Back to the complete issue
Monday, 25 March 2019

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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.