CAIRO: Egypt’s central bank published a statement in newspapers Thursday calling on bank employees to cease striking and resume working in order to preserve the stability of the national economy, while promising to meet with representatives.
The Central Bank of Egypt (CBE) vowed to take all necessary measures to ensure that the legitimate demands of workers in the banking sector are met.
Experts have called for an immediate revision of salary and incentive scales in public sector banks as well as recruitment policies, regardless of what takes place in the impending negotiations.
“What people find unacceptable is that management and leadership who are brought in from the private sector earn much higher salaries than employees already [working] at the banks, some of which have been serving the public banking sector for 30 years,” said Magdy Sobhy, senior economist and deputy head of Al-Ahram Center for Strategic Studies.
Protesters were asked to select of a group of no more than 20 people to represent and convey the demands of workers at each bank. These groups will meet with the CBE to discuss employees’ concerns with senior management, in the presence of the CBE governor and his deputy.
Meetings are set to begin Sunday and negotiations are to be completed in four weeks time.
In its statement, the CBE said this move is in line with its mission to maintain stability in the banking sector as well as preserve the rights of employees and their incomes, claiming to have doubled them several times throughout the years of banking reforms.
The CBE vowed to maintain monetary stability as well as that of the exchange market, adding that it trusts employees in the banking sector will understand the dire circumstances Egypt is facing, and thus return to their daily duties.
The closure of banks this week has forced many in the industrial sector to scale back production because clients were unable to pay for the goods. The stock market’s reopening has also been delayed several times.
Salary structures
Sobhy said that executives were brought in from outside to fill top leadership roles at banks as part of the government’s effort to reform the public banking sector, adding that they have little or no experience. He also claimed that there have been countless examples of nepotism over the years.
It is common for employees who have been around for decades to receive a fraction of the salary of new employees, even if working at the same organizational level, he said.
Some executives in public banks receive more than a million pounds a month with added bonuses and incentives, unusually higher than in the private sector. These salaries are not only funded by the banks but by the CBE itself, Sobhy said.
“This has to be looked into as the salaries have to justify the performance of these executives,” he said, adding that salaries have to be linked to productivity and competence.
Doha Abdel Hamid, professor of finance at the Canadian International University, has done extensive research on civil service wage reform. She said that the current policy of hiring temporary workers and giving them permanent contracts, used by the Ministry of Finance, are just “fire extinguisher policies that don’t really solve the problem.”
“Real change can only come through addressing Law 47/1978, which dictates labor policies in the civil service and this can only be done through parliament, which has recently been dissolved,” said Abdel Hamid.
However, she added, the current government can plan for this kind of policy reform and prepare draft amendments for the new parliament to discuss.
In a 2009 working paper for the Egyptian Center for Economic Studies titled “Reforming the pay system for government employees in Egypt,” Abdelhamid and co-author Laila ElBaradei proposed that a unified salary scale should be developed by the government with a reduced ratio between minimum and maximum salaries.
Securing funding for this kind of wage scale restructuring is another issue, which can be addressed by right-sizing the civil service force. Other challenges include enhancing transparency, reducing wage discrepancies, reforming the minimum wage policy and establishing a better link between pay and performance.
Building on the international experience, the authors called for establishing a ceiling for total government pay (basic salary + allowances + bonuses + commissions + incentives + profit sharing) so that the highest total income is no more than 14 times that of the lowest total income for an employee in any part of the government service.
According to Abdelhamid, a similar plan should immediately be devised by the CBE for public sector banks with a salary scale that is both progressive and fair.
“People who have been working for 30 years and still getting a monthly salary of LE 1,500 is totally unacceptable, and I consider it a human rights offence which the government should be held responsible for,” Abdelhamid said.
Sobhy said the lack of trust between protesters and the government is partly due to a lack of transparency in the government apparatus regarding salaries.
Like Abdelhamid, he called for an immediate and transparent restructuring of the wage policy to be announced with clear and specific goals for reform, thus ensuring equity and efficiency in the government apparatus.
He urged the CBE and the Ministry of Finance to work as rapidly as possible to address these policy reforms, citing the negative effects strikes are having on the financial sector, which spills over into the economy at large.
