Egypt's trade union movement has been gaining momentum since the nation's revolution, but the push for labour rights has been dampened by disorderly strikes that threaten to derail a recovery.
Unions gather strength in Egypt
CAIRO // Egypt's trade union movement has been gaining momentum since the nation's revolution last year, but the new-found push for labour rights has been dampened by disorderly strikes that threaten to derail an economic recovery.
An uprising driven by demands to tackle high unemployment, runaway inflation and improve rights for workers has empowered a once-underground labour movement after the fall of the former president Hosni Mubarak in February last year.
A new draft law, led by Ahmed El Borai, the former labour minister, allowed trade unions to organise for the first time beyond the parameters of the government-controlled Egyptian Trade Union Federation (ETUF).
This involved the formation of a second union power: the emerging Egyptian Federation for Independent Unions (EFIU), which now has about 2 million members.
However, delays in fully enforcing the law have maintained the rift between the ETUF, which is regarded as the regime's all-powerful union, and the EFIU, leading to impatience among thousands of employees and increasingly pronounced calls for the government to meet demands.
Last month, strikes halted work at Centamin, a gold mining company exploring in Egypt's Eastern Desert, after a "breakdown in ongoing discussions involving general salary increases and other benefits with some members of the workforce", the company said in a statement filed on the London Stock Exchange.
Work has since recommenced at the Sukari gold mine, but it is not the first such incident of strikes.
Lecico, a ceramics exporter, said "significant disruption" from lower productivity, ongoing strikes and subsequent shutdown of its factories in Egypt contributed to forcing the company to take 47.4 million Egyptian pounds (Dh28.7m) of provisions in the fourth quarter, while Agrium, a Canadian fertilizer company, had to close its nitrogen plant in Egypt last November after protests turned violent.
Former government officials and industry players say that until dialogue between the government, labour unions and employees commences, it is unlikely strikes will stop. "The weakness of trade unions has prevented any meaningful dialogue [between employees and companies] so the impact of course is tremendously negative as far as the economy is concerned," said Samir Radwan, Egypt's former minister of finance, who was in office at the height of the revolution between February and July.
"It makes the power of the trade movement extremely weak, and that has an impact in terms of difficulty to control strikes, stoppages, and factional demands by various groups like bus drivers and constructions workers."
Ongoing sit-ins and strikes, factory closures and security breaches have "intimidated the private sector", he said, which is often seen by ordinary Egyptians as a hangover of Mr Mubarak's allegedly corrupt privatisation spree during the 1990s.
More than 1,500 private enterprises have closed down, Mr Radwan said, and some foreign investors have exited Egypt. Now Egypt's economic indicators are flashing red and the country needs US$11 billion (Dh40.4bn) financing in two years to plug its deficit, according to Momtaz El Saieed, the current finance minister, who has been negotiating a $3.2bn emergency loan package with the IMF.
The International Labour Organisation (ILO), which last year endorsed a move by the government to introduce a draft law for freedom of association for trade unions, is now more sceptical.
"[Labourers] are starting to lose their patience with the system," said Yousef Qaryouti, the head of the ILO's Egypt office.
"It's not just an issue of salaries and minimum wage, this will not solve the problem. It is only through dialogue between the government, employees and workers that you can achieve stability and at the moment this is not the case."
He added that there were strategic disagreements between labourers and companies that required an overhaul at government level. But time is running out for the country.
Egypt's international reserves plummeted to $15.7bn at the end of February, approaching half of what they were before the revolution and only enough to cover about two to three months of imports.
Egypt's central bank said last week that the country's balance of payments had swung to a deficit of $8bn during the second half of last year from a surplus a year earlier of $571.7m.
Foreign direct investment dropped to a deficit of $418.1m from a positive $2.3bn a year earlier, the central bat also said.
Economists now expect the country's year-on-year GDP to grow by only 1.6 per cent in the financial year starting on July 1, but to rise to 4 per cent the following year, a Reuters survey of 11 economists forecast.
Mr El Borai expects the new independent federation of labour unions to start employing collective bargaining and become a real power in the relationship between employers and workers.
"Sit-ins and strikes may have resulted in a decrease in production rates and in the economy, but they are not the real reasons behind the [fiscal] crisis," he said.
"Union participation has a role in achieving the demands of the movements taking place in the Middle East, which include achieving social justice, which means redistribution of income. "It is not possible for less than 0.5 per cent of the population to enjoy over 75 per cent of gross domestic product."
Since the revolution the number of registered independent unions reached 305 under the umbrella of the EFIU.
"This is a very different reality from the one before the revolution," said Mr El Borai.