Some one-and-a-half years into the revolutionary climate that has had Egypt in its grip since January 2011, and despite a full change in the country’s political leadership, Egypt does not appear to be anywhere near getting the wheels of its production back rolling.
Major behind this is the state of discontent which engulfs the worker sectors and has led to almost non-stop demonstrations, walkouts, and sit-ins since the revolution.
The Economic expert and professor of economy at Mansoura University, Mukhtar al-Sharif, sees that the series of protests and walkouts which end in appeasing the workers with no regard to the employer will lead Egypt nowhere. “Ever since the outbreak of the revolution,” Dr Sharif says, “governments have taken to giving in to workers’ or employees’ demands, meaning they now know how to pressure the authorities in order to achieve gains. But thiscomes at a huge price in GDP.
“Under the current dire economic conditions,” he stresses, “our first priority should be to go back to production full force since, practically, there can be no wages for no work and no profits for no production.”
Arm-twisting or rightful demands?
The past few weeks especially witnessed production grind to a standstill in several factories among the major industrial projects in Egypt. Worker strikes closed down Tora Cement, which provides some 30 per cent of the cement market in Egypt; Sukari gold mine; the Ain Sukhna plant of Ceramica Cleopatra; and brought to halt production at the textile factories in Mehalla. True, the workers have now ended their strikes and the wheels are back rolling, but that only came about through the personal intervention of top officials who brokered settlements between the workers and their respective administrations.
The problem, however, is that matters do not stop there. Strike contagion has spread to workers and employees in many industries and businesses, who went with the flow and have taken to the streets.
Employers and investors see the walk-outs as arm-twisting and reject the outright “blackmail” by the labourers. The millions, in some cases billions, of Egyptian Pounds or Dollars of losses incurred due to the production stoppage mean that the firms are in debt, which does not promise profits any time soon. This alone imperils the financial benefits the workers had been hoping to achieve through the strikes, and threatens to render the settlement deals as no more than tranquillisers not remedies to the workers’ ills or answers to their rightful needs.
Sukari miners strike
Following a seven-day strike by the miners in the Sukari gold mine in the Eastern Desert, Centamin plc, the Egyptian-Australian joint venture which has exploitation lease of the mine, halted operations in all departments. This was the sixth strike since the 25 January Revolution in 2011, and was compounded by the labourers blocking the roads leading to the mine.
The general manager, Esmat al-Raghy, said the company stock in the London and Canada
exchanges lost some 68 per cent of its value, and that losses incurred owing to the work stoppage in the mine and factory amounted to some USD2 million a day. The Egyptian government, he said, also incurred daily losses of some EGP400 million as a partner in the project, to say nothing of the taxes and local fees lost.
Last Monday, however, with operations at Sukari halted and the Australian partner threatening to resort to international arbitration to collect its financial rights which, as Mr Raghy explained, amounted to USD30 billion, a settlement was finally reached. A joint commission headed by the Labour Force Minsiter Rifaat Hassan, and including as members representatives of the miners’ syndicate, presided over a meeting between a company delegate and worker representatives. It was decided to pay the workers the 60 per cent raise they had demanded as incentive for working and living in a remote area, and that 34 workers who had been fired should go back to work, but that an investigation should be carried out into the matter. Until Watani went to press, work had not resumed on the mines.
Mahalla textile and Tora Cement
Production resumed last week at Ghazl al-Mahalla (Misr Spinning and Weaving) Company in the Delta town of Mahalla al-Kubra after workers decided to suspend their strike which had lasted for some eight days.
The workers resumed production after some of their demands were met in the wake of a meeting at the presidential palace in Cairo between the presidential consultant Mohamed Gadallah and worker representatives. It was agreed that the workers should be granted salary increases and financial bonuses spaced over a specified period of time, and that the pay for the strike days would not be deducted from their salaries.
The case at Tora Portland Cement Company was more complicated. For the first time since the company was established in the 1930s and in an event with no precedent in Egypt, the furnaces at the cement plant were turned off.
Production came to a standstill owing to the strike of some 400 workers subcontracted by the company, who demanded to terminate their contracts with the subcontractors and be officially hired by Tora Cement.
The workers had locked the factory’s shipping gates since 11 July, leading to a pile-up of goods while the firm stood unable to honour its contracts with clients. According to Abdel Moneim al-Gamal, head of the syndicate of construction workers, the strike threatened to disrupt the entire construction sector in Egypt, since Tora Cement holds a 30 per cent share of the market.
An agreement was reached when the company agreed to provide the workers with a daily meal, regulate work hours to be eight hours a day, and provide each worker with a EGP50,000 insurance policy.
Unaffordable
Mohamed Hanafi, manager of the industries’ chamber, sees that the culture that governs the relation between employer and worker in Egypt has space for improvement. “Closing down a factory is no answer to problems,” Mr Hanafi says. “Answers lie in equitable laws that regulate that relation, with the State as guarantor and as the party well-positioned to step in to contain any crisis.
“Egyptian workers,” Mr Hanafi notes, “are generally underpaid; their wages need reconsideration. At the same time, however, employers cannot maintain factories in working order under conditions of labour unrest. In case they have to close down, they accumulate debt, which spells disaster to the factories and the economy as a whole.”
Rashad Abdu, professor of economy at Cairo University, stresses that a balance must be struck between meeting the rightful demands of workers and the economies of the factory. Egypt needs legislation for minimum and maximum wage that is fair to all.
Currently, Dr Abdu says, Egypt is suffering from declining revenues, a drop in investment, and an almost-halt in tourism. “We cannot afford anarchy and unrest,” he says, “The only way to go forward is to work hard and produce in order to be able to afford all the benefits Egyptians ask for.
“Several foreign investors,” he reminds, “have closed down and left. This means higher unemployment and lower production, which very poorly serves the workers’ cause.”
The story of Cleopatra
Mohamed Abul-Enein, the owner of the Cleopatra Group, says, “Closing the Ain-Sukhna factory was the hardest decision I took in my entire 30-year career as an industrialist.”
Established in 1983, Cleopatra Ceramics exports its products to more than 100 countries and employs around 20,000 individuals. Its Ain Sukhna factory south of Suez, is one of the largest ceramic tiles plants in the Middle East.
“I was among the first businessmen in Egypt,” Abul-Enein said at a press conference in Cairo to explain his position, “who ventured out of the Nile Valley and into the desert. Even though many at the time described this move as ‘madness’, I established a state of the art factory for ceramics in a desert area which did not have even the basic water and electricity. These I had to provide myself.
“Even though the economic downturn following the 2011 revolution slowed down production, I did not lay off a single worker. But the workers began rallying for what was, under the circumstances, unreasonable demands such as pay increases that amounted to some 50 per cent of their original salaries. When I rejected these demands, they detained at gunpoint for six days a number of Italian and Spanish experts who were working with the factory.”
The workers, however, alleged that Abul-Enein was not paying them their dues and had illegally fired a number of them.
But the straw that broke the camel’s back, according to Abul-Enein, was when the workers in mid-July refused to handle a shipment that was destined for Japan. At that point, he decided to close down the plant. “The factory was already overburdened with debt, which put it under severe pressure,” Abul-Enein said.
Suez governor Mohamed Abdel-Moniem Hashim, however, intervened and persuaded Abul-Enein to reopen the plant and rehire the workers.
WATANI International
5 August 2012