What does the newly-implemented private sector minimum wage requirement mean? The National Council for Wages hiked private sector minimum wages by 11% in July in a bid to move closer to minimum wage parity between the private and public sectors. The move — which marked the second time private sector wages were increased since the beginning of 2023 — compels private sector firms to pay their employees at least EGP 3k a month, up from EGP 2.7k. Broadly speaking, the private sector was prepared for these wage hikes, and lauded the move to enforce baseline salaries across industries, according to sources Enterprise spoke with.

It’s all very fresh — and didn’t come easy: The private sector minimum wage is relatively new in Egypt, having been introduced at the beginning of FY 2021-22 at EGP 2.4k a month.Private sector companies were initially resistant to the new minimum wage requirements, with thousands of companies filing for exemption. Companies claimed that high employment counts, increased production costs, and the pandemic have left them unable to pay for the additional labor costs.

Another private sector minimum wage hike incoming? The Supreme Council for Wages will meet before the end of the year to look into potentially hiking the private sector minimum wage in response to recent hikes to the public-sector minimum wage, council member Magdy Badawy told Enterprise.

But nothing is certain: Whether or not the council moves forward with another hike would largely depend on the various sectors’ ability to afford the additional expenses associated with a higher minimum wage requirement, Badawy said. Currently, not all private sector companies are on equal footing when it comes to salary ranges, Badawy said, noting that there are some who pay out salaries exceeding the minimum wage, some who pay out the minimum wage, and others who are struggling to keep up.

REMEMBER- The public sector minimum wage was just hiked for the third time in 12 months to a monthly EGP 4k from EGP 3.5k, following President Abdel Fattah El Sisi’s directives last month. The public sector minimum wage has climbed almost 50% since July 2022, before which it was set at EGP 2.4k a month. The level was then raised again in October and April.

Salary increases need to match inflation levels: “There was a lack of balance between the salaries being paid out and inflation levels prior to the implication of the private sector minimum wage,” Federation of Egyptian Industries’ (FEI) Mohamed El Bahy told us.

And although it may entail more spending for companies, minimum wages are good for the bigger picture: Hiking the minimum wage also helps increase spending which plays a key role in reviving the economy, El Bahy said. “Every wage hike ends up echoing in the local market, with people’s spending.”

The industrial sector is ahead of the game: “Employees in the industrial sector make double or triple the private sector minimum wage on average.” El Bahy said, adding that the sector prioritizes its workers and their comfort. The main component for industry is labor — so the workers’ happiness and satisfaction plays a huge role in the production process, he added. Employers prioritize worker satisfaction and that’s why the industry already enacts regular salary increases, especially for trained workers.

Industry also offers various forms of support: The industrial sector, on top of offering competitive salaries, also offers workers other benefits like transport cost and health ins.

Not all sectors are equal: “Some sectors, like the service sector, depend on customer tips to fulfill their employees’ wages,” El Bahy told us.

Exceptions are necessary: In some cases, the number of employees is more important than how much each individual employee is getting paid, El Bahy argued. In Upper Egypt for example, a single family can have four or five members in the workforce, which would put its total monthly income at over EGP 10k — enough to sustain an entire family in a village where living cost is much lower than in urban areas — El Bahy said, pointing to industries that mainly rely on untrained workers. “Imposing the minimum wage on such companies would push them to let go of a number of their employees.”

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