investor against us," said one employee, Ashraf Al-Saye, at Tanta for Linen. Early retirement was a scheme, workers says, was used by the new owners of privatised firms to offload tens of thousands of workers without raising complaints.
Other workers backed up these claims of investors seeming to flouting agreements.
“There are industrial rules that should be followed in the private as well as the public sector, working politics should not be linked to whether the company is private or public," said Adel Korani, an employee of Al-Nasr. "But the private sector in many cases in Egypt is not serious."
Korani repeated a belief, also held by many other workers, that investors snapped up certain companies because the enterprise included a valuable plot of land. After obtaining the real estate at a knock-down price, investors were then poised to ignore the supposed restrictions placed on selling it.
The timeworn idea that wages are better in the private sector also proved false, according to the testimonies of the workers affected by privatisation. As well as a lack of job security and allegedly rampant corruption, many employees talk of deterioration in both their working conditions and their wages.
In many cases, workers lost a great deal of the benefits they used to get automatically by virtue of being part of the public sector. 
"When it comes to benefits, the private owners tell us we are not public anymore. But when the benefits are for the investors, they treat us as a public company," said Adel Saad, a member of the workers' syndicate at Polvara.
"Because we have an unclear legal status, workers didn't get the benefits which the government gave to the public sector -- like the 200 per cent bonus that was announced."
Salaries at Sabahi, a publicly-owned textile factory near Polvara's premises, are higher despite reports that the company’s production is falling. 
“After privatisation we never got our share of profits, and to get the annual bonus we had to struggle. The daily meal and our health care disappeared too," said Adel Al-Shimi, from Shebin for Spinning.
At Polvara, some workers swear they have not been paid their entire allowances since 2006.
Wages at many Egyptian companies and institutions are calculated by a complex system of basic wages, bonuses, allowances for meals and strenuous work, as well as profit shares. On average, the basic public sector salary representes just 20 per cent of the total wage, leaving much of an employee's real income dependent on the good will of their employer.
"They give us the annual bonus after a long struggle. After that, if a worker deserved a bonus of, say, LE50, the administration would find a reason to pay him only 10 or 15 pounds," said one Polvara employee. 
In some cases wages even fell -- as salary sheets for the textile firm obtained by Ahram Online showed. 
Privatisation also meant 1,800 of Polvara's current employees received shares in the company. 
But these stakeholders have received no returns on these stakes since 1997 -- presumably because the company has made few profits. Reuters figures show Polvara lost a net LE4.7 million in the first quarter of 2011.
For the workers, who believe losses were planned by investors to give them a reason to sell the companies, this is not an excuse.
"They are complaining that the company is losing? Fine. Give it back to the public sector. What better deal could they ask for?” demanded one Polvara worker.
Workers at all four companies also talk of colleagues who were unfairly dismissed after asking for their rights -- indeed the third demand of Polvara employees was the rehiring of three colleagues that were fired.
Healthcare, one of the prized benefits of public employment, also deteriorated markedly after privatisation, say employees.
"I pay LE50 for medical insurance and when I go to the clinic they just give an aspirin," said one Polvara worker. "The director of the clinic has a industrial diploma [not a medical one] and the family healthcare we used to benefit from also stopped."
Add up all that workers claim to have lost since privatisation -- from wages to employment rights and healthcare -- and it's perhaps little wonder they talk of a persistent workplace atmosphere of insecurity and oppression.
"Before I felt that the company was mine, now I feel like a slave," lamented one worker. 
Elsewhere on the Polvara company premises some of his colleagues were beginning a hunger strike.
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