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Lawmakers to study how Egypt's civil servants are paid

The majority coalition in Egypt’s parliament wants to amend the civil service law to increase what government employees are paid, while some experts and economic observers believe the state ought to instead create a work environment that discourages incompetent civil servants.
Staff and workers of Egypt's Ministry of Finance Tax Authority hold a sign which reads, "Distress to President of the Republic, Cancel the Civil Service Law" during a protest in front of the Syndicate of Journalists in Cairo, August 10, 2015. Trade union workers staged the protest to demand the abolition of the Civil Service Law and a minimum and a maximum wage for public servants, local media reported.  REUTERS/Amr Abdallah Dalsh - GF20000019148

CAIRO — When Egypt's parliament returns in October, it's expected to consider legislation that could mean more money for government employees.

Hamam al-Adli, head of parliament's Complaints and Proposals Committee and a member of the pro-government majority party Support Egypt coalition, noted in a Sept. 7 press statement that some proposals will aim to amend Civil Service Law No. 81 of 2016.

Egyptian Finance Minister Mohamed Maait had said Aug. 27 that the government and the ministry have set up a committee to reform the wages of civil servants. The committee has already started collecting data on the wages of employees of Egyptian ministries and government agencies.

Maait explained the committee will address problems that arose from Law No. 81 of 2016. Incentives, allowances, bonuses and other non-fixed remuneration items that had been calculated as percentages of the basic wage were turned by this law into fixed sums. The change yielded less income for employees, a Ministry of Finance source explained to Al-Monitor on condition of anonymity.

“For example, an employee who earned in 2017 about 3,000 Egyptian pounds [$167] as a fixed wage would receive a total monthly income of 4,350 pounds [$243] when a percentage of 15% — or 450 pounds [$25] — is added to his wage for each of the three non-fixed remuneration items. He would receive the 3,000 pounds as a basic wage, plus 450 pounds as incentives, 450 as bonuses and 450 as allowances," the source said.

Under the previous system, “With the increase of this employee’s basic wage in 2018 by 10% to 3,300 pounds [$184], all non-fixed items would have increased accordingly. His total income would have become 4,785 pounds [$267]. This is broken down as 3,300 pounds as a basic wage, plus 495 pounds [$28] as incentives, 495 as bonuses and 495 as allowances. But the Civil Service Law turned the non-fixed items into fixed amounts of 450 pounds. This employee’s total income in 2018 is now 4,650 pounds [$260] — 3,300 pounds as a basic wage plus 450 pounds in incentives, 450 in bonuses and 450 in allowances — which is 135 pounds [$7.50], or about 3%, less than the total income he would have received under the previous regulation," the source continued.

The source pointed out that some employees receive just slightly less than they would have received under the old plan, but a large segment notice a bigger reduction, especially those who had received much higher percentages — with incentives, allowances and bonuses in some cases of up to 75% or 100%.

“The committee … will try to compensate civil servants for the loss incurred since the Civil Service Law of 2016 took effect, to this date. It will also develop a strategy to increase wages as of the current fiscal year until the fiscal year of 2021-22," the source said.

Not everyone thinks an increase is a good idea. Rashad Abdu, head of the Egyptian Economic Research Forum, told Al-Monitor the Civil Service Law of 2016 was designed to curb government employment through attrition. He said, “It aims to create a discouraging environment for employees by reducing wages, to encourage them to shift to the private sector."

Abdu pointed out that the bill aims to narrow the budget allocated for wages borne by the state, which stands at 270 billion pounds (almost $15.1 billion) in the state budget for the 2018-19 fiscal year. “The state is targeting about 989 billion pounds (almost $55.2 billion) in revenues in this [total] budget, which means that the budget allocated for wages would consume about 27% of total revenues,” he said. “This 27% representing the wages allocation to total revenues was the same in the pre-2016 budgets, before the civil service law was applied, although the law led to a decline in the number of government employees from 7 million to 5.7 million from 2016 until now.”

He continued, “The amount the state could have saved from its budgets, which ought to be allocated to health, education, development of infrastructure and services, is once again being spent on higher wages for a fewer number of staff. This will make government employees stick to their jobs.”

Economic expert Sharif al-Demerdash said the word "increase" in government wages is deceptive because a general increase would make the state bear several unnecessary expenses. He told Al-Monitor that would lead to higher inflation, noting, “Inflation results from an increase in prices, coupled with the growth of the purchasing power of some citizens, as a result of their increased income. Therefore prices will remain high since the purchasing power would maintain a high level of demand."

He added, “The solution is not to raise wages or to compensate civil servants for the effects of the civil service law, but to restructure wages. The excessively high wages of some government employees should be decreased and the wages of unjustly paid civil servants should be increased.”

Wael al-Nahhas, an economist and financial adviser to a number of investment institutions, told Al-Monitor, “Some government employees have not been affected by the civil service law and they are therefore not entitled to compensation. Others, however, deserve such compensation.”

Essam al-Feki, secretary of parliament's Planning and Budget Committee, told Al-Monitor he proposed the idea of reducing the basic wage while increasing the value of incentives, bonuses and allowances and linking them to production in the industrial and agricultural sectors, or to productivity, performance and citizens' satisfaction. Feki believes his proposal would only discourage employees unwilling to work hard and diligently.

“This would allow the state to reduce expenses while keeping competent employees and giving them their due rights," he said.

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