Crisis to watch: Minimum wage dispute into 2011

Bassem Abo Alabass, Wednesday 5 Jan 2011

After a court demanded new minimum wage, dispute continues over the LE400 ($70) monthly sum proposed by the government

Permenant frictions: Wages rise at a rate less than inflation rate.

The government has yet to decide on a minimum wage. In 2011, the lack of progress on the issue is expected to give rise to protests and demonstrations.

2010 ended with this situation still pending, after the government was instructed by the court to set a minimum wage. The LE400 ($70) sum suggested by the government caused more distress than comfort.

The Wage Council, an official institution headed by the minister of economic development, is pushing for the LE400 amount. Prime Minister Nazif has expressed support for this low minimum wage, citing that it is necessary in order to avoid lay-offs and to encourage new job creation.

Countering the government, analysts say this sum is below the amount necessary to stay above the poverty line. Similarly, the Labor Syndicates Union and NGOs have also contested it.

With an anticipated rise in inflation rate in 2011, the minimum wage issue will become even contentious.

The hullabaloo started in 2008 as the world food crisis unfolded, causing Egyptian inflation rates to surge to16 per cent. As the food crisis spread, demonstrators pleaded for a set minimum wage, leading the government to put the issue on its agenda.

In 2010, when food prices hit record numbers, sit-inns escalated in front of the Parliament building, underscoring the urgency in modifying wage schemes.

In 2009, the Egyptian Center for Economic and Social Rights (ECESR), an NGO, filed a case with the Administrative Court, demanding a minimum wage be set at LE1200. The court ruled that the government must set a minimum wage compatible with costs of living, but did not specify an amount.

The newly elected Parliament is seen now as the last resort in the attempt to fix a fair minimum wage.

Samir Radwan, a newly appointed MP and a distinguished economist, told Ahram Online that he intends to seek a fair wage for Egyptians. Resolving the minimum wage crisis, he said, is considered the top priority on the agenda of Parliament’s economic committee, which he heads.

“It will be over soon and workers will hear very good news,” Radwan promised.

Radwan had prepared in 2010 a study of wages in Egypt for the Information and Decision Support Center (IDSC), showing that several laws have increased and modified the minimum wage in Egypt, the last being No. 53 of 1984, which defined the monthly minimum at no less than LE35.

 Legal minimum wage in Egypt has not been revised since 1984.

Manal Metwally of Cairo University presented a 2008 study which proposed minimum wages be set at varying levels, at LE400, LE965 and LE482, for the spinning and weaving sector, engineering and electrical industries, and wood industry and its products, respectively.

Despite all these calculations are promises, the goal of increasing the minimum wage seems very hard to accomplished, as the government's position remains intransigent.

"If the minimum wage was set any higher, it could discourage businesses from hiring or lead them to hire in a clandestine fashion," Minister of Finance Youssef Boutros Ghali said on television. He added that if the starting salary is set at LE400 all the other salaries will also consequently increase, thus putting pressure on business owners.

"If production does not match the extra cost, the business owner will just raise his prices," he told Al-Ahram Weekly in November, 2010.

Conversely, workers are ready to fight back. "It will not be solved until the government meets our requirements," Abd El Rahmaan Kheir, a member of the National Council for Wages, told Ahram Online.

"The new Parliament will not change much," Kheir added, citing that the majority of the MPs are related to the ruling National Democratic Party, and will, naturally, lead to debates biased in favour of the government.

"It is a very frustrating situation," commented Ibrahim Azhary, the general secretary of Egypt's Labour Union, who voiced skepticism regarding expectations to end the wage crisis in 2011.

"How will LE400 be enough for a family?" he lamented. Three years ago, the Labor Syndicates Union conducted a study showing that the minimum wage must be set at LE1000 for an individual to be able to meet life expenses.

Relations between workers and employers have "entered a dark hole, and if the government does not come up with a proper cure it will be a disaster," Azhary warns.

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