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The National Council for Wages Sets a New Minimum Wage for Employees in the Private Sector

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On 28 June 2021, the National Council for Wages (the “NCW”) announced that it has set a new minimum wage for private-sector employees (the “Decision”). In addition, the Decision provides for new periodic increment schemes that private-sector employees will benefit from.

The Decision comes in alignment with the Egyptian government’s action plan to mitigate the adverse effects of the COVID-19 pandemic on the economy and its impact on workplaces.

We will delve into the key highlights of the Decision as follows:

Minimum Wage and Periodic Increments

The NCW is a public body and its current structure is established by virtue of Prime Ministerial Decree No. 2659 for the year 2020. The NCW is mandated with setting minimum wages for the public and private sectors. In addition, the NCW is also responsible for reviewing the minimum wages set thereby on an annual basis.

According to the Decision, the NCW has set a minimum wage for employees working in the private sector to be EGP 2,400 per month starting from 1 January 2022. The Decision further provides that private-sector employees will receive a periodic increment for the fiscal year 2021/2022, where such periodic increment will be 3% of the employees’ social insurance wage and may not be less than EGP 60 per month, as of 1 July 2021.

It is worth noting that, prior to the Decision, the NCW did not set a minimum wage for private-sector employees. Earlier this year, the Cabinet of Ministers increased the minimum wage for employees working in public sector companies to EGP 2,400 per month.

Implementation and Enforcement

The Decision also adopts flexible mechanisms to encourage its implementation by private sector companies. In this regard, private sector companies who are unable to comply with the new minimum wage will have alternative routes in order to fully comply with the Decision and implement the minimum wage outlined therein.

In addition, the Decision provides that the affected companies may submit their complaints either individually or through their affiliated unions to the NCW’s complaints’ committee and wages committee by no later than October 2021.

Market Reaction

The Minister of Planning and Economic Development, Dr. Hala El-Said, stated that “the NCW’s decisions in relation to minimum wages and periodic increments take into account several factors, including the interests of private-sector workers and the need to implement an appropriate increase in their wages, whilst taking into account the current global economic climate as a result of the COVID-19 pandemic and the need to lighten the load on economic entities so that they are able to maintain their activities.