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Weary workers in Egypt pose economic, political threats

Weary workers in Egypt pose economic, political threats

Companies in Egypt feel the squeeze amid demands for higher pay. Meanwhile the government has hiked minimum wage 67 percent but unions say it’s still low as staff strikes continue.

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October 9, 2011 1:00 by



…expand by just 1.3 percent in the fiscal year to June 30, 2012 and 3.6 percent next year, after 1.8 percent growth last fiscal year.
Egyptian ceramics firm Lecico warned in August that 2011 might be its worst year since 2004 after second-quarter net profit plunged 80 percent, partly because of a nine-day strike that halted work at Alexandria sanitary ware and tile plants.

This week Egypt’s stock market fell to fresh 30-month lows, hit by the threat of a possible strike by brokerage employees. The stock exchange issued a statement saying its head Mohamed Omran had met with traders and discussed their concerns.

Before the anti-Mubarak unrest erupted, the economy was heading for a growth rate of some 6 percent, the rate which analysts estimate Egypt, with 80 million people and youthful demographics, needs to generate enough new employment.

Labour unrest is scaring away both local and foreign investors, who were already fretting about the uncertain political outlook before a November parliamentary election.

Until Mubarak’s ouster, foreign direct investment was a pillar of the economy. In the 2007-2008 financial year, FDI exceeded $13 billion. It dropped to half that in the global financial crisis, but still was stronger than in many other emerging economies of similar size. Now money is flowing out; the central bank’s reserves have dropped by about $12 billion since early this year to $24.01 billion in September.

Simon Williams, Middle East economist at HSBC, said some investors were looking to place long-term funds in Egypt. “But with economic performance still weak, industrial action heightened and the political outlook so uncertain, only a few are persuaded that they must invest now,” he said, adding that the weak global outlook was adding to Egypt’s challenges.

“MORE UNREST”
In a bid to contain labour disputes and respond to public calls for social equality, the government hiked the minimum wage to 708 Egyptian pounds a month from 422.20 pounds in July.

Labour Ministry spokesman Alaa Awad said the minimum wage had been implemented across state firms. But he also said the ministry would not talk with strikers who disrupted output.

“The minister said there would be no talks with a protesting worker who is delaying production. He has to return to work before entering in any talks with the state,” he said.

Unions say the new minimum wage is still too low. Ahmed Abdel Zaher, the acting head of Egypt’s Workers Union, said that in practice, many factory workers still earned even less than the old minimum wage.

“The workers are asking for better, more fairly distributed pay and better work conditions. The government is very slow in responding to those demands, which will eventually lead to…

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