Tuesday
Nov022010
Column: On taxis and the minimum wage
Issandr El Amrani
My new column for al-Masri al-Youm is out, with a hopefully not to stretched metaphor about how the Egyptian economy resembles Cairo's taxi system.
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Reader Comments (4)
One think I think that complicates the discussion is that rising wages inevitably lead to even higher inflation (more money chasing after the same amount of goods).
So with inflation already problematic, from the government perspective, this is poor timing to address the minimum wage issue.
The other factor that gets overlooked is enforcement. If it gets set at LE 4-600, I suspect that within Cairo at least it will hold. However, in other parts of the country, where people are "willing" to work for less, and where there are higher levels of informal employment, how will it be enforced?
The last big issue is wages for farmers, who are traditionally paid (poorly) for how much they produce. I don't really see an easy mechanism to bump their incomes to some minimum threshold, without further increases in produce prices.
As to your article, I did like the taxi metaphor, and you get the analysis exactly right. The government has been going about the process piecemeal, raising salaries for certain sectors, without any systematic change. For example, in the universities, professors of all kinds are systematically underpaid, so the government launched a program to help professors in the sciences get research funding, and increase their salaries and pay grad students. But what about the rest of the faculty?
Good points all, Rashad. A big part of the problem will be implementation of this — even as it stands, some factory owners force employees to accept X as there salaries while only really paying them Y, by forcing them to sign letters of resignation to provide legitimate grounds for dismissal if they get upset. The problem is systemic, and won't be easy to fix.
Hand in hand with inflation, minimum wage also dramatically increases unemployment. Does Egyptian economic policy allow for a more free market determinant of wage?