Controversy over what constitutes an adequate minimum wage rages on, reports Niveen Wahish Not many would contest the importance of an adequate minimum wage in combating poverty. But experts do not seem to agree on what that minimum wage should -- or can -- be. Mohamed Trabelsi, senior specialist on workers' activities in North Africa in the Cairo office of the International Labour Organisation (ILO) said the minimum wage depends on a number of factors. These include the poverty level in a country, its growth rate, rate of inflation, and fiscal and social insurance policies. With this in mind, he said, what might be suitable as a minimum wage in one country may not be suitable in another. Not only that, but the various stakeholders in society -- that is, workers, employers and the government -- must take part in deciding the level at which the minimum wage will be set. Trabelsi would not give an estimate as to what a suitable minimum wage for Egypt should be. He said the ILO does not interfere or offer its opinion unless one of the stakeholders seeks its advice. "So far none of the stakeholders in Egypt have requested our advice on this issue," he told Al-Ahram Weekly. In recent weeks workers have staged demonstrations that call for a substantial rise of the minimum wage. According to a 1984 law, the minimum is currently set at LE35 for a first level entry job. However, after the addition of various bonuses and remunerations, no one actually receives less than LE400 per month. The figure that workers are aiming for is LE1,200. And a court ruling has supported them in their demands. Economist Abdel-Fattah El-Gebaly, deputy head of Al-Ahram Center for Political and Strategic Studies, believes that figure is absurd. He pointed out that one of the criteria in setting minimum wage -- according international practice -- is that it should be less than half the average individual income in a society, which he puts at LE1,138 per month in Egypt. Meanwhile, he said, it should be higher than the LE205 estimated by the World Bank as necessary for one individual to live just above the poverty line. One of the criteria that should be taken into consideration, El-Gebaly said, is that the minimum wage should not be so high so as to deter the private sector from hiring. That, he said, could push companies to hire employees without contracts, or they could totally refrain from hiring, which would push job seekers either to remain unemployed or to revert to the informal market. Another aspect to be kept in mind, according to El-Gebaly, is the burden of the increase on the budget as far as government employees are concerned. El-Gebaly suggested that the ideal minimum wage should range between LE500 and LE600. This figure, he said, would be somewhere in between the average individual income in Egypt and the poverty line. And for government employees, he said, it could be easily achieved by adding all bonuses to the basic salary. Currently annual bonuses become part of the basic salary only after five years. "Although this may be a burden on government coffers," El-Gebaly said in a March 2010 study on minimum wage, "it will improve conditions for government employees and make them feel the financial benefit of economic reform." There are around six million government employees. Their payroll for the 2010/11 budget is estimated at LE87 billion of the total annual budget. In his study, El-Gebaly recommended that once a minimum wage is set, it should be adjusted annually according to the rate of inflation. He also called for activating the Higher Council for Wages, created in 2003, to have the primary say in setting the minimum wage. Moreover, he said that the minimum wage should vary according to the economic sector, so that the wage suits effort and productivity. And it should differ between rural and urban areas, especially as studies show that 51 per cent of the poor are located in the rural areas of Upper Egypt, compared to only 5.4 per cent in urban areas. While the issue has been on the table for some time, it is not clear when something will be done about it. Doha Abdelhamid, professor of finance at the American University in Cairo, believes positive action will have to be taken soon in light of upcoming parliamentary and presidential elections, and amid unceasing labour demonstrations and sit-ins. These strikes and sit-ins are pressing the issue to the fore. Indeed, it took centre stage in President Hosni Mubarak's Labour Day speech last week, with the president stressing the government's commitment to supporting the poor. Within the president's speech Abdelhamid saw a clear message of upcoming reform. She expects two laws to be presented to parliament prior to presidential elections. Those are the labour law governing the private sector and civil servants, and the law governing the National Council for Wages. "In those laws, the president will observe that salaries are tied to productivity and inflation. He will also [ensure] that human rights conventions to which Egypt is signatory are observed [and] that there are no infringements. I hope this takes place sooner rather than later, as the current minimum wage is inhumane." While President Mubarak did not specify a figure for the minimum wage, he cautioned that an increase in wages that is not accompanied by rising productivity would lead "to a weakening of our competitiveness, a decline in job opportunities, and an increase in prices." An increase in prices is what many most fear. As is the case every year, prices rise commensurate with the annual bonus. If the minimum wage should rise, so will prices. But Abdelhamid said that should not stop the government from doing what it needs to do; it should correct deficiencies in market regulation. "It is the duty of the government to control markets and stop its ad hoc price rises through enabling more fair competition." Talaat El-Qawas, first deputy head of the Cairo Chamber of Commerce, also laments that it is taking so long to make a decision on an issue that affects the majority of Egyptians. He calls for an environment that is more conducive to investment. "Increased investment would mean more jobs and accordingly higher pay," he said. El-Qawas believes the private sector could pay a LE1,200 minimum wage, provided it is matched with higher productivity. But not all the private sector is as cooperative. Trabelsi of the ILO laments that many businessmen refuse to sit at the negotiating table with workers. He said a consensus could be reached if the parties work together. "In the lack of negotiation we cannot blame the workers for striking," said Trabelsi, adding that there are ILO agreements to which Egypt is signatory that insure the right of workers to strike. Also, he said, if workers could find a proper syndicate representative to carry their demands to the employer they would not be standing on the street. The private sector, he says, does not guarantee workers the right to form groupings such as trade unions to guard their interests. "By heading to the People's Assembly with their grievances, the workers are calling for politicians to put pressure on employers," Trabelsi said, adding "Egyptian workers' battle for their rights is worthy of admiration."
