Al-Ahram Weekly   Al-Ahram Weekly
29 Apr. - 5 May 1999
Issue No. 427
Published in Cairo by AL-AHRAM established in 1875 Index of issues This week's issue

Front Page

May Day dilemmas

By Fatemah Farag

As both business and labour mark Labour Day -- each in their own way -- it is clear that both agree that the challenges ahead are immense. More daunting still, is the fact that such challenges are to a great degree determined not by domestic factors but by a fiercely competitive global economy from which no country is immune. Globalisation, explains Mahmoud Abdel-Fadil, professor of economics at Cairo University, has resulted in "increased capital mobility, combined with an accelerated pace of technological change". Both entail "significant and far-reaching implications for human resource development, education and labour market facilities". As a result, it sometimes appears that the Egyptian worker is now required to be as skilful as his Western counterpart and as cheap as his oriental neighbour.

The future need not be gloomy, however, experts and officials argue. Industry Minister Suleiman Reda recently informed journalists that 2,255 industrial establishments have become operational in the past three years including 15 car-manufacturing companies, employing a total of 20,000 workers, with a production capacity of 216,000 cars per year. Reda added that the employment capacity of the industrial sector has an annual growth rate of 3.6 per cent. The government plans future industry growth of 12 per cent annually, creating 540,000 jobs between 1997 and 2002.

Moreover, the government has continuously stressed that the key to success is "social stability", which can be achieved only by providing some level of protection for labour. Aisha Abdel-Hadi, a member of the executive board of the General Federation of Trade Unions (GFTU) asserts, "The head of the state is on our [the workers] side."

Labour legislation is, naturally, a fundamental instrument for the provision of government protection for workers. A new unified labour law has been in preparation for several years. Following long negotiations between representatives of government, business and GFTU, a final draft was made ready over a year ago. Nevertheless, it is yet to make it to parliament for enactment.

Sayed Rashed, head of the GFTU, announced after a meeting with President Hosni Mubarak on Saturday that his organisation was willing to return to discussions of the proposed draft, despite a previous endorsement by the Federation, which described the draft as balanced and acceptable. Up until this week, official GFTU statements denied that a new draft or proposed amendments were under discussion. These denials were perhaps due to the fact that despite GFTU support, the draft has been criticised by rank and file trade unionists as being biased towards employer interests.

Criticism for the draft law came from other quarters as well. Nader Fergani, a prominent scholar and head of Almishkat Centre, opined that "at least in relative terms, the workers' representatives objectively failed those whom they are supposed to represent."

Whatever its failings, however, the current draft is most likely already a thing of the past. Kamal Abbas, head of the Centre for Trade Union Services in Helwan, argued that the GFTU's failure to push through the controversial draft is in itself indicative: "Last year, they [GFTU] promised workers the new labour law; this year, they are losing any credibility they had."

What becomes of the proposed draft is of importance partly because the new legislation is intended to address the twin problems of unemployment and investment. The idea is that a more flexible labour code will encourage investment and so create jobs. However, opponents of the bill have maintained that within a framework of already low wages and high unemployment, the results can only be problematic in terms of poverty and the prospects for growth.

While the fate of the draft remains unclear, some labour activists argue that the GFTU is unable to deal with the emerging realities of a new labour market in which the private sector is playing the key role. "Take 10th of Ramadan City as an example. There are over 600 factories and 90,000 workers and only 18 union committees," stated Abbas.

GFTU's Abdel-Hadi responded that "This is true, but the problem is that there is much resistance from employers to the establishment of committees in these new factories. It is something we are working on, but it does not undermine the fact that we are a strong organisation capable of facing the challenges of the present and future."

In the meantime, even the annual Labour Day bonus introduced by Nasser's populist regime is a source of squabbles. "It is LE120 this year. Some people will get it in bulk as it was always dispensed. However, this year it also became optional for management to pay the amount in LE10 monthly instalments. It is like putting an end to the idea that this day should be celebrated at all. It defuses the relevance," Abbas said.

In the final analysis, such a problem seems insignificant compared to broader employment issues. Citing government figures provided by the 1990-1995 Labour Force Sample Survey, Fergani concludes that from 1990 to 1995 the economy created little over 700,000 new job opportunities, although the same number is required annually. Nader goes on to explain that "this means that GDP would need to grow, on average, by LE88 billion annually. Compared to the 1995 GDP of a little less than LE200 billion, an incredible annual rate of GDP growth of 44 per cent is required."

The key to the impasse in the eyes of many is education policy. Abdel-Fadil points out that most job creation in the 1970s and 1980s came in the low-skilled and non-tradable sectors, such as construction. Since the importance of unskilled labour is on the decline internationally and economic activity is becoming more dependent on skill and knowledge, he argues that "globalisation, structural adjustment and technological advances in production processes are seen to reduce rather than increase demand for the bulk of the labour force in the Middle East/North Africa region." Consequently, as the public sector shrinks and reduces employment, and as agriculture sheds labour, workers find that they lack the skills for new types of jobs.

"The issue of training is the key," said Abbas. "In Korea, development was based on a comprehensive educational policy. We still do not see this happening here. Even in the new factories, production lines are imported with a foreign expert to run them. They are assembly plants and the Egyptian worker does not have to be very skilled. The Egyptian worker does not gain the kind of knowledge that can make him an interactive part of the production process."

To deal with this problem, the Ministry of Industry has established 53 training centres, specifically designed to meet the needs of the job market. Exponents of Quality Control Programmes implemented as a pre-condition for obtaining an ISO certificate point out that new workers will benefit from better training aimed at incorporating them into the production process, not to mention healthier and safer working environments. Fergani says that considerable investment should be made in re-training, and that the education-training system be transformed into a system of life-long learning, so as to foster higher quality and a continuous upgrading of skills.

"People must be aware of the problems they are up against and hence the Federation is actively involved in training programmes towards this end," said Abdel-Hadi. "Moreover, an important part of fitting into the new international order is to establish positive relations not only with the industrialised West but also with developing countries. The latter, if successful, will turn the working classes of these countries into a block capable of promoting their interests on the international scene."

Until more comprehensive reforms and policies are introduced, workers will be caught in an ambiguous transitional situation. In times past, the struggle of labour versus capital was probably a straightforward one; in today's world, the lines of demarcation are obscure and as both sides of the production process celebrate this year's Labour Day, the future remains up for the taking.

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