Workers doubt Mubarak job pledge

Egyptian President Hosni Mubarak has pinned his party’s campaign for this month’s parliamentary elections on pledges of jobs; but workers and analysts say privatisation might be undermining his plans for job creation.

Reformers appointed by Mubarak have revved up the economy
Reformers appointed by Mubarak have revved up the economy

A group of relatively young reformers in Mubarak’s National Democratic Party has overseen sales of state-owned companies at an accelerating pace, stimulating so much interest in the economy that traders say the stock market can barely cope.

However, workers in companies slated for sale, many of which are overstaffed and poorly run, fear the investment boom will take their livelihoods with it and some analysts doubt the sell-offs can go hand in hand with job creation.

“Mubarak’s promises of more jobs are not compatible with the privatisation process at all and his promise to provide four million jobs is really a dream, wishful thinking,” Abdel Hameed Ghazali, an economics lecturer at Cairo University, said.

“It’s harmful.They are expelling the employees, they are closing down a viable project, stopping production which is not good for the economy as a whole. The only good thing is that we are getting money to cover the budget deficit,” he added.

Economic figures

The government says the unemployment rate is about 10%; but unofficial figures put it at 20%.

The UN ranks the country as 119th in human development and says one in five Egyptians lives in poverty.

The UN says one in five Egyptianslives in poverty

The UN says one in five Egyptians
lives in poverty

By contrast, figures show revenues from privatisation jumped almost 800% to 5.09 billion Egyptian pounds ($883.7 million) in the three months to the end of September, compared with 595 million pounds in the same period a year ago.

Gross domestic product, a key indicator of economic health, rose by more than 5% in 2005 from 4.1% a year earlier, August data showed.

Traders say trade volumes on Egypt’s stock market, which hits new highs almost weekly, are so heavy that the trading system has slowed down, making them miss trades.

Most of Egypt’s business community see privatisation as the way forward, arguing that growth in new businesses will more than compensate for the loss of jobs in old state companies.


However, a senior economist at one of the country’s leading investment banks said he had reservations about the feasibility of Mubarak’s pledge of more jobs.

Hani Geneina, senior economist at EFG Hermes, said state companies had to move towards privatisation to compete in a new environment; but privatisation did lead to lay-offs.

The president’s son, Gamal, is anadvocate of economic reforms

The president’s son, Gamal, is an
advocate of economic reforms

He said he doubted that government job-creation plans such as building more factories would alleviate the problem.

“It may be cheaper to just lay them off. That’s what happened in the 1990s. There’s no magic formula to retrain everyone. I believe anecdotally that’s still the case,” he said.

“The government … said they are going to supply so many factories and they are going to employ this many people.
The key thing is that you have to look at the demand side as well. Will there be demand for all this supply or not?” he added.

Profit necessary

Investment Minister Mahmoud Mohieldin, the government’s chief privatisation advocate, said that he tried to ensure buyers retained the workforce; but he could insist on this only if the company was making a profit.

“One of the main rules … is basically to keep not just the number of employed but the very same people who are working and to have an investment plan and programme to help increase jobs,” he said.

“We have never seen anything good come of privatisation. What the investor is going to do isn’t clear. We don’t know him”

Shawky al-Sharkawi
Factory union leader

“I have this luxury if the company is a profit-making one. If the company is not a profit-making one …I  don’t really have adequate bargaining tools so I resort to the early retirement schemes,” he added.

Textile factory boss Mohamed Hassan described a government redundancy scheme whereby workers could retrain and were then offered money to start a business.

“If he does not like this, he can take the money and take early retirement. There will be no one left out on the street,” Hassan said, describing privatisation as a matter of negotiation and agreement between the investor and employees.

No negotiations

Factory union leader Shawky al-Sharkawi said he appreciated the money on offer, but said workers had not had the opportunity to negotiate with potential buyers about ways to keep jobs.

Mubarak’s job promises may notbe compatible with privatisation

Mubarak’s job promises may not
be compatible with privatisation

Al-Sharkawi led a strike last month at the factory where he works, in protest at being kept in the dark about sale negotiations and job losses.

“We have never seen anything good come of privatisation. What the investor is going to do isn’t clear.

“We don’t know him. We haven’t seen him. We don’t know what his plan is. We’re not reassured,” al-Sharkawi said.

“We reject privatisation not because we reject selling companies but because of fear for our jobs. Workers are not convinced. We’re afraid.”

Source: Reuters

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