For years, the balance between wages and prices has been an ongoing challenge for Egyptian citizens, who are grappling with skyrocketing prices that outpace wage adjustments. This situation has worsened due to government economic policies such as currency devaluation and the removal of fuel subsidies. Despite this, the minimum wage remains fixed at EGP 6,000, making it difficult for wages to keep up with inflation and rising prices.
Ibrahim Hussein, in his early forties and working in the Sayeda Aisha district near downtown Cairo, has had to cut back on using his small car, which is nearly 25 years old, due to the continuous hikes in fuel prices, the latest of which occurred at the end of October.
“I can no longer afford the daily cost of using my car,” says Hussein, an employee in a private sector company. “Fuel alone costs me over EGP 3,000 per month, in addition to regular maintenance expenses. With three children in different stages of education, along with other commitments such as food, clothing, rent, medication, and utility bills for electricity, gas, and water, I had no choice but to switch to public transportation. This has added to my daily suffering, affecting my health negatively as well.”
Hussein adds that despite these pressures, he has not entirely given up on his car, limiting its use to emergencies or family outings. “The car, under such circumstances, is a lifeline,” he says. He concludes by expressing his ongoing struggle with rising costs: “Every time there is a currency devaluation or an increase in fuel prices, life becomes more difficult. What can we possibly do next?”
Unfair Wages
According to the latest economic census published in 2020, 12.6 million citizens work in the formal and informal private sectors. Reports from the United Nations and the World Bank define extreme poverty as earning less than $2 per day, equivalent to EGP 100. In January 2023, the Ministry of Manpower issued a circular mandating companies to implement an increase in the minimum wage, with financial penalties ranging from EGP 100 to EGP 500 per violation, multiplied by the number of workers affected.
Petroleum product prices have risen significantly, with three increases in 2023 alone: the first in March by 15%, the second in July by 12%, and the most recent in October by 17%.
A report by the Central Agency for Public Mobilization and Statistics (CAPMAS) on employment and wages, released in mid-October 2023, showed that the average monthly wage for workers in the public and private sectors was EGP 5,005, compared to EGP 4,284 in 2022, marking an increase of approximately 16.8%.
An analytical study published by the Egyptian Initiative for Personal Rights in September 2023, titled “Towards a Fair Wage for All in Egypt: Options for Universal Minimum Wage Application,” concluded that it is now essential to issue a unified law restructuring the wages of all paid workers in Egypt. The law should increase wages in line with rising prices and establish a minimum wage sufficient to meet the needs of workers and their families.
The study recommended reviewing wages every six months amid continuous price increases and implementing mechanisms to enforce the minimum wage in the private sector. It also called for obliging non-compliant employers to compensate workers adequately for the harm caused by depriving them and their families of part of their wages, leaving them vulnerable to poverty.
Fuel Subsidy Removal
Mahmoud El-Askalani, head of the Citizens Against Price Hikes Association, believes that with the continuous price increases due to fuel subsidy removal, the government must implement economic policies targeting the middle class to help maintain their social standing and prevent them from sliding into lower-income brackets. These measures are vital to reducing the financial burden on the state while ensuring social stability by protecting the middle class.
Speaking to Zawia3, El-Askalani points out that current economic conditions threaten many families, especially given the pressure of rising prices compared to stagnant wage increases. He warns that this situation intensifies the burden on the middle class, whose collapse could trigger class conflicts between the poor and the wealthy, particularly with the growing gap between social strata.
El-Askalani praises the open markets organized by the government periodically, particularly during social events, as they provide direct support to citizens. He suggests that these initiatives should continue and diversify in the coming period. Additionally, he advocates for reconsidering the taxes imposed on small business owners from vulnerable social groups, proposing instead that wealthier segments bear these taxes through an agreement with the authorities. This approach would ensure that recent economic decisions, such as subsidy removal or currency devaluation, do not disproportionately affect impoverished classes.
He emphasizes the need to halt the complete removal of fuel subsidies, limiting price hikes to a minimum. Moreover, El-Askalani calls for negotiating with the International Monetary Fund (IMF) to exempt this condition from the economic agreement. He highlights that frequent fuel price hikes have led to unprecedented inflation and price increases, adversely impacting middle-class, poor, and low-income groups.
Although the minimum wage is set at EGP 6,000, a significant portion of low-income individuals do not receive it. He stresses that the average income for a family of four should not be less than EGP 13,000 per month to cover basic food and living expenses. El-Askalani warns that the current circumstances could lead to the collapse of social stability if no radical solutions are implemented to address the economic challenges weighing heavily on citizens.
Currency Value and Income Patterns
Sabrine Mohamed’s family—like many in the same social class—faces similar difficulties. With the continuous rise in prices, her husband has been forced to seek an additional job alongside his primary one, which barely covers the family’s food and rent.
Sabrine notes that her two children no longer see their father daily, as he leaves for work at 7 a.m. and doesn’t return until after 11 p.m., impacting his health and relationship with the family. Her husband works in a private company, handling warehouse duties during evening hours.
She explains that she relies on recurring government initiatives to meet the family’s basic needs during certain periods. Sabrine hopes for an end to the relentless price hikes and for effective market regulations to prevent families from falling victim to exploitative merchants amid ongoing inflation.
In early 2016, Egypt introduced its first decision to float the pound against the dollar, followed by subsequent devaluations. The Egyptian pound has since dropped from EGP 8.8 to nearly EGP 50 per U.S. dollar, a depreciation of approximately 470%, significantly eroding its purchasing power due to widespread inflation and soaring prices.
According to the 2018 Household Income and Expenditure Survey by CAPMAS, the average household expenditure was EGP 51,399 annually, with food accounting for the largest share (37%) at EGP 19,051. Housing expenses ranked second at 18.6%, followed by healthcare at 10%, costing families approximately EGP 5,095 annually.
A study by Damietta University’s Faculty of Commerce, titled “Exchange Rate Fluctuations, Wages, and Inflation in the Context of Egypt’s Economic Reform Programs,” found an inverse relationship between exchange rate increases and real wages in the public sector. The study emphasized the importance of considering exchange rate fluctuations when adjusting public sector wages to ensure effective monetary and fiscal policies, sustain economic activity, and stabilize prices. It also highlighted the need to prevent wage earners from falling into poverty traps caused by devaluation.
Economic expert Bilal Shoaib states that the significant gap between rising prices and wages remains a persistent challenge for Egyptian citizens. With fuel prices increasing by 30-35% and essential goods seeing over 100% price hikes, inflation has surged, reaching 44% at its peak before stabilizing at 26-31%.
Shoaib notes that despite continuous price hikes, wages have not kept pace. While the government set the minimum wage at EGP 6,000, many private sector institutions have failed to comply, exacerbating the gap between wages and prices. This disparity heavily impacts citizens’ purchasing power, contributing to economic stagnation in Egypt and globally, especially with the devaluation of the Egyptian pound and the floating exchange rate.
He emphasizes the need for periodic wage evaluations, particularly given the close link between essential goods prices and the dollar’s value. Shoaib calls for addressing the trade balance deficit, where Egypt’s imports exceed $90 billion while exports remain below $45 billion, driving up the cost of imported goods and prices.
In light of the steep price increases, Egyptians face challenges in securing basic needs, pushing many families to cut back on their expenses. Shoaib agrees with calls to enhance social protection programs and improve government initiatives to support low-income groups, warning that the continuation of current conditions may further strain the middle class.
Shoaib concludes that sustainable solutions lie in increasing local production in agriculture and industry to reduce reliance on imports, providing affordable essential goods, and alleviating the financial pressure on Egyptian citizens.
