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Amendment to the Minimum Wage of Private Sector Employees


Introduction

In light of the unprecedented amendment to the minimum monthly wage of the private sector employees in 2021, where the minimum threshold was set at EGP 2,400 (two thousand four hundred Egyptian pounds) for the year 2022, the Ministry of Planning and Economic Development issued decree no. 103 of 2022 (the “Decree”) to increase the minimum wage for private sector employees, as well as the annual periodic raise, effective as of 1 January 2023.


Overview

The Decree has (i) increased the minimum monthly wage for private sector employees from EGP 2,400 (two thousand four hundred Egyptian pounds) to EGP 2,700 (two thousand seven hundred Egyptian pounds) to be calculated based on the definition of salary listed under the Egyptian labour law; and (ii) set the minimum of the periodic statutory annual raise at EGP 100 (one hundred Egyptian pounds) for the fiscal year 2023, instead of EGP 70 (seventy Egyptian pounds) that was set for 2022. For context, the National Wages Council (the “NWC”) has previously determined the periodic statutory annual raise to be not less than 3% (three per cent) of the social insurance salary stipulated by the law.

It should be noted that the Egyptian labour law has delegated the NWC to determine, among others, the annual statutory periodic raise for private sector employees, which in no event shall be less than 7% (seven per cent) of the basic salary on which social insurance contributions are calculated.


Concerned Entity

The Social Insurance Authority.


Our Take

Employers should ensure due compliance with the provisions of the labour law and the NWC. In other words, if employers calculate the 7% (seven per cent) from the basic salary against 3% (three per cent) from the subscription salary and find that the former percentage is less than the latter - then employers must pay the difference resulting from both calculations. If vice versa, then employers must ensure due compliance with the provisions of the labour law, as it constitutes the minimum.

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