Why is the government not laying down the foundations for social justice?

Nader Fergany , Saturday 16 Nov 2013

Higher living standards and social justice — top priorities of the revolution of the people — should be based on both minimum and maximum earnings, and a reasonable ratio between the two

Finally, after several months in office, Egypt's interim powers — the presidency and cabinet — gathered some courage and revolutionary spirit and took a decision on minimum income for workers in the government and public sectors. But it appears to be an embarrassed and forced courage, and thus the outcome is too little, very late. There are also overtures that the minimum wage will not be applied to the private sector, or at least some components of it, although I believe minimum income should be higher in the private sector.

I believe minimum earnings (wages for work) should be higher in the private sector because all trusted available data indicates that the productivity of workers in Egypt’s private sector continued to grow over the past two decades, which increased the profits of employers. The value of workers' actual earnings decreased, however, because of stagnant wages and constant price hikes.

The announcement of minimum wage rates for government and public sector workers is the bare minimum to guarantee social justice, because it did not mention maximum earnings or wealth distribution. Genuine social justice is based on both minimum and maximum earning marks, and a reasonable ratio between the two in income and wealth.

One might notice that the interim powers took as much time to take a partial stand on social justice as did the 1952 Revolution to begin implementing a key measure in social justice in the history of modern Egypt — agricultural reform. That step genuinely achieved social justice because it imposed a maximum limit on agricultural land ownership in Egypt, which is the true measure of wealth in this country. It put a limit on something that is much more difficult than earnings.

It is clear that the interim government is uninterested in social justice because it ignored putting a limit on maximum earnings, although there were efforts by previous cabinets, and several sitting ministers predicted an announcement would be made soon about both minimum and maximum income. Instead of the anticipated announcement, the cabinet is procrastinating on the issue of maximum income.

It also appears the incumbent government is preparing for a higher cap on maximum earnings than suggested by previous cabinets, namely LE35,000. Unfortunately, the leader of the campaign claiming this is a difficult issue and proposing no less than LE40,000 as a maximum is the deputy prime minister for social justice, who is considered to be in the revolutionary camp. This means maximum income would be 35 times the minimum income, which is much higher than the normal ratio in most advanced capitalist countries.

The acting director of the Central Agency for Management and Administration recently said her agency is preparing to operate according to this cap.

But what should the ratio be between minimum and maximum income in a country like Egypt, which has for many years suffered from gross social injustice that triggered a great revolution of the people that made higher living standards and social justice two of its top three priorities?

Let us look at the extent of disparity in wealth in capitalist states that are capable of sustaining larger income gaps more than a country like Egypt, because of high living standards there and availability of effective services for human security other than income. Among members of the Organisation of Economic Cooperation and Development (OECD), the difference between minimum and maximum earnings in the world’s top 10 states is less than 30 times. It is no more than 22 times in Finland and New Zealand, which are well known for their social justice.

While it is true the ratio can reach 50 times in the US, a country where the obscenely rich and overwhelmingly poor co-exist, it is a blatant example of social injustice in the world. At the same time, we should not forget that all these countries pay effective unemployment benefit, and provide social services and health benefits, especially for the elderly or disabled.

Accordingly, I believe in a country striving to achieve social justice after a great revolution of the people that holds higher living standards and social justice as top priorities, maximum income should not be more than 20 times minimum earnings — even if only during the transitional phase. This means limiting maximum income to LE24,000 per month. Naturally, capping maximum income will meet technical problems in application, such as taking an inventory of salaries and other earnings of civil servants who are members of committees, for example, or have other sources of income.

Nonetheless, it should be clear to everyone the main obstacle facing the application of a maximum income is the fact that decision makers — and many of their posse and cliques — will lose a lot of money if a maximum cap is applied. All the ministers and those currently in power earn much more than this amount, as well as other material benefits. This is the reason why successive governments ignore the fact that imposing a reasonable maximum income would free vital resources to meet the cost of raising minimum income rates.

For example, if the cabinet approved LE24,000 as the maximum monthly income, this would save the state enough money by reducing payment to one person whose income might reach LE1 million monthly, to raise the income of 2,000 people/families from the supposedly average LE700 for government workers to the promised minimum income. Or it could raise 3,000 people/families from LE500 to the same minimum income.

Earning LE1 million or more per month in Egypt is ridiculous while there are still people who go hungry or are so poverty stricken that they search the garbage to find something to eat and feed their families. The majority of those who earn such incomes today have enjoyed this outrageous privilege for too long and must have accumulated great wealth, therefore they should do some good and contribute to making Egypt a better country, one marked by social justice after the great revolution by the people, through sacrificing a little of their worldly wealth.

According to statistics, if the government applies the maximum income cap on those earning LE1 million or more a month in the government and public sectors, this would free the necessary resources to fund the minimum income promised to all government workers. The large surplus that would remain can be deposited in a fund for other social justice purposes, such as guaranteeing the rights of the impoverished who crowd the streets of Egypt.

If the interim government took steps to establish a strong foundation for social justice in Egypt, perhaps this would be some guarantee that Egypt’s weak will not launch a third massive wave — after the first and second — of the great revolution of the people, in response to a blend of impoverishment and oppression that is produced and exacerbated by authoritarian regimes.

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