Prime Minister Hazem Al-Beblawi's decision to set a minimum wage of LE1,200 a month for public-sector workers starting in January 2014 has triggered calls for similar treatment by private-sector workers and pensioners. The Federation of Pensioners Syndicates issued a statement last week asking for a minimum rate for pensions in order “to achieve social justice”. Among Egypt's elderly, there are now five million pensioners who receive less than LE500 as a monthly pension, a “very modest figure” according to the statement. Al-Badri Farghali, head of the federation which represents more than 50 separate syndicates, told Al-Ahram Weekly the pensioners wanted a minimum pension of LE960. According to Farghali, this included calls for an extraordinary bonus of 20 per cent to be paid to pensioners whose current pensions exceeded the suggested minimum rate. In response to complaints from pensioners, the government is considering setting a minimum pension of 80 per cent of the current minimum wage. Ministry of Social Solidarity spokesman Hani Mehana said that the ministry had also submitted a request to the cabinet to apply an annual five per cent bonus for pensioners. Meanwhile, negotiations between business owners, private-sector workers associations and members of the government have not yet reached a breakthrough in determining a minimum wage for those working in private companies. One of the main distortions in the wage structure in Egypt is the fact that workers in the private sector get lower salaries while working longer hours than their counterparts in the public sector. According to a report issued by the Central Agency for Public Mobilisation and Statistics, workers in public companies earned an average of LE657 per week in 2012, while private-sector workers' average weekly salaries came in at LE397. The wage difference in annual incomes amounts to about LE13,500 per year. The private sector employs 17 to 20 million workers, representing 50 per cent of Egypt's total labour force. Minister of Labour and Immigration Kamal Abu Eita has recently said that the government cannot oblige the private sector to determine a minimum wage rate, yet it plays an important role as a mediator between labour representatives and business owners. Calls to set a minimum wage for the private sector have been received with dismay by business owners, who say that the timing of any increases would be inappropriate at a time of economic slowdown. Mehana said that during the meetings between trade union representatives and businessmen, the latter had said that any raise would be an additional burden on their businesses. According to the country's labour laws, business owners are obliged to pay the equivalent of 40 per cent of a worker's salary in social insurance. This rate would increase if minimum wages rose. Mehana said that many private-sector businessmen had no objection to raising the minimum wage, but they would not be able to pay the extra money for social insurance. If the minimum wage was set at LE1,700 a month, business owners would have to pay more than LE500 a month in social insurance, for example. “The government is currently considering exempting business owners from paying extra insurance if they increase salaries,” Mehana said. One owner of a textiles factory in Al-Mahalla Al-Kobra who preferred to remain anonymous said that setting a minimum wage for workers was essential to enable them and their families to live in dignity. “However, the problem is that if a minimum wage is set, many industries in Egypt, such as the labour-intensive textiles industry, would not be able to survive,” he said. He said that the average worker's wage in his factory was LE70 per day and the factory's total profit margin was 10 per cent. “If the minimum monthly wage is set at LE2,000, for example, I am certain that I would have to close the factory within a few months.” Samir Radwan, a former minister of finance, told the Weekly that although an acceptable minimum wage rate was crucial, the government had made a mistake when it decided to raise all public employees' salaries to LE1,200. “This move will burden the state budget and will lead to higher inflation,” Radwan said. According to Radwan, the government should have applied the rise gradually over a five-year period by dividing employees into five categories according to the amount of their salaries. The first stages should have targeted raising the salaries of those on the lowest income levels, he said.
