As the government prepares to implement a maximum wage starting next month, experts remain unclear on the mechanism of its implementation, writes Niveen Wahish A maximum wage 35 times the minimum income of employees at the third degree is to be applied in the public and government sector starting January 2012, Prime Minister Kamal El-Ganzouri announced this week. The third-degree pegged income will differ from one authority to another according to the decision. Egypt's government and public sectors account for around 6.5 million civil servants, representing around 25 per cent of the country's workforce. Since the beginning of the year, there had been some calls for the application of a maximum wage as a form of achieving social justice and freeing funds in the government budget. "If applied, something good may come of it," Kamal Abu Eita, Head of the Federation of Independent Syndicates told Al-Ahram Weekly stressing his doubts about its implementation. Abu Eita fears there will be many exceptions made which will eventually beat the purpose of the decision. Others question how the decision will be implemented. One economist who preferred to remain anonymous criticised the lack of transparency regarding the mechanism for application. He said that according to the Cabinet decision, the minimum wage upon which the maximum wage will be calculated will differ from one ministry to another which could mean that it may not save a meaningful sum for the budget. Nonetheless, he said, that variation may be advantageous in that it will give a degree of flexibility allowing for higher wages where the job may require a higher skill. The economist further questioned the basis on which the maximum wage will be decided; "will it be seniority or efficiency?" He fears that this decision will drive away calibres that are much needed in the government, pointing out that if the government is out to achieve social justice without being certain it has the personnel with the needed expertise, it will be on the losing end. "If a certain expertise is lacking within the government, it would need to import it but the needed expertise might not find the maximum wage attractive." In that case, he said there must be a solution whereby a higher wage is paid against a specific mandate with a time frame and clear quantifiable indicators of performance. "The whole process also must be transparent to the public." The economist believes that placing a maximum or a minimum wage is meaningless without revisiting the overall wage system. Manal Metwally, professor of economics at Cairo University, believes likewise. Currently, Egypt's wage system is distorted with 20 per cent of an employee's salary as a fixed sum on which pension contributions are collected, and 80 per cent is variable. Metwally wants to see reform to the wage system and the placement of a clear definition for wages based on productivity. "Even if I am referring to the government's administrative system, there should be criteria for measuring the service offered to citizens." Metwally believes the Cabinet decision was enacted to gain popular support without taking into consideration the details. She, too, demanded that the government clarify how much savings for the budget will be made and how it will affect the work environment and the employee. She does not support the idea that Egypt should apply a system just because the developed countries have it. The US has a maximum wage of 15 times while in Europe, it ranges between 20 to 35 times. "If we apply their standards, we should likewise apply their minimum wage and their social support system." In fact, Metwally is against a cap on wages because it could cap productivity as well. "What is wrong with a transparent wage system whereby there is a clear criterion for rewards?" She fears the private sector may follow in the footsteps of the government to cut its costs by putting a ceiling on wages, in which case it goes against the principles which encourage initiative and innovation. While the decision will apply to government bodies, it does not include public banks at this stage. This, according to some economists, was believed necessary to prevent any destabilisation of the sector because it is pertinent to maintaining the stability of the economy at the moment. Yet, that decision provoked the anonymous economist who noted that "these sectors are important, but so is the government especially at this critical juncture in time when government performance must be turned around and every expertise must be encouraged to contribute to revamping it."
