The New Minimum Wage for Private Sector Employees in Egypt: Key Updates and Implications
April 9, 2024
Introduction
In a move by the government to ensure the welfare of employees in the face of current economic developments, whether on a local or an international level and in line with the objective of maintaining a balance between employer and employee interests while providing the necessary employee support, the National Wage Council (the “NWC”) has approved a significant increase in the minimum wage of private sector employees, nearly doubling the previous minimum wage set earlier this year.
Overview
On 8 April 2024, the NWC raised the minimum wage for private sector employees through the issuance of decree no. 27 of 2024(the “Decree”) by the Ministry of Planning and Economic Development. The Decree sets the new minimum wage for private sector employees to EGP 6,000 (six thousand Egyptian pounds) effective 1 May 2024, including the employer’s social insurance contribution.
In this respect, it is worth noting that the minimum wage for private sector employees has been steadily increasing since 2022, as outlined below:
Date
Minimum Wage
January 2022
EGP 2,400
January 2023
EGP 2,700
July 2023
EGP 3,000
January 2024
EGP 3,500
May 2024
EGP 6,000
The Decree specifies that the new minimum wage is calculated according to the salary definition outlined in the current Labour Law No. 12 of 2003 and includes the employer’s social insurance contribution. Typically, following a minimum wage increase or the issuance of any employee-related decrees, written circulars are issued to clarify their practical application. Furthermore, the Decree allows companies facing economic challenges that prevent compliance by the new minimum wage to submit an exemption request (through their competent trade union) by 15 May 2024. This request must include justifications for the exemption along with supporting documents evidencing the same. It is also worth noting that the Decree excludes small enterprises with 10 (ten) or fewer employees.
Concerned Entities
• Ministry of Planning and Economic Development; and • Ministry of Labour.
Our Take
We acknowledge that the minimum wage increase will impact the social insurance wage before the National Organization for social insurance. However, the issue remains that all companies submitted the Social Insurance Form 2 earlier this year, which includes the comprehensive wage and the social insurance wages. That said, we await further details on the practical implementation mechanism to clarify how these wages will be adjusted to comply with the new minimum wage increase.
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