Private sector minimum wage to rise to LE6,000, many companies eligible for exemption

The National Wages Council decided on Sunday to raise the private sector minimum wage to LE6,000 per month, starting in May.

A set of legal exemptions, however, will mean that a vast majority of companies are not obliged to implement the rates.

The hike, which represents a 71 percent increase, follows a similar raise to salaries in the public sector. The wage raises follow months of record high inflation and are being implemented after a March devaluation saw the Egyptian pound drop around 60 percent against the dollar.

Sunday’s increase is for the total wage, including the employer’s share of the insurance subscription, according to a statement from the Planning Ministry, which runs the wages council. 

But exemptions are granted to private micro businesses employing fewer than 10 workers — the total of which is equivalent of nearly two-thirds of Egypt’s workforce.

According to the latest official census data on the matter, collected in 2017-2018, the percentage of establishments whose workforce does not exceed ten employees is 97.2 percent of the total economic establishments in Egypt, employing 62.9 percent of the country’s labor force.

Even the remaining private sector companies will also have a three-month period to request exemption from paying the minimum wage, as long as they provide proof that they are struggling financially to a grievances committee led by the labor minister.

The first-ever legal minimum wage for private sector workers was introduced in January 2022 at LE2,400. It was raised to LE2,700 the following January, then again in July 2023 to LE3,000, before reaching LE3,500 at the beginning of this year, according to the ministry statement.

A mechanism was also introduced to allow exemptions from paying the initial minimum wage, which the Private Sector Workers Syndicate chair told Mada Masr at the time were granted to 22 commercial sectors in their entirety, employing 7 million workers, following demands by the Federation of Egyptian Chambers of Commerce.

Exemptions were canceled in 2023, before the window was opened again in today’s decision.

Beyond the legal exemptions, the syndicate chair had noted in 2022 that any minimum wage increase would also need to be paired with major changes to enforcement, as businesses are able to exploit a variety of legal and quasi-legal ways to avoid implementing the minimum wage, paying out periodic raises and bonuses, and providing other rights guaranteed by long-term hiring.

Today’s decision comes two months after the introduction of a LE180 billion social support package in February that included raising the public sector minimum wage from LE4,000 to around LE6,000 per month.

The following weeks witnessed a wave of strikes and labor demonstrations in different sectors demanding increased wages and fairer bonuses in the face of increasing cost of living. The strikes included employees at the Ghazl al-Mahalla textile company and at Universal Group, as well as several short-lived protests at real estate giant Talaat Moustafa Group.