{"id":582238,"date":"2023-03-05T00:00:00","date_gmt":"2023-03-05T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/03\/05\/el-sisi-announces-egp-150-bn-program-of-wage-hikes-pension-increases-amid-soaring-inflation\/"},"modified":"2023-03-05T00:00:00","modified_gmt":"2023-03-05T00:00:00","slug":"el-sisi-announces-egp-150-bn-program-of-wage-hikes-pension-increases-amid-soaring-inflation","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/03\/05\/el-sisi-announces-egp-150-bn-program-of-wage-hikes-pension-increases-amid-soaring-inflation\/","title":{"rendered":"El Sisi announces EGP 150 bn program of wage hikes, pension increases amid soaring inflation"},"content":{"rendered":"

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A new program of p<\/span>ublic-sector<\/span> wage hikes, pension increases + tax breaks<\/span> <\/span>as <\/span>inflation toll mounts: <\/span>President Abdel Fattah El Sisi <\/span>announced<\/a><\/span> a new round of <\/span>public-sector wage and pension hikes on Thursday designed to <\/span>mitigate the impact of soaring inflation on the public (<\/span>watch, runtime: 3:03<\/a><\/span>). The measures include wage increases and a higher minimum wage for civil servants, higher pension payouts for state employees, and a higher income tax exemption threshold.<\/span><\/p>\n

#1- Wage hikes:<\/span> From 1 April, all <\/span>civil servants and workers at state-owned enterprises<\/span> will <\/span>receive a minimum EGP 1k increase to their monthly salaries, and the <\/span>monthly minimum wage <\/span>will rise by at least 17% to EGP 3.5k<\/span>. The minimum wage for employees with advanced qualifications will rise further: people with Master\u2019s degrees will get at least EGP 6k per month and PhD holders will receive at least EGP 7k.<\/span><\/p>\n

REMEMBER- This is the<\/span> third minimum wage hike this fiscal year:<\/span> <\/span>The government has <\/span>now increased the public-sector minimum wage by almost 50% <\/span>since July<\/a><\/span> before which <\/span>it was set at <\/span>EGP 2.4k per month<\/span>. A <\/span>second adjustment<\/a><\/span> was made in October raising it to EGP 3k.<\/span><\/p>\n

Will the private sector move in tandem? <\/span>The National Council for Wages will start looking into <\/span>setting a new minimum wage for private-sector workers and discussing the issue with businesses after the public-sector wage changes are signed into law, council member Magdy El Badawy told Al Hayah Al Youm (<\/span>watch, runtime: 14:15<\/a><\/span>). The council <\/span>raised the <\/span>minimum wage for private-sector workers<\/a><\/span> to EGP 2.7k from EGP 2.4k <\/span>at the start of the <\/span>yea<\/span>r<\/span>.<\/span><\/p>\n

Expect pushback:<\/span> Efforts to raise private-sector wages have received pushback from some <\/span>firms, who have complained that they can\u2019t afford the higher wage bill. <\/span>(We don\u2019t think businesses should get exemptions: If you can\u2019t afford to pay a liveable minimum wage, then your business probably doesn\u2019t deserve to exist.)<\/span><\/p>\n

#2- Pension increases:<\/span> State pension payouts will rise 15% from 1 April.<\/span> The measure will <\/span>impact around 11 mn pensioners, according to National Organization For Social Ins. (NOSI) head Gamal Awad.<\/span><\/p>\n

#3- An income tax break: <\/span>The government will raise the personal income tax exemption threshold <\/span>to EGP <\/span>30k from EGP 24k<\/span> currently. <\/span>(<\/span>Remember:<\/span> There are also plans \u2014 as yet still on the drawing board \u2014 to <\/span>raise the maximum tax rate to 27.5%<\/a><\/span> on high income earners, and we understand the taxman has no plan to back down on that front. Cabinet does not presently intend to raise corporate income tax to that level.)<\/span><\/p>\n

#4- Higher b<\/span>onuses for teachers, professors, and doctors:<\/span> Public sector employees, public <\/span>school teachers and university faculty members, and doctors will see hikes of EGP 300-500 to their bonuses, while doctors working night shifts and those in ER departments will see their incentives double. <\/span>The Washington Post reported <\/span>last month<\/a><\/span> that more than 11.5k doctors left Egypt\u2019s public healthcare system between 2019 and 2022 amid low wages and high inflation. <\/span><\/p>\n

#5 More money for Takaful and Karama: <\/span>Beneficiaries of the Takaful and Karama social <\/span>support program will see a 25% rise in cash transfers.<\/span><\/p>\n

REMEMBER- The government <\/span>added 1 mn families to the program<\/a><\/span> <\/span>under two rounds of <\/span>extra support last year, bringing the total number of beneficiaries to 20 mn.<\/span><\/p>\n

We knew more money was coming for social support: <\/span>The World Bank agreed in <\/span>December<\/a><\/span> <\/span>to extend a USD 500 mn loan to expand the Takaful and Karama program amid soaring food and energy <\/span>inflation<\/a><\/span>. The IMF\u2019s USD 3 bn bailout package for Egypt also aims to expand the cash transfer program by an additional <\/span>5 mn families<\/a><\/span>. <\/span><\/p>\n

THE COST-<\/span><\/p>\n

The full support package will cost some EGP 150 <\/span>bn<\/span>, the Finance Ministry <\/span>said<\/a><\/span> yesterday. The statement broke down the cost of some of the individual measures: <\/span><\/p>\n