Egypt’s new minimum wage disappoints many

Cairo, Egypt – Despite the ongoing economic malaise, authorities here have recently announced a rise in the minimum wage for the country’s public sector workers – after years of debate – but critics say the amount is far from sufficient.

The new government decided to raise the minimum monthly salaries of all state employees from 700 Egyptian pounds ($102) to 1,200 pounds ($174) as of January 1, 2014, Interim Prime Minister Hazem el-Beblawi said at a televised news conference.

A decision on whether to extend that to private sector workers is still pending. 

Interim Deputy Prime Minister Hossam Eissa said “sweeping popular demand” and comments such as “the people started to say that the government is hesitant” had forced the move. “We thought that we couldn’t wait any more,” said Eissa.

However, labour rights activists pointed out the mininum wage increase will still leave many public sector employees short. 

Mnay Egyptian workers will receive a wage raise [AP]

“We were demanding that amount as a minimum monthly salary in 2010. They can’t decide to put it into effect four years later,” Dalia Moussa, from the Egyptian Centre for Economic and Social Rights, told Al Jazeera.

“Are they aware of how much higher inflation is, or how much the Egyptian pound has dropped in value?”

The volatile political situation and sporadic violence since the 2011 uprising that ended the 30-year rule of Hosni Mubarak has scared away many foreign investors and tourists, severely impacting Egypt’s economy. 

Foreign reserves have dwindled by about half pre-2011 levels to $18.9bn, and the local currency has lost about 17 percent of its value against the US dollar since the 2011 revolution.

“This decision could benefit the newly hired employees as it sets a starting point for their salaries, but it did not mention the older workers whose salaries have taken years to reach it,” Moussa said.

Figures from the official statistics body – the Central Agency for Public Mobilisation and Statistics (CAPMAS) – show the Arab world’s most populous nation boasted a workforce of 27.2 million in the second quarter of 2013. According to the International Labour Organisation, public sector employment accounts for about one-third of total employment in Egypt. 

“The government will look into implementing a gradual wage system that is based on years of service, academic qualifications and experience,” Alaa Awad, spokesman for the ministry of manpower, told Al Jazeera. He said the decision would affect about 6.2 million workers.

“This a revolutionary and courageous decision given the rough economic situation the country is going through,” said Awad.

In a bid to ease the financial burden of Egyptians, the government has also announced scrapping public school fees, and discounting the price of basic food items by 10 to 15 percent.

Slower growth

Since the 2011 revolution, Egypt has grappled with economic growth of about two percent, its slowest in decades. 

In the fiscal year that concluded on June 30, the budget deficit reached 240 billion pounds, representing 13.8 percent of gross domestic product, according to the ministry of finance.

This was a 43.9 percent increase from the year earlier deficit of 1667.7 billion pounds. The jump was attributed to a hike in state expenditures and the repayment of interest on domestic and international debt. 

“This year’s fiscal budget did not have room for such a [minium wage] hike, and therefore this is the maximum the government could have provided at the current time,” Awad said, responding to dissatisfaction with the pay rise.

But Fatma Ramadan, a member of the Executive Committee of the Egyptian Federation of Independent Trade Unions, accused the government of “siding with the bureaucrats, whom they’re a part of”, and asked who will be saddled with paying for the wage hike.

“This is not a move that reflects the revolution’s demands,” Ramadan said. “Will they be deducting from the poor, since they can’t touch the rich?”

Moussa, meanwhile, alleged the government was “bribing businessmen” to set minimum wages in the private sector, in exchange for cutting workers’ health insurance. “This means that employees will receive slightly higher wages, which will be deducted from their insurance – all that to guarantee that business owners don’t lose extra pennies.”

But government spokesman Awad argued the cabinet “could not impose minimum wages on those who work outside its umbrella. The National Wages Council is conducting talks with those concerned to reach a consensus, which should be announced soon”.

As for proposals to impose a maximum salary ceiling, which would impact higher-earning employees, Awad said the cabinet would focus on employees who “exceed 53 times the minimum value”.

“All these decisions are well studied and are not taken randomly,” he said.

Ramadan said it was not only a matter of raising Egyptian workers salaries, but also reining in inflation. Strict price controls should be implemented along with pay increases. “Merchants have already started inching up prices,” she said.

According to CAPMAS, inflation in urban areas in August stood at 9.7 percent while several economic experts predicted that consumer price inflation would reach double digits by 2014. 

Kamal El-Fayoumi, a worker at the state-owned Weaving and Textile Company in Mahalla City, who organised anti-Mubarak rallies, called the new minimum wage “a farce”.

“If the government wanted to take action, it wouldn’t have postponed it to the beginning of next year, especially since it’s an interim government and may be gone by then,” he said. “The next government can easily clear itself from its predecessor’s decisions.”

El-Fayoumi also said more pressure should be put on Egypt’s leaders to provide living wages that address rising costs. 

“We will use statistics and figures to show how the government could have done this properly,” he said. “But after two revolutions, such a decision is appalling,” he said.