The National Wages Council’s (NWC) decision to set a minimum wage for the first time for workers in the private sector at LE2,400 per month became mandatory for private-sector establishments on 1 January.
Under the new regulations, private-sector employees will also be eligible for an annual raise equivalent to a minimum of three per cent of their insurable income.
The government decided not only to increase the minimum wage for the public sector from LE2,000 to LE2,400, but also to adopt the same minimum wage for the private sector in June last year. While the first decision was enforced immediately, the implementation of the latter was postponed to January this year to give companies a chance to adapt.
Hala Al-Said, chair of the NWC and minister of planning and economic development, said that setting a minimum wage for the private sector was an important step to ensure proper living standards for all employees, adding that companies suffering from the impacts of the Covid-19 pandemic would be exempt for a period from applying the new minimum wage.
She noted that the NWC had received 3,090 individual requests and 2,855 requests from 22 sub-sectors during the period slated for receiving postponement requests from July until the end of October 2021 and that these were being examined in accordance with Article 2 of Decree 57/2021.
This states that if an establishment is exposed to economic conditions that make it impossible to meet the minimum wage, it may apply for an exemption. All requests must include justifications for the exemption and be accompanied by the relevant documents.
The application of the minimum wage would be postponed for establishments that had submitted exception requests until mid-February, when the examination of requests is expected to be completed, Al-Said said.
Shaaban Khalifa, head of the Syndicate of Private Sector Workers, said in a press statement that the number of beneficiaries of the minimum wage decision for the private sector was about 35 million workers employed in a total of 3,738,000 private-sector companies.
He called for a binding mechanism on business owners to implement the minimum wage due to fears among workers that some might not implement it under the pretext of the economic situation resulting from the coronavirus pandemic.
He noted that Law 12/2003 stipulates that the NCW shall be responsible for setting a minimum wage at the national level and in all sectors in its Article 34, taking into account living expenses and measures that ensure a balance between wages and prices.
Magdi Al-Badawi, a member of the NCW, said that due to the difficult economic consequences of the pandemic, the NWC would consider requests from companies wanting exemptions. Evaluations would be carried out according to the financial situation of the institutions concerned and a wage close to the minimum would be identified until their financial situation became more stable, he said.
He added that there would be no absolute exemptions and that the NCW would hold a meeting every three months to look into the circumstances of such companies and their ability to implement their commitments.
According to a statement from the Ministry of Planning, entities that have applied for the exemption from the minimum wage include some in the ready-made garments and textiles sectors, especially those that export abroad, in addition to some companies in the tourism sector, private schools, and some retail stores.
Al-Badawi said that current labour laws do not include severe penalties for violators of decisions of the NWC, but that the new law being discussed in parliament will include such penalties. Fines on institutions that do not adhere to the decision will be imposed in accordance with the current labour laws for the time being.
The Egyptian Businessmen’s Association (EBA) has announced that it will submit a request to the government to exclude several sectors from the application of the minimum wage, most notably labour-intensive sectors such as spinning and weaving, agricultural companies, and packaging companies, in the light of currently higher running costs.
Ali Issa, head of the EBA, said in a statement that the government had excluded companies suffering losses as a result of the coronavirus pandemic, but the same exceptions should be applied to labour-intensive sectors so that they can preserve employment.
He said that Egypt’s private-sector companies were committed to implementing the minimum wage for workers at the beginning of the year in line with the decision by the NCW with the aim of preserving businesses and employment.
*A version of this article appears in print in the 6 January, 2022 edition of Al-Ahram Weekly.