On Egypt's minimum wage
Rashad Mahmood, an independent consultant and journalist who until last year was based in Cairo, sent me his thoughts on the campaign for a new minimum wage in Egypt. I agree with him that the inflationary impact of arbitrarily increasing the minimum wage is not being talked about enough. Nor are other issues: for instance, if the minimum wage is drastically increased, why not end the bonus system in place in many workplaces? And optional extra like additional months of wages that are paid out by some employers? A new wage system cannot only be about a living wage, it should also be about a clearer, enforceable system that provides labor flexibility and increases productivity. That's something missing from the public discussion thus far.
For a little background on the minimum wage in Egypt, last year an administrative court ruled that the government had been negligent in not holding a meeting of the Supreme Council for Wages, which sets the minimum wage, since 1984. The official minimum wage had thus been frozen at the ridiculous level of LE36 per month. The NGO that had filed the suit meanwhile issued a report that, based on cost of living estimates, the minimum wage should be LE1200. Business associations countered that it should be LE400, the government agreed, and I had bet that, were it not for the revolution, Hosni Mubarak would have decreed that the government should set it at LE500-600 as a pre-electoral populist measure. After the revolution, some labor activists even called for a new minimum of LE1500. For the moment, different wage levels are set for the public and private sector (which does not make sense to me) and many workers earn a good part of their income not from salaries but from bonuses.
Here are Rashad's thoughts: