The Federation of Egyptian Industries (FEI) has launched an initiative to urge the private sector to pay an exceptional social allowance with an average value of between EGP 100 and EGP 200, depending on the economic circumstances of each enterprise.
The Chairperson of the FEI Mohamed El-Sewedy said that this initiative aims to offset the rising prices of fuel and electricity.
El-Sewedy noted that the federation is also in talks with the government to allow the increase to be tax-exempted.
He pointed out that the private sector is serious in carrying out all its responsibilities to contribute to the advancement of production and achieve economic and social stability.
“We, at the FEI, have also embraced the promotion of corporate social responsibility among our enterprises, as well as applying the latest management systems to achieve a decent work environment and the pursuit of sustainable development,” El-Sewedy noted.
Meanwhile, Ahmed Al-Wakil, the chairperson of the Federation of Egyptian Chambers of Commerce (FEDCOC), said that private sector employers are not obliged to respond to the initiative.
Al-Wakil added that the other condition is that the financial structures of the company allow the allowance to be paid and not be affected, and there should be no losses for the company. He noted that the board of directors of the FEDCOC insisted that the allowance gets paid without a minimum or maximum.
This push by the FEI came few days after of the government’s decision to increase fuel prices on the second day of Eid Al-Fitr, therefore making it the third time that the Egyptian government increased the fuel prices, following the austerity measures announced in 2015.
In the latest increase, there was more than 60% surge in the prices of both the cooking gas for commercial use and the cooking gas for home use and around 34% increase in the prices of octane gasoline.
Ninety-two octane gasoline increased from EGP 5 to EGP 6.75 per litre, about a 34% increase. Eighty octane gas increased from EGP 3.65 to EGP 5.5 per litre, nearly a 50% increase.
Furthermore, the government has also increased prices of drinking water by up to 45%, electricity by 26%, and raised metro fares in the last few weeks.
The initiative comes a few weeks after parliament signed off on an exceptional raise for civil servants, who have low-income earners and the poor, as part of a drive to shore up the social safety net, ahead of the new fiscal year.
The next budget will include subsidy cuts that will translate into rising power and fuel prices. Analysts expect this to temporarily drive up inflation, which had eased to 13.1% in April from 13.3% in the month before.
In early June, the parliament signed off on salary and pension increases worth more than EGP 60bn.
In mid-July 2017, the Support Egypt Coalition, which represents the majority in parliament headed by member of parliament and head of the FEI, El-Sewedy, launched a similar initiative to grant social allowance to employees of the private sector, at a minimum of EGP 165 with a maximum of EGP 330, depending on the circumstances of each facility.
By the end of June last year, the Egyptian government has increased the prices of fuel only after seven months of liberalisation of the exchange rate of the Egyptian pound, which led to spiking the rate of annual inflation to reach 30.9% in June.