Egypt's private sector minimum wage just an 'initial step': Official

Egypt has approved a new monthly minimum wage of LE700 (US$120) for the private sector effective January, giving rise to questions as to how the rate will be enforced in a job market unused to such regulation.

"The National Council for Wages (NCW) has set up a 'complaints committee' which will be in charge of looking into workers and companies' grievances," says Ashraf El-Araby, advisor to Fayza Aboul Naga, minister of planning and international cooperation and head of the NCW.

The complaints committee will have the authority to exempt companies that present sufficient proof they cannot pay their employees the new rate. It will also have the power to punish firms which fail to adhere to pay employees wages that meet or exceed the new baseline.

On Thursday, the NWC approved a long-awaited minimum wage for the private sector to be implemented on January 2012.

An ‘exigent circumstances allowance’ would be added to those who earn less than LE700 until their pre-tax gross salary -- not their take-home amount -- reaches the minimum rate.

In 2008, the average monthly wage in the private sector reached LE567 for males and LE444 for females according to state statistics agency CAPMAS. The law, however, did not force private sector employers to raise their employees' wages.

Many have criticised the new regulation, claiming the increase will not affect the insurable salary of employees, which will lead to a big disparity between wages and pensions.

"We cannot solve all problems with just one decision. To adjust insurable salaries with regards to total salaries, the Social Insurance Law must be amended and in-depth studies must take place to avoid having large deficits in social insurance funds," El-Araby says.