Workers protest for compensation as Egyptian Iron & Steel furnaces extinguished

Ten workers at the Egyptian Iron and Steel Company were detained for two hours on Sunday after security forces dispersed 500 workers who demonstrated at the company’s main gate, a member of the company’s trade union committee told Mada Masr on condition of anonymity.

The workers’ protests came as the historic public sector industrial giant drew one step closer to liquidation, as the final plant in operation at the company was extinguished and it was announced on Sunday that a party would be appointed to begin the liquidation process the following day on May 31. 

Negotiations between the state and the company’s trade union committee about the severance package of the company’s workforce of around 7,500 workers are still ongoing, with monthly payments, end-of-service compensation, and health insurance benefits at stake for the workers. 

Though Egyptian Iron and Steel workers were aware that steps would soon be taken to implement the decision to liquidate the company, which was taken in January and met with protests by as many as 4,000 workers at times, production at the company’s plants was halted abruptly on Sunday, prompting the comparatively small and spontaneous protest.

Heads of department at the company were informed on Sunday with just 24 hours’ notice that the company would cease operations with immediate effect. In turn, the department heads informed workers verbally of the step on Sunday afternoon. Egyptian Iron and Steel’s management board, which was reshuffled in November, also ordered bus drivers for the company to stop transporting workers to and from the company headquarters in Helwan.

Central Security Forces forcibly dispersed the workers' protests, chasing crowds of workers in the surrounding area and detaining 10 workers for two hours before releasing them, the trade union committee source and another worker who participated in the protest told Mada Masr. 

Kamal Abbas, the general coordinator of the Center of Trade Unions and Workers Services, suspects that the announcement was made at short notice intentionally, to preempt and prevent labor bodies organizing a strike. The same tactic was used before production was halted at the National Cement Company before its liquidation, Abbas told Mada Masr. 

“What happened yesterday stripped the committee of its most important weapon,” said Abbas, since the bargaining power of the trade union committee rests upon “the workers being present within the company’s walls, which could mean a permanent strike." Abbas added that halting production and preventing workers from entering the company’s premises therefore weakens the committee as it enters into talks over the amount of compensation to which workers will be entitled.

The decision to cease production halted the remaining functional furnace out of a total of four in the company, the first time that all of the furnaces have lain dormant in 63 years. Natural gas supplies were also halted.

The company uses blast furnace technology which requires special procedures before any halt in production. Stopping the furnace suddenly can cause severe, even permanent, damage to the plant. 

In March, a member of the company’s board told Mada Masr that “no board member can take responsibility for the decision to halt the furnaces, which operate via technology that only allows them to be stopped for maintenance purposes. Any suspension of operation means their destruction, which means a loss of public funds of around LE500 million per furnace.”

According to Abbas, since the company board refused to make this decision for fear of bearing legal liability for mismanaging public funds, the decision to halt production was likely taken by the Metallurgical Industries Holding Company board, the biggest shareholder in Egyptian Iron and Steel.

In a separate labor action on Sunday held hours before the decision to halt production was taken, 1,200 workers held a protest to demand that they be paid compensation worth a minimum of LE400,000 and a maximum of LE700,000, echoing the line being put forward by the trade union committee.

Thus far, workers have been offered a minimum rate of compensation of LE250,000, just LE25,000 more than an initial LE225,000 offered by the Public Enterprise Ministry, which has capped the maximum compensation rate at LE450,000. The trade union committee member told Mada Masr that the workers have refused the offer, which was reached by the Labor Force Ministry and the trade union committee’s national parent union, the General Union of Engineering, Metal and Electrical Workers.

“The new offer does not include any contribution from the state to support the fellowship fund to ensure that all workers get all their financial rights, but rather proposes dividing the current resources of the fund between the workers in accordance with their years of experience and size of contributions,” he said. 

As it stands, the agreement would see an exceptional monthly allowance be paid to people who have worked at the company for over 25 years at a rate of LE1,200 per month until they reach the age of 60, after which they would be paid a pension. The trade union committee initially demanded a rate of LE2,000. “Negotiations are still ongoing about whether the workers will continue to receive health insurance services,” said the trade union committee source. 

The January decision to liquidate the company was the latest coup to a major overhaul of the state industrial sector — which is reportedly burdened with LE40 billion in debt — being carried out by Public Enterprise Minister Hisham Tawfiq, and which has thus far included the liquidation of the National Cement Company and the Egyptian Navigation Company and the partial privatization of other key players in the public sector.

The January decision to liquidate the Egyptian Iron and Steel Company, which flourished during the mid-century growth of a national industry that followed Egypt’s independence and served as the stage for seminal labor action in the 1980s, continues to be met with substantial backlash both in and out of government, with labor syndicates, the House of Representatives, and media and press pundits expressing their disapproval. MP Mostafa Bakry posted a series of blistering tweets on Monday, criticizing Tawfiq as a “man who hates our history, workers, and companies” and lamenting the shutdown of the company.”

While the iron and steel furnaces are to be closed for good, the company’s quarrying and mining activities have been splintered off and incorporated as a new shareholder entity, which was listed on the Egyptian Stock Exchange in late May. According to January coverage from the privately owned Masrawy news outlet, the new mining and quarrying company will employ just 400 workers, compared to the 7,500 currently employed by Egyptian Iron and Steel. 

While the government has consistently attributed the company’s liquidation to huge losses and the infeasibility of resuming production, a trade union committee member previously told Mada Masr that it disregarded several proposals to halt losses while paying off over a period of two years the debt the company has accumulated.