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Egypt private sector faces challenges applying new minimum wage increase

Egypt’s private sector is struggling to implement the minimum wage limit the National Council of Wages (NCW) has set recently.
05.05.24 | Source: Ahram Online

The NCW decided in April to raise the minimum wage for private sector workers to EGP 6,000 starting in May, an increase of approximately 71.5 percent, following a similar decision issued for state employees months earlier.

This move will benefit 18 million workers and employees in the private sector, according to the labour ministry data.

The decision came in line with Egypt's commitments to the International Monetary Fund to protect vulnerable groups, against the impact of the second wave of economic and structural reforms backed by the IMF.

Moreover, the decision came to offset soaring inflation in the country that has remained in the double-digit zone for over two years.

Egypt's core and headline inflation rates currently exceed 33 percent.

The latest depreciation of the local currency - with the Egyptian pound losing 55 percent of its value against the US dollar since the devaluation applied on 6 March - has further fueled inflationary pressures and weakened consumer purchasing power.

At the close of transactions on Thursday, the US dollar was traded at over EGP 48/ 1 USD.

The NCW decision mandated the new minimum wage for private sector employees, calculated according to the wage specified in the Labour Law, which includes the employer's contribution to social insurance subscriptions.

Labour-intensive sectors are the most affected by the decision, several business owners said, while exports will suffer due to competition with products from other countries in the external market.