CAIRO: Egypt’s privatization program and concerns as to whether it lessens the unemployment figures is once again in the spotlight. Prime Minister Ahmed Nazif and Minister of Investment Mahmoud Mohieddin reiterated the benefits of the program for job creation, on two separate occasions.
In an interview with Al Ahram on Monday, Nazif said that Egypt’s privatization program is giving top priority to workers rights and the government would not sell companies at any price.
Whether this statement was in part made in order to quell concerns over the Omar Effendi privatization saga, which found the privatization of the largest state-owned department store chain a controversial and difficult case as the sale was stalled, then failed, and currently in negotiations because bidders were reluctant to take on board the stores payroll of 6,000 workers and the asking price made by the government, is not clear.
Nazif also said during the interview that the government is planning to continue with the privatization process, and that the number of sales may increase the number of social security beneficiaries to nearly one million families.
The government is raising state pensions from LE 80 to LE 180 per month, and is also controlling expenditures, so that state and government employees are unable to purchase vehicles or house.
For this reason, he was quoted as saying that the government has adopted rigid policies: Government appointments cannot be expanded. Subsidies need to be reviewed so that the people in most need received the most benefits. According to the Al Ahram article, the PM was also quoted as saying that the government must not “mushroom, or grow too fast and cause shocks in the system.
In line with the PM’s statements, Mohieddin announced that the government will spare no efforts when it comes to creating more job opportunities.
According to the Ministry of Investment, a program entitled “Investment for employment has been launched with the sole purpose of creating more jobs and eradicating unemployment by enforcing reform procedures. Some of the program’s main concerns and aims are to create a better investment climate and attract greater investments; the ministry quoted the minister as saying in a press release.
“Workers are represented in meetings which discuss the sale of companies. They take part in negotiations and contracts with investors, Mohieddin was quoted as saying in a press release issued by the ministry. The minister also said that workers’ representatives were in fact present in such meetings to ensure that the workers’ rights, the retention of the benefits of wages and salaries and other entitlements and procedures were considered in previous sales.
The new “investment for employment program is very much in line with a World Bank study that shows the correlation between a better investment climate and greater job opportunities. According to a 2005 World Bank presentation for the MNA Regional Conference on Job Creation and Skills Development, entitled Creating Jobs: the Role of the Investment Climate, improving the investment climate is critical to faster growth and the creation of more and better jobs. The study also states that this is best done through the reduction of policy-related risks, costs, as well as great changes in formal policies.
I have asked the chairmen of the holding companies and affiliates to list temporary workers by the end of May, Mohieddin said. Those who worked for three years at least will be permanently appointed. Appointments will be finalized according to the standards set by the holding companies, workers’ union and syndicates.
However, while the government’s commitment to creating greater job opportunities is not in question, some question the method in which this is done.
In fact, according to the World Bank study, while bettering the investment climate is a strategic method to create more jobs, it is far from foolproof. Improvements in the investment climate go hand in hand with the enhancement of human capital, also known as education and training. In many countries, including Egypt, the provision of secondary and tertiary education tends to be designed for the non-poor or for political patronage, according to the study.
Current labor regulations are also an obstacle, as they tend to provide high protection for a few workers but either minimal or zero protection for most of those in the un-regulated economy, including many youth and unskilled workers, according to the study.
For the Egyptian government to combat this, they will have to adapt existing regulations to the true needs of the country and make available training and education by providing public funding, and on-the-job training.
