The impact of minimum wages: auc versus government workers

 BY ROQAYA ZAMZAM

Enforcing minimum wages in the private sector in Egypt has sparked debate with regards to its application at AUC.

A workers’ supervisor, who requested to remain anonymous, explained that AUC staff members have more benefits than those who work in the governmental sector.

He said that AUC workers get insurance and have different opportunities to develop themselves with courses offered by the university.

Workers are also given the opportunity to send their children to enroll in the university’s undergraduate programs.

The supervisor added that once the minimum wage law is implemented to the public sector, workers would more likely be discouraged from moving to it.

“With the ongoing financial crisis the country is going through, every sector is affected; including AUC,” he said, adding, “If the law gets applied, AUC won’t be able to abide by it immediately; it will take the university a year or two to be able to adjust their policies.”

The minimum wage for any full-time worker at AUC is EGP 1,460, which, according to the supervisor, provides better standards of living as opposed to the numbers that the public sector provides its workers with.

On the other hand, a custodian, who also requested to remain anonymous, disagreed with the supervisor’s statements.

“I would definitely shift jobs to the public sector as soon as the law gets implemented; here at AUC, I supposedly get 1450 pounds a month. But, the amount is reduced to EGP 1100 after all cutbacks,” he said, adding that the government would provide workers with at least EGP1200 pounds as net value.

He said that it is difficult to work in the public sector, given the fact that one must have connections and a lot of money because nothing works without bribes.

Sherine El Ashrafy, economics professor, said that on a national level, “The higher the price, the lower the quantity demanded; if the minimum wages increase, businessmen will demand less labor to reduce their costs.”

Ashrafy added that cuts in the labor force would not only cause huge inflations in unemployment, but would also result in a drop in skills and quality of products.

She believes that there are certain steps that must be taken for the law to be effective and provide a sufficient environment for economic growth.

“Because private sectors seek profitability, the government must give them the initiative to work and encourage domestic investment. They should increase the demand of labor through giving the private sectors lower bureaucracies and tax incentives,” she said.

Ashrafy added that although the minimum wage law has already been enforced on the public sector, it still holds some unresolved issues and may lead to bigger problems.

“It will increase the government’s spending necessitating the government to find other sources of revenues to cover the budget deficit,” said Ashrafy, adding, “Increasing the real state tax will add to the governments profits, but a lot of changes have been made to it so its application remains a problem.”

Ashrafy explained that the government’s only solution would be to reduce corruption through firing workers who aren’t qualified for their positions.

“Realizing each workers’ capabilities and hiring those who are perfect for the job will cause the government to shift its spending into more useful material and will ease the application of the law,” she said.

In her opinion, the public sector is different because it doesn’t seek profit, but does have a higher standards of living and the population’s welfare as a priority.

She added that if the government does not produce enough revenues to cover budgets cuts more problems would arise with necessities like electricity cuts, it could cause chaos across the country.

Aly Wageeh, an appeal lawyer, explained that the law is one of the revolution’s demands and issuing it shows our path to democracy and growth.

“Applying it on the public and private sector is a must to ensure the worker’s rights and above the subsistence living. They deserve a good standard of living above which they can perform better at their jobs and benefit the country,” Wageeh said.