The General Egyptian Federation of Trade Unions (GEFTU) and parliament’s Labour Committee announced this week that they were rejecting the government-drafted amendments to the Public Enterprise Law 203/1991. The law regulates eight government-owned holding companies with 121 affiliated subsidiaries operating in all kinds of businesses and employing close to 250,000 workers.
Gibali Al-Maraghi, chairperson of parliament’s Labour Committee, said following a meeting on 24 February that the amendments introduced by Public Enterprise Minister Hisham Tawfik would negatively affect the interests of workers and trade unions and pave the way for privatisation.
“After much discussion of the amendments by the committee, all members agreed that they were not in the interest of workers and companies in all industrial sectors in Egypt,” Al-Maraghi said.
Committee member and GEFTU Secretary-General Mohamed Wahba said the amendments opened the way for privatising most public sector companies in a way that was detrimental to the interests of thousands of workers. “Article 38 of the newly amended law states that a company incurring losses that exceed half of its capital shall be liquidated,” said Wahba, adding that this would push 40 per cent of companies into liquidation and would do a lot of harm to workers.
Wahba said workers and trade union activists had expected that the amendments would reflect a new government policy aimed at upgrading industrial companies. “But we were surprised that the amendments opted for the easy way out — which is liquidating and selling companies rather than streamlining their performance,” Wahba said.
Leftist MP Abdel-Hamid Kamal said the new amendments stripped workers in loss-making companies of receiving profits, not to mention that they made it possible for the boards of these companies to be dismissed. “The boards of all industrial companies include elected members representing workers in line with the labour law. The membership of these cannot be abolished or suspended,” Kamal said, adding that for these reasons he had called upon all Egyptian workers to “unite against this law”.
MP Maysa Atwa said the amendments stripped workers of having a seat on the boards and public assemblies of companies. The fact that the boards and public assemblies would no longer have representatives of the workers under the amendments would enable the liquidation of companies without protests, she said.
The amendments clearly aimed to marginalise trade unions in order that they would not be able to play any role in defending the interests of workers in industrial public sector companies, added MP Sulaf Darwish.
Darwish proposed that ahead of being discussed by parliament, the amendments to the public enterprise law should become the subject of national dialogue. “The government should first listen to the viewpoints of workers and trade unions and then submit the law to parliament,” she said.
Al-Maraghi said the objective of any new amendments to the public enterprise law should be to safeguard national industry against unfair competition, preserve the constitutional rights of workers and public ownership in these companies, and attract investments to upgrade their performance.
He pointed out that when the public enterprise law was passed in 1991, it aimed to modernise the public sector in terms of either opening the door to the private sector to have shares in companies affiliated with it or selling companies to strategic investors, in either case developing the companies financially and industrially.
However, what had happened was that “over time the government used this law to kick off a massive privatisation programme that led to selling two-thirds of the companies affiliated with the public sector,” he said.
MP Mohamed Wahba said the 1991 privatisation programme had drastically damaged the industrial sector. “In its drive to implement the International Monetary Fund’s [IMF] recommendations [back then] in this respect, the government rushed to sell most of the companies, even if these were sold at less than their real value and workers were forced into early retirement,” Wahba said, arguing that “the new amendments aim to maintain the same policy, which will do a lot of harm to workers and trade unions.”
Following a cabinet meeting on 26 February, the government of Prime Minister Mostafa Madbouli approved amendments to the public enterprise law. A statement said the amendments were in line with the economic developments Egypt has seen since 1991 and over the past 29 years.
“The amendments aim to update the legal rules regulating the performance of public sector companies and restructure their financial and administrative systems,” the statement said.
Minister Tawfik said the amendments simply sought to increase the contribution of the public sector companies to the national economy and raise their competitive edge in a way that would help the state to reap more profits from them.
The cabinet statement said the amendments also obliged holding companies and their affiliated subsidiaries to abide by transparency and governance rules. “The public assemblies of companies will be required to boost governance, oversee company boards, and remove them if they deliver poor results or fail to secure profits,” the statement said.
Tarek Metwalli, deputy chairman of parliament’s Industrial Committee, told Al-Ahram Weekly that MPs were divided over the law. Most members of the labour force committee saw the amendments as mainly aiming to launch a new wave of privatisations rather than improve the industrial sector, while other MPs affiliated with the Industrial Committee saw the amendments as necessary to stem the tide of losses in public sector companies, he said.
He said discussion of the law was not over and there would be comprehensive deliberation of the 26-article law with Tawfik and Minister of Manpower Mohamed Saafan and with the GEFTU’s leading officials. “The law will be discussed in a series of meetings because of its important role in saving the public sector companies from collapse,” he said.
According to Metwalli, Egypt’s public sector companies suffer from two major problems: redundant employees and outdated administrative systems and production lines. “The law addresses these two problems, particularly in the sector of spinning and weaving by modernising production lines and providing training for workers, as well as upgrading administrative systems,” he said.
He added that the new amendments to the public enterprise law would also include a chapter on governance and transparency. “The law will oblige all companies regulated by the public enterprise law to publish their financial statements,” Metwalli said, and “it will also provide incentives to encourage companies to list their shares on the stock market.”
*A version of this article appears in print in the 5 March, 2020 edition of Al-Ahram Weekly under the title: Workers unite against new law