A recent study revealed that government wages are breeding poverty and disquiet. Mona El-Fiqi leafs through the report Government employees are disappointed with their wages and bonus system, according to a study by the Egyptian Centre for Economic Studies (ECES). The results, published last week, were the outcome of research conducted by Doha Abdelhamid, professor of economies at the American University in Cairo (AUC) and Laila El-Baradei, professor of economics at Cairo University. The report also gave several suggestions and four scenarios on how to amend the wages system to enable civil servants face price increases and live at reasonable standards. Surprisingly, research revealed that fresh graduates continue to dream of landing a job with the government, since it ensures a fixed income, health insurance, training, a pension and other benefits. But in reality, civil servants bemoan the low income from such "secure" jobs. Some 82 per cent of respondents complained that both wages and bonus sums are not enough to cover their basic needs. Even annual increases in wages are not enough to cope with continued price jumps, and the majority said they cannot afford to have any savings. Moreover, 76 per cent feel the current method of determining bonus money is unfair. In fact, some 39 per cent of civil servants depend on other resources of income in addition to their salaries. While some respondents suggested that salaries should be raised to a minimum of LE1,000 per month, others prefer to see the annual wage increase by 30 to 50 per cent. "Their dissatisfaction with their income has caused workers in the government sector to go on strike asking for raises," stated the study. The number of strikes in 2007 ranged between 323 and 500. Defending the current wages structure, Safwat El-Nahhas, chairman of the Central Agency for Administration, said that the government is successfully applying a system to raise employee income. El-Nahhas pointed to President Hosni Mubarak's campaign promise to raise government salaries for those in lower echelons by 100 per cent within six years, while higher tier civil servants will see a 75 per cent increase. He praised the government's move a few months ago to raise minimum wage from LE148 to LE280 per month. Total annual wages came at LE72.9 billion in the government's budget for fiscal year 2008/2009, compared to LE37 billion in 2003/2004. "The government would not be able to raise salaries unless total GDP increases," explained El-Nahhas. He disagreed with the study that bonuses are only dispensed to government employees ahead of elections. Annual bonuses, he noted, have nothing to do with election dates since they are determined according to a law issued in 1987. But according to the report, the legislative framework of the wages system in the government sector is very complicated since it is regulated by more than 40 laws and decrees issued between 1942 and 2008. Researcher Abdel-Hameed revealed that the ratio of minimum wage compared to total GDP dropped from 60 per cent in 1984 to 13 per cent in 2007. This ration is at 78 per cent in Turkey and 51 per cent in France. The document included a section on some African, Asian and European countries which reformed their government wages system. It stated that while the motive for restructuring was different in developing countries and developed ones, the overhaul always aimed at fighting corruption and achieving social justice and decentralisation. Abdelhamid pointed out that the study presents four scenarios for restructuring the wages system in Egypt. The first scenario suggests amending wages in July, 2008, taking into consideration the inflation rate and GDP according to government figures, which are seven and 7.1 per cent respectively, and the impact of this increase on the budget. The second suggestion proposes to raise salaries according to the poverty rate, and in accordance with inflation rates and GDP. The third proposal recommends changing wages according to the minimum level of an individual's basic need, estimated at LE912 per month, which covers the national poverty rate of LE660. The final scenario advocates the amendment of the wages system according to the maximum level of an individual's basic need, calculated at LE9,000 per month, taking into consideration the inflation rate and GDP. The report argued that the first two proposals can be easily applied within the framework of the current budget, but the third and the fourth would require the government to find extraordinary funds to cover the budget deficit. Abdelhamid's research colleague, El-Baradei, emphasised that the report presents several recommendations to help the government fund higher wages. These include reducing benefits to employees in the Armed Forces and Police Academy; cutting governmental luxury expenses such as expensive furniture, vehicles and airplanes for cabinet members; better application of the income tax law for high income categories; and finally, begin applying the real estate tax law. At the same time, the study recommended that the government apply several strategies to restructure the wages system, such as minimising the number of employees to the ideal average, and adhering to the rules of transparency when allocating bonus sums. Most importantly, calculating wages according to the worker's productivity and work quality is essential. Finally, the report urged the government to study the political impact of any economic proposition before application, and that overhauling the wages system should be based on political and economic studies since it is an essential part of the comprehensive administrative reform of the government sector.
