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Towards wage equality in Egypt

Egypt’s private-sector workers are waiting in line for an increase in their minimum wage commensurate with that of state employees

Safeya Mounir , Wednesday 24 Mar 2021
Towards wage equality
Labourers in the private sector are waiting for the NCW’s decision
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Private-sector workers in Egypt are standing by in anticipation of a decision by the National Council for Wages (NCW) to raise their minimum wage to LE2,400 a month on a par with government workers as per a recent presidential decree.

The NCW, headed by Minister of Planning Hala Al-Said, is a tripartite council representing workers, the private sector, and the government. It sets national wage policies and adjusts minimum wages.

The NCW asked the Federation of Egyptian Industries last year to lay out sectoral and geographical studies with a view to a decision on raising the minimum wage, said Khaled Abdel-Azim, executive manager of the federation.

According to the studies, a raise was found to be not viable for all sectors, Abdel-Azim said. It would be hard to implement in the ready-made garments sector, for example, because it would raise the cost of production of goods that already face tough competition from exporters like Bangladesh, he added.

Last week, President Abdel-Fattah Al-Sisi ordered an increase in the minimum wage for civil servants to LE2,400. The decision is a positive move that will improve the economic conditions of individuals on limited incomes and poorer families, said Alia Al-Mahdi, a professor of economics at the Faculty of Economics and Political Science at Cairo University.

Once approved by the NCW, the decision to raise the minimum wage will be implemented in the formal private sector where financial transactions are conducted electronically and thus can be traced, allowing checks to be made to ensure that companies are committed to the presidential decree, Al-Mahdi noted.

However, it is possible that the non-formal private sector may not apply the raise because companies operating in the sector may barely cover their costs and would have to raise their prices in order to pay increased wage bills. This would have inflationary effects on the market, Al-Mahdi said.

The increase in minimum wages is part of a LE95 billion financial package announced by President Al-Sisi during his meeting with Prime Minister Mustafa Madbouli and Minister of Finance Mohamed Maait. The package includes increasing the salaries of state employees, approving two bonuses, and increasing the incentives for workers subject to the civil-service law and other state employees.

Meanwhile, the Egyptian Federation of Investment Associations (EFIA) is also preparing to launch an initiative to raise the minimum wages of workers in the private sector in line with the presidential decree.

Moharram Helal, head of the federation, said last week that the EFIA had asked affiliated associations to convene an urgent meeting to agree on mechanisms committing factories to increasing workers’ salaries according to the specific circumstances of each factory.

The revised salaries should not be less than LE2,400, he added.

However, the majority of factories are under pressure as a result of the repercussions of the Covid-19 pandemic, Helal stated, adding that investors and industrialists had promised to increase salaries when the present crunch subsides as a way of reassuring workers suffering from the rising cost of living.

The EFIA is one of the largest civil-society organisations in Egypt and comprises 60 investor associations and more than 40,000 affiliated facilities that employ over six million people.

While workers’ salaries were not low, Helal said, it was important to increase them, even if only slightly, to encourage workers to be more productive and to boost confidence between workers and industrial institutions.

Helal told Al-Ahram Weekly that investors are not obliged to increase workers’ wages, but that previous minimum-wage increases had been applied after negotiations. The majority of factory workers in Egypt currently receive the former minimum wage of LE2,000, save for workers in the ready-made garments sector as a result of competition with foreign producers such as Bangladesh.

Chairman of the Egyptian Trade Union Federation (ETUF) Gibali Al-Maraghi said last week that his federation, which represents 2.5 million workers in 23 unions, would present a request to the NCW to set the minimum wage of private-sector workers at LE2,400.

 Al-Maraghi said the ETUF would negotiate with representatives of business organisations at the NCW, in the presence of government representatives, in order to increase the minimum wage and improve the livelihoods of private-sector workers. 

Last year, the NCW approved a LE2,000 minimum wage for private-sector employees.

*A version of this article appears in print in the 25 March, 2021 edition of Al-Ahram Weekly

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