Tuesday, November 08, 2016

How Will Egypt's Labor Unions React to Harsh Economic Measures?
Hadeer El-Mahdawy, Mahmoud Aziz
Ahram Online
Tuesday 8 Nov 2016

Amid the harsh economic reforms implemented by Egypt’s government on Thursday, which included the floating of the Egyptian pound against the US dollar and lifting fuel subsidies, many are demanding that extra protective measurements be put in place.

Following the Thursday decisions, the Egyptian government adopted a number of measures to ease the impact of these economic reforms.

The measures include raising the food subsidy bill from EGP 18 to 21 per person, raising the supply prices of some basic crops to support local farmers, increasing food subsidies, as well as increasing the annual pay raise for the public sector from 5 to 7 percent.

However, these protective measures have not been regarded as sufficient enough to protect civil servants and wage earners in general from the ongoing wave of skyrocketing prices.

Egypt’s annual headline inflation hit its highest level in 30 months to register 14.8 percent in June 2016 from 12.9 percent in May, compared to 11.5 percent in the same month last year.

With core inflation reaching 13.94 percent in September, economists believe inflation rates will continue to increase after the floating of the pound and subsidy cuts.

Demands for wage increases

The Egyptian parliament’s majority bloc Support Egypt announced in a statement that it fully supports the government’s new IMF-inspired economic reforms; primarily floating the pound and increasing fuel prices.

Mohamed El-Sewedi, an electric cable tycoon and chairman of the Support Egypt bloc, has recommended that the salaries of state employees who receive less than EGP 2,000 per month be raised.

El-Sewedi, who also chairs the General Federation of Egyptian Industries, stressed that “businessmen, industrialists, and merchants should not view these decisions as a new opportunity to raise the prices of goods.”

The Support Egypt bloc was formed and officially recognised in parliament in May 2016 as the majority coalition, including 317 MPs (52 percent).

The Free Egyptians Party, the largest political party in parliament with 65 seats,called upon the private sector to raise wages, saying that the party is willing to hold meetings with the prime minister to discuss ways of protecting employees from the impact of the recent economic decisions.

On the other hand, the 25-30 bloc, a left-leaning parliamentary coalition named after the two revolutions of 25 January 2011 and 30 June 2013, called for an emergency session of the legislature to be held to discuss the government’s “disastrous” economic decisions.

According to a statement by the group, “the new wave of liberalisation policies will negatively affect poor and limited-income classes.”

The Islamist Nour Party also condemned the new measures, saying that “Egypt needs a local economic reform programme based on fighting corruption and tax evasion rather than borrowing money from the IMF.”

Reaction from professional syndicates

On Saturday, the Doctors Syndicate demanded an annual 25 percent raise of the primary wages of its members, saying that doctors’ wages have been dramatically diminishing, especially after the implementing of the fixed incentives system in June 2015.

The syndicate said that after the issuance of the civil service law, which stipulates a periodic 7 percent raise, the wages of doctors and other civil servants not covered by this law have not seen any kind of increase since July 2015.

“The 7 percent raise is relatively small compared to the inflation rate and price hikes,” said a recent statement by the Doctors Syndicate.

The syndicate has had a long-running active protest movement to improve its members’ financial status.

A third tier specialised doctor’s monthly wage is EGP 880 on average, which is less than the EGP 1,200 minimum wage mandated by the government.

A wave of organised protests was held recently by doctors across the country to demand a raise in infection compensation, which ranged between EGP 19 and 30 for a doctor per month in 2014.

Following a lawsuit filed bythe syndicate against the state, the administrative judiciary ruled for the increase of infection compensation to EGP 1,000 for a doctor per month in November 2015.

However, this ruling has not been implemented due to a government appeal that is awaiting review by the High Administrative Court on 20 November.

The civil service law approved by parliament in July states that government employees can receive a 7percent bonus aside from their basic salaries instead of 5 percent.

However, the civil service law does not cover large segments of the Egyptian workforce, including doctors, teachers, trade and customs workers, and other entities that have their own organisational laws and regulations, such as the military, police and judiciary.

Unlike the Doctors Syndicate, engineers have not directly demanded a specific raise of their primary wages, though syndicate head Tarek El-Nabrawi says there have been negotiations with the Central Authority for Organisation and Administration since the start of this year to implement full-time employment compensation for engineers.

According to the tier system the syndicate is pushing for, engineers’ wages should range between EGP 3,000 for third tier to EGP 15,000 at the highest level, “which will help in improving the financial status of engineers in general, especially after the recent economic decisions.”

Omar Morsi, a teacher and the deputy head of the independent Egyptian teachers union, says “this is the worst month I’ve ever had. Because of the price hikes, I spent my entire salary in one week; the cost of everything has doubled, from food prices to transportation fees.”

“Even with the 7 percent raise, people are suffering from the price hikes and the absence of some commodities,” said Morsi.

The average monthly salary of teachers in Egypt ranges between EGP 1,700 and 4,000.

Possible strikes?

As for any possible moves by syndicates to exercise pressure on the government, Morsi said the official Teachers Syndicate is currently under the state’s authority, while the activities of the independent syndicate and union are restricted because of laws that limit protests in the country.

In 2012, a strike by 10,000 teachers was organised by both the independent union and the Teachers Syndicate to demand wage increases, which were implemented two years later.

A crisis has emerged over the past few months following the drafting of a new law by the government organising the activities of syndicates, which has been perceived by labour activists as a restriction on the formation of free unions and a clear violation of the international labour agreements signed by Egypt.

“The government should increase wages to meet prices and providepeople with peaceful means of protest against these decisions,” Morsi said.

The government introduced a law in 2013 that severely restricts protesting in Egypt, with hundreds put in prison for violating the law.

Although Ibrahim Shahin, a member of the Teachers Syndicate board, praised the recent economic measures, he says the government should seriously consider raising the wages of low-income citizens, such as teachers.

According to Shahin, the syndicate had convened before the recent economic decisions to study the implementation of Law 155, which gives teachers raises equal to those of other public sector employees, especially since teachers are not covered by the civil service law.

“We demand that the government raise our wages according to a percentage, for example 20 percent, to cope with the price increases,”said Shahin, stressing that this should be accomplished through “legitimate channels,” such as meetings with the education and finance ministers and through coordination withthe cabinet and the presidency.

Karem Mahmoud, a board member in the Journalists Syndicate, says the syndicate has not yet decided on a course of action regarding the economic measures, though he stresses that wage increases are a priority.

“Prior to the recent economic developments, the syndicate was considering initiating a campaign among national, private and partisan newspapers demanding a raise of wages for journalists,” said Mahmoud.

Kamal Abbas, the head of the Centre for Trade Union and Worker Services, says that while low-income workers have been hit hard by the state of the economy, “employers are also in crisis because of the instability of the current economic situation.”

“The [government’s] measures completely ignore vital policies such as cumulative taxation, governmental squandering, and the private expenditure system, or policies to decrease the gap between imports and exports. All this adds to the burdens on poor citizen,” said Abbas.

The Federation of Egyptian Industries, a union of private sector companies and factories, advised its member entities to raise wages ranging between EGP 1,000 to 1,500 of its workers up to 10 percent, according to the financial capability of each entity.

The federation said in a recent statement on the new economic reforms that the raise is not obligatory for its member entities, but “should be driven by a national and social responsibility towards the workers, especially during the current price hikes and energy subsidy cut-off.”

The federation also called on the government to take all possible measures to control the market and increase production to achieve the goals of these economic reforms.

According to Abbas, most private businesses do not apply the wage increases mandated for the public sector, leaving workers in a very distressing situation.

However, Abbas believes that the main problem is that “we have not had real syndicates in Egypt since 1957.”

“A [labour] a syndicate by definition should defend its members, but in Egypt they seek approval from the state, as if they were government institutions,” he said.

“We have five members from the labour union who are MPs, and they did not even comment on the recent economic measures.”

Egypt has witnessed over the past few years major labour strikes, including the 2008 Mahala workers strike demanding delayed bonuses and snowballing into a wider movement against corruption and price increases.

The 2011 revolution and the ensuing period saw major strikes and labour protests, though now, according to Abbas, many are afraid to go down that with for fear of government crackdown, since recently workers have faced prison and military trials for striking.

In May of this year, 26 workers at a marine armoury were put on military trial for “inciting strike action” after a work stoppage demanding the improvement of their economic situation.

Five of the workers were released upon their resignation and 11 others currently in detention await a court ruling on 15 November.

Abbas does not expect protests in reaction to the current situation, but rather strikes provoked by delays in salaries and bonuses.


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