Egypt’s national minimum wage could rise by a third
National minimum wage could rise by a third: The government could raise the national minimum wage to EGP 1,400-1,600 a month, from a current EGP 1,200, unnamed government sources said, according to the local press. The exact increment has yet to be determined, but will likely range between 17-33%, the sources say. Also under consideration is doubling the annual raise increment stipulated under the Civil Service Act to 15%, up from a current 7.5%. A committee studying the increases should complete its work within a month. President Abdel Fattah El Sisi instructed his ministers to implement the wage changes as of the first day of FY2019-20. Plans to raise the national minimum wage come after El Sisi discussed potential wage increases during a meeting last week key members of Cabinet.
It’s about time. None of us like rising costs — we run a business, too — but EGP 1,600? Is even that a liveable minimum wage? Argue about how many bureaucrats we really need. But don’t argue that an EGP 1,600 minimum wage is unreasonable in the private or public sector.
What is this going to do to the national budget? Rising expenditure on public wages is unlikely to widen the state budget deficit, since the ongoing reform program should see a new wave of subsidy cuts, which would allow some breathing room. A government source had told us earlier this year that the draft FY2019-20 state budget sees public wages accounting for EGP 294.9 bn of total spending, up from EGP 266 bn in the current fiscal year. Former Finance Minister Amr El Garhy had said last year that every EGP 10 addition to civil servants’ wages would increase costs to the state budget by around EGP 3.5-4 bn.
This comes as the Finance Ministry expects to finalize the upcoming state budget by next week, Minister Mohamed Maait tells Al Masry Al Youm. A preliminary draft of the budget forecasts GDP growing at a 6% clip and the budget deficit narrowing to 7.2%.
Background: The planning and finance ministries had been looking at a potential amendment of the national minimum wage in August 2017, but appear to have shelved these plans. Sources said at the time that any change would affect both the public and private sectors.