WATANI International
31 May 2009
The impact of the global economic crisis on Egypt’s working class was painted in bleak colours in a recent report by the House of Worker and Syndicate Services (HWSS). The report showed that newer industrial zones were the worst hit by the economic crisis, especially where no social security were guaranteed for the workers. The report said the current economic crisis has bared the private sector’s black market hold on employees, while stressing the absence of any role for the official Workers Syndicate in industrial zones. The Sadat City industrial zone, home to more than 2,000 industrial institutions, hosts fewer than 10 syndicate committees.
Uninsured
The government has yet to come up with a concrete plan of action to confront the crisis, and has so far refrained from commenting on the rate of workers’ dismissal or reduction in wages and incentives. The sole action taken by the government has been to support businessmen overcome the crisis, indirectly thus helping to keep jobs intact.
The HWSS reported that 6,100 workers in the private sector were dismissed in April 2009, of which more than 3,100 worked in the textile industry. One factory closed and all its employees were dismissed without any compensation. In some cases where employees were not dismissed, they had to sustain cuts in wages and incentives. Workers complained of being penalised for minor reasons and forced to work overtime without extra pay. In some sectors, including tourism, unpaid leave was encouraged and expense money reduced. In the construction sector some workers were forced to choose between agreeing to renew their contracts with revised, meagre pay packages, or not renewing them at all.
The HWSS expects more workers to be dismissed in the coming months. It must be noted, though, that the report was written before the H1N1 flu crisis hit worldwide, prompting the government to start a pig cull in Egypt. The cull has already left some 20,000 Egyptians who worked in the pig breeding industry jobless.
The report quoted Adham Nadim, executive manager of the Industrial Modernisation Centre, who expects factories to dismiss 45 per cent of their unskilled labour force. Last March, Mr Nadim said during a businessmen’s seminar that 65 per cent of the 2 million Egyptians working in the industrial sector were insured. Therefore, Mr Nadim said, a tight insurance plan had to be drawn in order to guarantee insurance hand outs.
Growth downfall
Since the onset of the global economic crisis, Mr Nadim said, Egyptian exports decreased by some 30 per cent. “We have lost our main markets, and should therefore look seriously for alternative markets,” he remarked.
On his part Minister of Economic Development Osman Mohamed Osman expects, as a result of the global economic crisis, a 9.5 to 10 per cent increase in unemployment and a 4 per cent decrease in growth during 2009/2010, the report said. Each percentage point decrease in growth rate, Dr Osman said, produced 150,000 unemployed, and it was the fast growing sectors in the economy that were most affected by the crisis. The Suez Canal, tourism, industry and transportation sectors are each expected to suffer some 8 to 5 per cent reduced growth ratio in fiscal 2009/2010. As for the sectors of building, commerce, finance, communication and information technology, Dr Osman expects variable ratios of growth decrease, especially considering that the limitations and the time range of the global economic crisis are not predictable.
Added burden
No employees were dismissed in the Egyptian banking sector, the report declared. Nevertheless, banks have taken a few measures to deal with the crisis. For the first time some national and international banks in Egypt have imposed a charge on deposits and withdrawals. According to an employee of Misr Bank, the decision to set a charge on banking transactions was dictated by the Central Bank, but the fees varied from one bank to another.
Dr Osman said the financial gap between total investment and national savings was expected to reach EGP85 billion during 2009/2010. Remittances from Egyptians working abroad, which normally finance this gap, he said, were expected to fall from EGP41 billion in 2008/2009 to EGP40 billion in 2009/2010.
The global economic crisis is expected to bring home more than 250,000 Egyptians working abroad in the months to come. This should be an additional burden on the government, which is as yet not prepared to deal with the 10 million unemployed already in Egypt, to say nothing of the added burden of those coming home.