CAIRO: In May 2008 I interviewed Egypt’s Minister of Trade and Industry Rachid Mohamed Rachid for a special supplement we were preparing for the World Economic Forum in the Middle East in Sharm El Sheikh.
The interview covered a wide range of topics, and inevitably touched upon the rising dissatisfaction of blue and white collar workers, the growing instances of industrial action in a year fraught with food crises, and the eventual negative impact this would have on Egypt’s then booming growth rates, which had hit 7 percent.
Minister Rachid had downplayed the effect of the workers’ strikes.
“It’s very understandable that such an environment [public sector companies that are not necessarily well-managed, profitable or secure about their future] could create some labor instability, Minister Rachid said, “Let’s not confuse that with the fact that this is only representing 350,000 public sector laborers out of a 22 million workforce. So let’s put that in the right context. The ratio would be 1 or 2 percent. And if we take it to the industrial level it would be less than 10 percent. So, this is not a true representation of the status of labor in Egypt.
He backed his argument citing the achievements of the trade ministry in boosting exports and industrial growth, as well as realizing the historic feat of having non-oil exports exceed oil exports. Even though he contended that “good business people always understand that the best labor they have are those who have their rights in full . and the pride and satisfaction of being in their job , he seemed unconcerned about the wave of protests which had spilled into the civil servant sector, which employs some 6 million Egyptians.
Supporting his stance were other experts who believed that labor unrest clearly hasn’t had any effect on macroeconomic indicators, and that strikes are of minimal concern to foreign investors since they don’t affect the budget deficit.
But three years on and all this has changed.
The incessant strikes, demonstrations by blue and increasingly, white collar workers and recently the resurgence in demands for a suitable minimum wage have all brought the issue of employee satisfaction to the forefront, especially in light of a recent Administrative Judicial Court ruling to raise the minimum wage.
The ruling by the State Council criticized the government for violating the constitution by failing to modify the current minimum wage of LE 35 in force since 1984, to match the exorbitant rise in the prices of basic commodities which has accompanied the shift from a socialist to a capitalist system boasting a free market economy.
The Minimum Wages Council, which was established in 2003, again in violation of the constitution, has failed to fulfill its primary mandate; that is to reset the national minimum wage, which has led to demonstrations by hundreds of employees living under the poverty line to agitate for a minimum wage of LE 1,200.
In an Ahram Weekly report, economic analyst at Al-Ahram Centre for Political and Strategic Studies Ahmed El-Naggar suggested that the minimum wage can be funded with a “progressive tax on incomes over LE 40,000, a 0.5 percent charge on stock market transactions, a 20 percent corporate tax on net profits and the removal of electricity and gas subsidies for cement, iron and fertilizer companies. This way it will add no extra burden on the government treasury.
Even though the government claims that the LE 35 minimum wage is only on paper and is supplemented by bonuses and annual increases, an official study by the Egyptian Investment Authority puts the monthly income of a government employee on tier six at LE 98, which is LE 66 less than the per capita income marking the poverty line, according to a news report published by this newspaper.
Officials from the International Labor Organization (ILO) have also told Daily News Egypt that more than 44 percent of Egyptians live under the international poverty line of $2 a day and that Egypt currently breaches seven ILO conventions including Convention 94 on Labor Clauses, the Convention on Equality of Treatment and the Minimum Wage Convention.
It is no surprise that yesterday morning Minister Rachid was quoted by the official egynews.net as saying that Egypt is studying the Brazilian model in an effort to hike the minimum wage to LE 1,650.
There is no doubt that issues related to labor rights and minimum wages have moved irreversibly to the top of every ministerial agenda. The developments in the labor situation over the past five years have imposed this shift and there is no going back, not only for social reasons but also for vital economic ones related to Egypt’s competitiveness in an age where human rights and corporate best practice have become ever more significant.
The next period will be pivotal in steering the Egyptians’ relentless struggle to achieve social justice.
Rania Al Malky is the Chief Editor of Daily News Egypt.