With a socialist appointed as minister of manpower, expectations are high concerning moves to bring about better working conditions in Egypt and fairer wage policies. The minister, Kamal Abu Eitta, together with others in the current government, has been moving quickly towards this end. Last week, Ahmed Galal, the minister of finance, issued a decree obliging all state bodies to apply minimum and maximum wage rates retroactively starting from 1 July. The current minimum wage rate is LE700 and the maximum is 35 times this figure. According to the decree, employees who have received more than the maximum rate since July will have to return this to government coffers. On Monday Galal was quoted as saying that the government is currently considering setting a unified maximum limit for wages of all government employees rather than 35 times the minimum wage which differs from one place to another. The minimum and maximum wage rates were decided for the first time in 2011 after the 25 January Revolution by the government headed by the then prime minister Essam Sharaf. However, the limits were mostly on paper until earlier this year, when the former minister of finance, Al-Morsi Hegazi, issued a decree in March asking all state bodies to apply them from May. Any employee receiving more than the maximum would then have to return any additional money earned. Bonuses would be included in the maximum limit except for travel stipends. According to last week's statement by Galal, violations of the law will be subject to penalty, with employees receiving more than the maximum being subject to a fine of between 25 and 100 per cent of the money paid along with the obligation to deliver this to the relevant administrative authority. Hanaa Kheireddin, a professor of economics at Cairo University, said that although the maximum wage rate was applicable in theory, the government had in fact failed to implement it. “A large number of high-ranking employees still receive large amounts of money as bonuses from different governmental institutions. These exceed the maximum rate, but it is difficult to trace them,” Kheireddin explained. While the maximum rate has not been applied, the LE700 minimum rate has been described as insufficient to attain a decent standard of living. “As a result of the hikes in prices, the minimum rate should be not less than LE1,200, or $6 per day,” said Ahmed Ashour, a professor of management at Alexandria University. In a move to resolve the problem, a draft law setting minimum and maximum wage rates has recently been finalised by the Ministry of Manpower and immigration in cooperation with the Ministry of Social Solidarity and been submitted to the cabinet for approval. Under the new law, the minimum wage rate is set at around LE1,000-1,200, said one source who did not want to be identified. Moreover, a committee was recently formed from representatives of the ministries of manpower, finance and social solidarity to discuss ways of increasing the minimum wage rate. Ahmed Al-Boraai, minister of social solidarity, said at a press conference last week that “we all agree that the current minimum wage rate is not enough and increasing it to LE1,200, for example, won't inflate the government's total budget for salaries as the actual gross income of employees, including salary and other additional compensation, is actually higher than this figure.” However, experts disagree. Ashour said that he believed the bill would be enormous, as there are some 6.5 million employees in government and public-sector jobs in Egypt. Hamdi Abdel-Azim, former dean of the Sadat Academy for Administrative Sciences, said that “if the increase is manageable now, in the future it will raise the social insurance payments of employees as well as annual bonuses, which are determined according to the main salary.” The minimum rate should also be in force in the private sector, Hani Mehana, a spokesman for the Social Solidarity Ministry, told Al-Ahram Weekly. Al-Boraai is expected to meet with members of the business community over the coming two weeks in order to determine minimum wage rates for the private sector. “The approval of businessmen is important because raising the minimum wage rate means increasing social insurance payments, which would be an additional burden on business owners particularly in the current difficult economic situation,” Mehana said. As soon as the law is approved, both the public and the private sector will be obliged to implement the minimum and maximum wage rates. The committee formed from different ministry representatives has also decided to reconsider the fate of the National Council for Wages, which used to be headed by the minister of planning. This council was formed by Law 12/2003, and its main function was to determine minimum wage rates in accordance with the price and inflation rates. The council was also supposed to set annual pay raises at a maximum of seven per cent. To put an end to the wage issue, experts say that clear regulations should be put in place before setting the minimum and maximum wage rates, in addition to revising these every two to three years. “When setting the minimum wage rate, the government should take into consideration that this figure should be enough for an acceptable living standard, to encourage an employee to improve his performance in his job, and to guarantee that there will be no financial misconduct,” Ashour said. As for maximum rates, experts have different views, some seeing them as important for a fairer income distribution. “It is not fair that some employees get just a few hundred pounds a month, while others receive pay cheques of tens of thousands as bonuses,” Kheireddin said. Ashour believes the government should lift the ceiling on salaries in order to attract high-calibre experts and compete with the private sector. The experts agreed that it would be impossible to apply maximum wage rates to the banking, insurance and oil sectors.
