For decades, the Egyptian economy was managed in the same manner that a taxi driver managed his vehicle. The taxi–let’s say a vintage Nasr 128–may have been 30 years old but was kept on the road by bits of string, extra-strong duct tape and the inventiveness of mechanic and driver alike. You could never go very fast in the taxi, but that was not a priority. The essential thing was to keep it going and stop it from falling apart. Taking a ride was never a very comfortable experience, but it got you there in the end, and even though the meter never indicated what you should pay–that was up for negotiation and often depended on what you looked like you could afford–you were grateful to get there, because there was no viable alternative anyway. This built-in ambiguity allowed for flexibility in a transaction that had no set rules.
Nowadays, you still have those old battered taxis, although they’re disappearing fast. The new white taxis are taking over, and there was much relief to see they were comfortable, fast and had working meters. The introduction of the white taxis went very smoothly at first, and people would go out of their way to find one. Then, you started noticing things. One of the advantages of the new taxis was that they’re air-conditioned, but the drivers would not turn it on because it consumed more fuel. A few drivers tampered with their meters, so that a fare across the Nile that would normally cost no more than LE10 would suddenly be LE25. Because you knew that these were meant to be working meters, you had no leg to stand on. Some drivers even disregarded the meter altogether, insisting on a certain amount no matter what it said. The ambiguity old started creeping back in.
The fight against this systemic ambiguity, in my opinion, is one of the things that the Nazif government, in place since 2004, should be credited for–in the realm of economic affairs, anyway. It has simplified bureaucracy for customs, reducing the ambiguity and complexity that encouraged chronic levels of corruption. It tried–without success so far–to implement a real estate tax that should greatly increase the visibility of who owns what land in the country. It has passed a pension reform that, while not without its critics, sets the basis for a system in which future pensions can be ones retirees can actually live on.
But its biggest failure thus far has been to address, after years of runaway inflation, one of the most dysfunctional parts of the economy: wages. After five years of almost continuous labor protests across the country, the government should have gotten the message that there is a profound problem with an increasingly two-track economy: one for the poor, that is getting worse, and one for the better off, that is benefiting from increased integration into the global economy. This is why Egypt is seeing growth rates that are the envy of much of the world, and at the same time, growing protests and rising poverty at the bottom of the social ladder. Yet it has handled the wage issue piecemeal, dealing with one protest after another, granting concessions in one place, holding firm in another, but not tackling the larger issue.
The recent ruling by the Supreme Administrative Court to set a new national minimum wage is both an opportunity to resolve this matter and a symptom of the problem. Last week the court confirmed a March ruling that the Supreme Council for Wages, which had not met since the mid-1980s, should have been updating the national minimum wage, which stands at surreal LE35 per month (though no Egyptian actually earns that little). This means that for over 20 years there was no national standard–an ambiguous situation that gave plenty of room for exploitation. But there is also a problem with the court’s decision: in ruling that a new minimum wage should be set in accordance with rising prices of basic commodities, it is making a decision that should be informed by careful economic analysis and the result of negotiations between government, private sector and labor unions–not the personal whim of a judge.
The reaction to the court ruling by the government also smacks of political manipulation. It decided to set the new minimum wage at LE400, which was immediately contested by activists who want to set it at LE1200. The Egyptian Federation of Trade Unions, a regime-controlled entity which entertains its own ambiguity as to whom it represents, is talking about a minimum wage of LE550 but then wants different minimum wages according to qualifications (surely to be arbitrarily determined). Osman Ahmed Osman, the Minister of Economic Planning, shockingly told the press that if it is set that high, “we’ll bring Bangladeshis who’ll work for less than LE400.” Other government officials want separate minimum wages for civil servants and private sector workers.
As usual, the whole issue has landed on the desk of President Hosni Mubarak, who is said to be consulting the Ministry of Finance about it. I expect that at some point next year–perhaps shortly before the presidential elections–the Ministry of Finance will propose a new minimum wage between LE400 and LE600, and the president will say this is too low and increase it by decree. That is, after all, what happened a few years ago when civil service salaries were increased. It’s hard to see another outcome in the absence of representative stakeholders and a real political mechanism for social dialogue (one that, ideally, includes free elections and independent trade unions). This is why while parts of the economy now function like a white taxi, its core remains a battered black taxi, strung together by elbow grease and a keen sense of what can be gotten away with.
Issandr El Amrani is a writer on Middle Eastern affairs. He blogs at www.arabist.net. His column appears every Tuesday.