Egypt discussing private sector minimum wage

Egypt’s National Wages Council approved earlier this week a LE 700 minimum wage for private sector employees, effective January 2012, state media reported.

Alaa Ezz, secretary general of the Federation of Egyptian Industries, told Daily News Egypt that the decision to increase the minimum wage to LE 700 has already been taken.

He also said that in discussions with the National Wages Council and the federation, officials have taken into account living expenses as well as the current state of the country’s economy.

Increasing salaries any further would be unfeasible. “You have to put in mind social considerations at this critical stage, while also keeping in mind the state of the economy,” he said.

“When making this change, we take into consideration the share per capita and productivity, the GDP and the cost of living,” he added. “This figure, however, will not be subject to social insurance because the social insurance takes 50 percent.”

Ezz said the figure is inclusive of bonuses as well as meals while on the job.

Minister of Manpower Ahmed El-Borai said that the minimum wage, without specifying public or private sector, should take into account increasing prices and living expenses.

Mark Millar, head of research at Naeem Holding, questioned whether a decision like this can be implemented in the private sector given the current economic climate.

"Whatever they impose now, especially in the private sector, can easily be circumvented. Who is actually going to watch if the private sector applies these wages?" he asked.

"There are no police [authorities] on the streets, let alone in private companies. There are ways around it,” he added.

Some fear that the already sluggish economy, still reeling from the effects of the January 25 uprising on key sectors, may be further hindered by added financial pressure on the private sector.

With foreign reserves dwindling and tourism trickling in, the main focus has been to attract foreign direct investment. However, with changing rules in the business field, investor confidence may be kept at bay for a while longer as uncertainty continues.