Bonus set THE DEBATE over the annual employee bonus has been nipped in the bud with President Hosni Mubarak's decision to set it at 10 per cent, the same as last year. Mubarak's decision comes on the back of increased discontent over escalating prices and calls for a decent minimum wage for workers. Last year President Mubarak did not specify a percentage but urged parliament to be as generous as possible given budget constraints imposed by the global financial crisis. Hand in hand EXPERTS this week stressed the need to buffer the negative social impact of economic reform. According to Giovanni Tria, president of the Italian Public Administration School, countries currently designing exit strategies from the global economic crisis must reconcile the need for growth while tackling social needs and unemployment. Tria was speaking at a national workshop on "The Social Impact of Economic Reforms in Egypt: the parliamentary and civil society perspective". Niveen Wahish reports Tria stressed that experience has shown that poverty has been reduced in countries where economic growth is higher, but what needs to be addressed is the transition cost of reform. As Othman Mohamed Othman, Egyptian minister of economic development stressed, without economic growth in Egypt there will be no social welfare. He said that growth in the past three years prior to the setback caused by the global financial crisis reflected on the welfare of at least 8.5 million citizens. These were citizens who found employment or got better pay, or they got access to better services. However, when growth slowed as a result of the crisis some six million citizens were dragged below the poverty line, he said. "If high growth continues for 10 years, there will not be a need to speak of social welfare." But Ahmed Ghoneim, professor of economics at Cairo University, questioned that reform might have had an effect on the welfare state despite the improvement in the growth rate. He pointed out that growth was mainly in the urban, not rural, areas. And it emanated mainly from capital intensive rather than labour intensive sectors, such as telecommunications and information technology. Thus it was not accompanied by increased employment. Ghoneim said social welfare might have emanated from the ability of the informal sector to absorb unemployment and ease poverty. Moreover, labour migration and remittances were also important in improving the social welfare of Egyptian families. In addition, government efforts in terms of subsidies, and attempts by institutions such as the Social Fund for Development, helped ease the situation. Ghoneim lamented that institutional reform came much later than economic reform, and that laws essential to the proper operation of markets -- such as the competition and consumer protection laws -- were only enacted in the past few years. He acknowledged that recent laws take into account the social dimension, but more is needed. He called for better incorporation of small and medium sized industries into the value chain. And he called for better attention to education and wealth distribution because these were key to the success of East Asian emerging markets. The workshop was organised by the IPALMO Institute (Institute for Relations between Italy and the Countries of Africa, Latin America, the Middle East and Far East) in cooperation with the Egyptian People's Assembly, the Italian Chamber of Deputies, the Italian Embassy in Cairo and the Italian Cooperation for Development. Towards Mercosur EGYPT is set to sign a trade agreement with Mercosur (Brazil, Argentina, Paraguay and Uruguay) next July. Negotiations between Egypt and the four-country bloc are almost coming to an end, according to Rachid Mohamed Rachid, Egyptian minister of trade and industry. Egypt's negotiations with Mercosur are an attempt to boost trade and economic relations with South America. "Latin America is one of the main priority markets for Egypt," he said. "There are several sectors in both trade and industry that could be lucrative for companies on both sides to get involved in," Rachid said at a recent meeting with Miguel Jorge, Brazil's minister of development, industry and foreign trade. Egypt is also working on encouraging bilateral trade and investment with Brazil. Brazilian investments in Egypt are estimated at a meagre LE21 million. Although bilateral trade figures have improved in recent years, from $899 million in 2005 to $1.53 billion in 2009, the trade balance tilts heavily in favour of Brazil with Egyptian exports coming at a value of around $87.7 million in 2009.
