By Sara Aggour and Doaa Farid
The recent government decision to set minimum income at EGP 1,200 has been met with strong criticism from many economists and activists, who say the figure is too low and comes contradictory to the government’s claimed pursuit of social justice.
Heba Khalil, the head of economic research at the Egyptian Centre for Social and Economic Rights (ECESR), said she trusts this is a positive step in a long and complicated path, but heavily criticized the EGP1,200 figure.
“We need to have a clear understanding on what this number represents. Our demands in 2009 and 2010 were for EGP 1,200 minimum wage [rather than minimum income], but nowadays, and after almost three or four years, with these exceptionally high rates of inflation, this number needs serious revision,” she said.
On 10 September, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced that core inflation increased 0.68 % in August compared to a 0.86 % increase in July.
In a press conference last week, Prime Minister Hazem El-Beblawi announced that the cabinet’s decision on minimum income is to be implemented starting January 2014.
While several officials applauded the decision, Khalil said this number is lower than expected. “A reasonable start will be around EGP 1,500,” she added.
According to So’od Amr, a member in the syndicate for Suez Canal authority, international statistics have illustrated that a family of four would require around $8 per day to fulfill their basic needs.
“This roughly sums up to EGP 57 per day which means that an average family will need around 1,750 to live a dignified life,” Amr said.
Meanwhile, Minister of Manpower and Immigration Kamal Abu Eita said that this is the maximum that could be accomplished during the economic circumstances that country is currently experiencing, state run MENA reported.
Abu Eita added that a decision has been made to restructure the hierarchy of wages based on experience, skills and training.
Another point that Khalil discussed was the fact that the number in question represents the minimum income, not the minimum wage. “This figure contains the monthly salary, which can be something around EGP 700 for example, along with any additional income such as bonuses, compensations and overtime,” she explained. “This raises some question marks on whether or not it satisfies the social justice demands of workers.”
As Fatma Ramadan, member of the Egyptian Federation for Independent Trade Unions’ executive office, put it: “We require a minimum wage, not a minimum income, in both the private and public sector as both workers and employees are suffering from the high prices and the rise in inflation rate.”
Ramadan described the decision as “unclear” and she criticized not mentioning the resources of fund of the government.
“They shouldn’t have said the minimum income for income is EGP 1,200 for all employees, since there are different positions,” she said.
Ramadan also stressed on the importance of a minimum wage law “not just a decision,” as this will guarantee an increase in pensions.
“We’re hearing from the government that social justice is a priority, but no serious steps on the ground have been taken yet; we don’t feel any change,” Ramadan added.
“If you examine the Egyptian budget, you’ll find that wages is not a big section, but you’ll see that the rewards and bonus comprise a much bigger section and figure,” Khalil said, stressing that each employee must have a guaranteed satisfactory monthly wage aside from what he may receive as bonus or overtime work.
A financial report released by the finance ministry earlier this month showed that public expenditure included EGP 141bn for wages and compensations, representing a 14.8% increase from the preceding year.
Khalil pointed out that the ongoing discussions regarding the minimum wage are exclusively concerned with public sector employees, when in fact the majority of Egyptian labour work in the private sector.
Minister of Planning Ashraf El-Arabi said earlier in August that the average income in the public sector is more than the private sector, despite many more working in the latter, adding that his administration “is seeking additional social insurance for private sector employees.”
Discussing the private sector, El-Beblawi said that the minimum wage for the private sector requires further discussions between businessmen and workers that were “expected to be set next week.”
Meanwhile, head of the Egyptian Trade Union Federation (ETUF) Abdel Fatah Ibrahim described the decision as “disastrous, as it doesn’t achieve job security for workers at this critical stage,” adding that the decision does not take into account the balance between living expenses and the service required from the worker.
Ibrahim added that a worker’s full income, which includes his wage as well as a variable salary, such as bonuses, exceeds EGP 1,200 for the time being, according to a statement from ETUF.
“The ETUF refuses the government’s paper which was submitted to the National Council for Wages about the minimum wage to be EGP 800 for the workers and 1,000 for highly educated employees in the private sector,” read the statement.
After his appointment in early September, Ibrahim announced that the work agenda for the next phase would place more emphasis on social justice, the amendment of the labour legislation and setting the minimum and maximum wages.
The interim cabinet’s economic stimulus plan which will aim to create a 3% growth rate over the current fiscal year, put “maintain social justice and create new job opportunities” as their priority, according to the Minister of Planning. In light of this, the cabinet announced last week that it will bear the tuition fees of public school students.
The National Council for Wages agreed in August to formulate a national wage policy which will include studying the maximum and the minimum level of income at the national level, in addition to linking wages and pensions to living standards.
In a state-TV interview earlier in July, El-Beblawi said he introduced a draft for a comprehensive law on the maximum and minimum wage when he was finance minister under Essam Sharaf’s government in 2011, a law which he said put “maximum wage at no more than 35 times the minimum wage.”
Kamal El-Fayoumy, an Egyptian socialist and activist in El-Mahalla El-Kubra, expressed his frustration with the minimum income decision, saying that “this new government is no different than Mubarak’s or Morsi’s.”
El-Fayoumy said that the suggested figure is unrealistic, adding that there was no mention of the maximum wages.
“There are around 5,000 factories that are shut down which can be reopened and help increase Egypt’s income resources and consequently our wages,” he said.
When asked about the reason behind the shutdown of these facilities, El-Fayoumy said it had been “to benefit exporting businessmen.”
El-Fayoumy added that Egyptian resources can offer employees much more than EGP 1,200 minimum income.
Textile workers, he said, are working on an initiative that involves sending representatives to government officials in order to discuss labour needs as well as plans and suggestions developed by workers to help increase the facilities’ production.
Prior to becoming prime minister in the interim government, Hazem El-Beblawi told the Daily News Egypt in a previous interview that social justice has no absolute definition and varies according to the country’s welfare.
“The wealthier the country, the better the distribution of income will be,” El-Beblawi said. “We must create a balance between various factors such as competence of officials and labour, production invectives and fair income distribution.”
In October 2011, the government approved a minimum wage of EGP700 per month for private sector employees, which took effect in January 2012, and the Supreme Council of the Armed Forces issued a decree setting the maximum wage at EGP 50,000.
Al-Nour Party submitted a draft law for the Shura Council in February of this year which would set the minimum wages for public and private sector workers at EGP 1,200 per month, with a maximum wage not exceeding 35 times the minimum wage, to be reviewed every three years by the Supreme Council for Wages.
Maintaining social justice was a point of discussion under Mubarak, Morsi and still is under the current government. However, there are differences in the way such issues are addressed in the two constitutions, with the suspended 2012 constitution decidedly more vague in its wording.
According to Article 13, the national economy aims to achieve balanced sustainable development, protect production and income growth, and guarantee social justice, solidarity and welfare.
By comparison, the 1971 constitution is much more explicit. Article 23 stipulates that “the national economy shall ensure raising the national income, fair distribution, raising the standard of living, solving the problem of unemployment, increasing work opportunities, connecting wages with production, fixing a minimum and maximum limit for wages in a manner that guarantees lessening the disparities between incomes.”