President Abdel Fattah El-Sisi has increased the minimum wage for Egypt’s over five million public employees by 66.7% to EGP 2,000 ($115.5), instead of EGP 1,200 ($69.3). The move will increase the wages item in the budget by about EGP 30.5bn ($1.8bn), Al-Sisi stated, adding that over EGP 300.5bn ($17.3bn) would be allocated for salaries in the fiscal year (FY) 2019/20 budget, up from EGP 270bn in FY 2018/19.
The new increase will apply to all Egyptian public workers, the president asserted, adding that pensions will also increase by 15%, with a minimum increase of EGP 150 ($8.7). The new minimum pension will be EGP 900 ($52).
He also announced a 7% annual allowance, or a minimum of EGP 75, for those addressed by the Civil Service Law and a 10% allowance for employees not included in the law.
Al-Sisi revealed that all public employees will receive an exceptional allowance of EGP 150 ($8.66) to alleviate the impact of inflation on wages.
Egypt has undergone a number of economic reform measures in the past few years, including flotation of the local currency, which deeply affected its value against the US dollar.
Egypt’s annual urban consumer price inflation rose to 14.4% in February due to food price increases. The last time the government raised the minimum wage was in 2014 when it reached EGP 1,200 up from EGP 700.
Hamada El Agawany, vice chairperson and managing director of El Agawany for Industrial Machines and board member of the Cairo Chamber of Commerce, supported the president’s decision to increase the minimum wage.
El Agawany stressed that there are no instructions from the state to raise the minimum wage for private sector employees, but the company is fully convinced of the importance of increasing salaries in the light of current high prices and high inflation rates. “The salary increases may be higher than the public minimum wage,” he said.
“The decision to raise the minimum wage and offer new allowances will have a significant impact on the citizens’ purchasing power, and will increase the GDP growth, and that is to give back to the people who bear the bitterness of difficult economic reforms,” El Agawany added.
Mohamed Saad Eldin, chairperson of Saad Eldin Group and head of Petroleum and Mining Chamber at the Federation of Egyptian Industries, said that the minimum wages in his company exceeds EGP 2,000 and that the company pays good salaries to employees commensurate with their competence and dedication to work.
He disclosed that the company will apply the increase announced by Al-Sisi in terms of pensions and allowances to increase the efficiency of employees and the belief of the company to apply reward and punishment at work, confirming that the State does not intervene in the private sector’s affairs.
Furthermore, Youssef Beshay, senior banker at BNP Paribas, believes that real reform is participating in boosting more foreign direct investment, pointing out that raising the maximum wages of employees attracts more efficient people from outside administrative governmental bodies.
He added that most investments in Egypt are short term and seek high revenues.
Ehab Said, chairperson of Khadamaty company and head of the communications division of the General Federation of Egyptian Chambers of Commerce, said that raising the minimum wage is a good step, but the wage of EGP 5,000 ($288.7) is not enough for employees in the light of price hikes of all goods and services.
He noted that the private sector considers employees to be partners to success and to maintain the success of their organisation and its growth, pointing out that the company already pays a minimum of more than EGP 2,000.
He added that the company follows the annual increase in pensions by an annual increase of 7% prescribed by law.
Additionally, he stressed that there is no instructions from the state to the private sector to increase salaries or increase the minimum wage.
He also called on the State to qualify workers by raising their capacities as it raised their salaries to increase the country’s renaissance and to follow the method of reward and punishment, as in the private sector. As well as finding an alternative to disguised unemployment by training and qualifying the non-influential workers in their bodies and motivating them by linking rewards with achievement in the work.