While official announcement asserted the government's intention to apply minimum wages for the private sector, businessmen representatives have not yet reached a unified approval, Mona El-Fiqi reports Following the endorsement of setting a LE700 minimum wage for government and public sector employees which was applied starting July 2011, the government announced it is currently studying the application of minimum wage for the private sector. Minister of Manpower Ahmed El-Borai said that the minimum wage of LE700 would be applied to all private sectors except tourism which is still suffering after the 25 January Revolution. According to El-Borai, projects with fewer than five employees will not be required to apply the minimum wage. El-Borai asserted that the government would not make any unilateral discussions regarding the application of a wage floor for the private sector and that business organisations have approved imposing a minimum wage for their employees after five meetings to discuss the issue. While some business organisations announced their approval to the application of minimum wages in the private sector, others have many reservations on the subject. A representative of businessmen who agree with the government, Moharam Helal, chairman of 10 Ramadan Investors Association, said: "We agree to apply a monthly minimum wage in the private sector between LE700 which was previously determined to the public sector employees and up to LE850 on condition that it would be the total payment for a worker including his meal, transportation fees and social insurances." Although Helal is in favour of applying a minimum wage, he complained that the social insurances currently imposed for each worker reach 40 per cent of which 26 per cent is paid by the business owner, while 14 per cent is paid by the employee. Some business organisations agreed with Helal to set LE700 as minimum wage for the private sector such as 6 October Association and Borg Al-Arab Association, but the Egyptian Federation for Chambers of Commerce (EFCC) has another point of view. Ahmed El-Wakil, EFCC chairman, told Al-Ahram Weekly that according to law, the government has the right to impose minimum wages for its employees but the private sector is not obliged to comply with this decision. The National Council for Wages which is formed by members of the government and representatives of the EFCC and the Federation of Egyptian Industries has the authority to decide minimum wages for the private sector. According to El-Wakil, the EFCC and the Federation of Egyptian Industries are still studying the issue and have not yet approved to apply minimum wage for the private sector. El-Wakil explained that, in general, business owners are in favour of raising the wages of workers in both the public and private sector. They reason that the raise will create a higher purchasing power in the local market which in turn will be translated into higher demand for goods and services which means more production and more profits for all sectors. However, El-Wakil said that if the minimum wage for the private sector is applied without adequate study, it will bring many negative results such as raising the unemployment rate and reducing the competitiveness of Egyptian products. Although the minimum wage for a worker in El-Wakil's factory is LE1,400, in general, many business owners were not able to pay their workers LE700 because it would have meant firing some of them. El-Wakil said that if the minimum wage is applied in some industries such as the garments industry, they will lose their competitiveness since labour wages constitute 70 per cent of a product's total cost. Moreover, it will be difficult for business owners in some geographical areas where living standards are low to apply the minimum wages. According to El-Wakil, small enterprises which employ less than 20 workers would not be able to pay minimum wages. Changing the culture of society is a must. According to El-Wakil, labour wages in the private sector should be calculated according to a worker's productivity. In most countries, wages are decided per hour according to productivity to encourage workers to increase their working hours and their production. In the developed countries, an average indicator for minimum wage is set in accordance with the country's GDP. To help to change the culture of people, the labour law and social insurance should be revised, according to El-Wakil. The decision to set a minimum wage for the private sector comes within a comprehensive plan to achieve social justice through revising the whole wage system and determining a minimum and maximum wage in both public as well as private sector. The National Council for Wages is expected to meet soon to discuss the issue. According to Fayza Abul-Naga, minister of planning and international cooperation, the meeting aims to determine the minimum national wage for the private sector as well as the maximum wage for government employees. The council will notify all public and private business through a formal declaration. Abul-Naga said it has been determined that the maximum wage will be 36 times the minimum wage representing the 36 years of work from the first appointment of an employee until his retirement. She said that maximum wage in the state administrative apparatus will be announced and the government will take the initiative and declare the salaries of the prime minister and cabinet. As for disparities in government employees' wages, Hazem El-Beblawi, deputy prime minister for economic affairs and finance minister, said that wages would be determined by an equation accounting for average inflation and on average wage growth of 10 per cent annually over a 36-year career. The equation would allow wages to reach 36 times the minimum wage. In a recent meeting, the cabinet agreed to form a committee to study the status of wages and propose a new framework to remove disparities in the law within six months.
