Private-sector minimum wage to rise 11% in July

Private-sector minimum wage to rise again: The private-sector minimum wage will rise by 11% from July after the National Council for Wages (NCW) decided to raise the threshold for the second time this year to support workers amid soaring inflation. In a statement yesterday, the Planning Ministry said that private-sector firms will have to pay their employees at least EGP 3k a month from 1 July, up from EGP 2.7k.

This is the second time the council has hiked the minimum wage this year: A 12.5% increase came into effect in January, raising the minimum wage from EGP 2.4k a month. The latest increase means that private-sector employees on the minimum wage will have seen their monthly income rise 25% in the past six months.

BUT- This is still lower than the public-sector minimum: Some members of the council werehopingto raise the minimum wage to EGP 3.5k and match the new minimum for public-sector workers introduced in April.

Annual bonuses remain unchanged: New rules introduced in January oblige private-sector firms to pay out annual bonuses equal to at least 3% of the employee’s ins. (or a minimum of EGP 100) as of their 2023 financial years.

Cushioning the blow from the economic crisis: The minimum wage hike is the latest in aseries of measures announced by the government to soften the impact of the economic crisis. Three major currency devaluations have helped to push inflation to a near-record high of 32.7% in May, putting pressure on low-income households.

Industry bodies aren’t happy:Mohamed El Bahey, a member of the Federation of Egyptian Industries (FEI), told us that without sector-specific exemptions companies will be forced to lay off workers to shoulder the higher wage costs. “It’s expected that we see layoffs in sectors that depend heavily on untrained workers and those where workers earn lower salaries as a result of the new hike,” said El Bahey, who heads up the pharma manufacturing division at the FEI.

No problem for the industrial sector: The new hike will not present a challenge to businesses in the industrial sector owing to the fact that many of the workers in this sector are already paid above the new minimum wage, El Bahey added.

No exceptions: The new decision didn’t exempt any sectors from complying with the new minimum and all of the old exemptions have been scrapped, head of the NCW’s complaints committee Abdelhamid Belal told Enterprise yesterday. Manpower Minister Hassan Shehata will request exemptions for a list of nonprofit organizations that he will present to the NCW, Khaled El Fiky, a member of the council’s board, told Enterprise, without giving further details.

Background: The private-sector minimum wage is relatively new in Egypt. It wasintroducedat the beginning of FY 2021-2022 at EGP 2.4k a month. The raise earlier this year was met with push back from companies who complained that they couldn’t afford the higher wage bill.