The basic minimum wage for the public sector rose from EGP 246 to EGP 870, according to Tarek Elhasry, Director of the Administrative Reform Programme lead by the Ministry of Planning (MOP).
A new civil services law adopted by the ministry was launched as a part of an administrative reform plan. The law was activated on 13 March, but the changes tackling wages will be activated on 1 July this year with the launch of a new state budget, said Elhasry on state-run television on Sunday.
“Raising the basic minimum wage is a good step taken by the government and it is required for humanitarian and economic purposes, as it is their civil right,” Karima Korayem, Professor of Economics at Al-Azhar University Faculty of Commerce, told Daily News Egypt.
Commenting on the activation of the new legislation, Korayem indicated that some issues are still in question, as the number of employees on which this new law will be applied has yet to be revealed as well as how the amounts will be issued and managed by the government.
Korayem further noted that she strongly supports the raise; however, it shouldn’t be accompanied by hike in commodity prices, leading to zero change in the buying power of the people.
“I hope that the government and Ministry of Finance have correctly sorted their financial accounts to be able to cover this new base,” Korayem said.
Meanwhile, Alia Elmahdy, Economic Expert and Professor at Cairo University, commented on the raise saying she does not think that the increase will lead to an increase in income tax “as the government previously indicated that the income tax was unified at a maximum of 22.5%”.
“I would have preferred the increase to reach EGP 1,200. This would be a starting point, as even this number is not sufficient to cover people’s needs,” Elmahdy noted.
She further elaborated that insurance is deducted from basic wages and that pensions are applied based on wages. Thus, an increase in basic wages will lead to an increase in pensions, emphasising her point that the raise is still considered a low rate.
The new law entails that basic salaries will contribute to 80% of wages, where as promotions would depend on performance as opposed to seniority.