Case spurs review of Egyptian wage laws
Matt Bradley, Foreign Correspondent
- Last Updated: April 24. 2010 8:14PM UAE / April 24. 2010 4:14PM GMT
Nagui Rashad, 46, worked as a public sector wheat grinder for 22 years before being suspended after filing a court case to receive minimum wage. He now works two days a week for an Egyptian NGO. Victoria Hazou for The National
CAIRO // After more than 20 years of employment at the Egyptian Company for Mills, Nagui Rashad’s salary grew five-fold. Yet he was far from satisfied.
In a country where the price of food now rises by more than 20 per cent every year, Mr Rashad said his pay rise over two decades left him and his family with barely enough money to buy basic essentials
His is a struggle faced by the majority of Egypt’s population, where the average income of a government employee is 394 Egyptian pounds (Dh300) per month – just a fraction of the country’s poverty line wage of 656 Egyptian pounds for a family of four. But Mr Rashad, who said he was earning 510 Egyptian pounds per month, including bonuses, was just angry enough to join a public campaign for a new minimum wage that has galvanised everyone from white-collar bureaucrats to textile workers
Late last month, an administrative court decided in favour of Mr Rashad, who had filed a lawsuit accusing the government of violating past laws that required legislators to raise the minimum wage alongside inflation. The verdict will effectively compel policymakers to replace the old minimum wage, which was set at a measly 35 Egyptian pounds per month in 1984, with a salary that is appropriate for the cost of living
“It was worth it because Egyptians, and workers in particular, deserve lives which are better than the ones they have,” said Mr Rashad of the year he spent sparring with Egypt’s judicial system. “I don’t feel like a hero. [The workers] are the heroes. Now I’ve passed on my duties to the Egyptian workers, and they must really insist on pushing the government to implement this court decision.”
With street protests growing over the past several months, Egypt’s workers seem to be rising to the challenge. But while the court ruling may shame the government into passing new legislation, the verdict offered no guidance on exactly what the new minimum wage should be
Protests three weeks ago outside the offices of the cabinet saw workers chanting for a minimum wage of 1,200 Egyptian pounds per month – a sum that, if chosen, would swell wages across the country and would probably lead to more inflation and unemployment.
Meanwhile, officials at the National Council for Wages, the governmental body that is charged with deciding the new minimum wage, seem to be angling for a number closer to 400 Egyptian pounds
“If you propose a minimum wage that is very high, the private sector will not increase the employment in their companies,” said Abdul Fatah al Gibaly, a member of the council and an economic analyst at the semi-official Al Ahram Centre for Political and Strategic Studies. “That means that you will be in unemployment or working in the informal sector, which means it will increase the informal sector on one side and unemployment on the other
Egypt’s vast “informal sector” – which operates outside government supervision and accounts for an estimated 40 per cent of the Egyptian economy – makes the enforcement of any minimum wage a problematic endeavour. Set the minimum wage too high, say economists, and watch as legitimate private enterprises collapse.
“The government has very limited capacity to enforce labour regulations within these [unofficial] enterprises,” said Ragui Asaad, an expert on the Egyptian labour market and a professor of planning and public affairs at the University of Minnesota in the United States. “It would be very partially enforced and therefore not very useful
But other economists say the only thing standing between workers and a generous minimum wage is big businessmen and their influence in parliament.
If inflation is to be avoided, the country needs to enforce more equitable economic policies alongside the minimum wage to better redistribute wealth throughout all levels of society, said Ahmed al Naggar, an economic analyst who also works for Al Ahram Centre and an expert witness during Mr Rashad’s court case. This would avoid the sharp price increases that would follow a significant increase in the minimum wage, he said
“You will have a lot of money that will go from the hands of the businessmen into the hands of the workers who will turn this money into active demand. This will encourage new projects, which means a higher growth rate,” said Mr al Naggar.
He added that higher wages in the official sector will put pressure on unofficial employers to raise wages. Meanwhile, raising taxes on the rich and cutting support for Egypt’s large state-subsidised companies will give the government enough revenue to finance the steep increase in salaries for the millions of Egyptian government employees
But for workers such as Mr Rashad, the question of a minimum wage is one of social justice rather than economic theory. He has been suspended from his warehouse job at the Egyptian Company for Mills for more than a year because, he said, the management was opposed to his organising efforts.
Since his suspension, a non-governmental organisation that advocates for labourers’ rights has taken him in as a part-time employee – work that he said still earns him more than he made as a full-time stockroom worker
“Labourers do not have enough awareness of their rights because they lack practical experience,” he said. “I saw that the labourers think that the job of the labour union activist is to help them to get a day off or sick leave or to go for a few days to the seaside. They thought that this is the only duty of the labour union. But I discovered that the job of the labour union goes far beyond that