Friday, May 14, 2004


By William Fisher

May Day has come and gone in Egypt, and only one thing was missing: Labor.

As reported in Al Ahram, Egypt’s leading daily newspaper, “On May 1st police forces overwhelmed a group of activists holding a May Day demonstration in Tahrir Square (in downtown Cairo) calling for a 40 per cent increase in wages.”

There are three problems with a 40 per cent wage increase – or any. The first is that Egypt’s 21 million workers are understandably seeking a larger slice of a pie that has been getting smaller year-by-year. The second is that labor in Egypt has no political power. The third is that if it had any power, the police would squash it like a roach.

Egypt’s economy is in freefall. Unemployment and under-employment has been rising and working conditions getting worse. Most Egyptian workers live well below the poverty line.

The public sector – the government and the industries it owns – remains the country’s largest employer, despite years of efforts to privatize. Governments produce nothing and the enterprises they run are customarily poorly managed, over-staffed and inefficient.

Meanwhile, prices have been rising steadily. The price of basic staples has gone up between 33 and 109 per cent -- onions have increased by 500 per cent. Over five million people live in shantytowns, and over 100,000 Egyptians are diagnosed with cancer every year as a result of pollutants." According to Manpower and Training Minister Ahmed El-Amawi, improved investment is the key to solving many of the problems. And yet, according to a report by the Chambers of Commerce Federation, 800 factories in the new industrial satellite cities have stopped production as a result of economic recession. Investment in Egypt has dwindled to a trickle.

Organized labor is an oxymoron. It has no political constituency. The channels through which workers can express their demands are extremely limited. Labor activists have long pressed for an open trade union system to allow for multiplicity. The General Federation of Trade Unions (GFTU) is seen to be a government puppet in its endorsement of the unified labor law passed last year. Labor activists like Kamal Abbas, head of the Centre for Trade Union Workers' Services (CTUWS), believe part of the problem stems from the committee established under the law to decide on minimum wage, the restrictions of strike action, and limited time contracts. The committee, which is under the leadership of the Minister of Planning, has yet to take any action.

The legal system still provides an avenue for workers, but the current law impedes worker access to the courts. Petitions now go to the Appeals Court as opposed to courts of first instance, and there are only eight Appeals Courts in the country. Last year alone, more than 1,000 cases were backlogged. Moreover, the five-member committee established under the new law to look into labor complaints does not convene regularly. The group includes representatives of the Federation, the judiciary and the business community, but business people rarely attend, so the committee does not convene.

The Nasserist Party, which rails against privatization, American neo-colonialism and unemployment, has announced the formation of a Labor Front coalition of labor offices at political parties and labor activists. It has initiated a campaign to make sure workers understand their rights under the new law and can press for those rights. But most observers believe the political parties can do little since they are subject to heavy-handed government restrictions. Thus, there is
no organized labor constituency.

For many years, the United States, the European Union, and other donors have poured tens of millions of dollars into helping Egypt build a more competitive private sector and a more business-friendly policy environment for them to operate in. Significant funding has also been devoted to upgrading human capital: training programs to give the workforce the skills needed to survive in a 21st century environment. Yet university grads drive taxis or emigrate to the US and Europe. In 2001, 80 per cent of university graduates were unemployed a year after their graduation.

While there has been some progress in private sector development, government policy, capital, regulatory and practice constraints continue to place virtually insurmountable obstacles in the path of growth, except for the already wealthy. This chokes off investment and leads to still higher unemployment. Moreover, It is the wealthy who are able to use their contacts to practice ‘crony capitalism’, who tend to get most of the benefits of donor funds, who use their money to lubricate permitting and customs procedures, and who have access to the banking system.

In that environment, the prospects for substantial advances for workers are less than minimal. And so are the prospects for Egypt’s rise out of poverty and under-development.

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