Al-Ahram Weekly 17 - 23 June 1999 Issue No. 434
Published in Cairo by AL-AHRAM established in 1875

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Privatisation at a cost

By Sherine Nasr

More than 1,000 newly retired workers in the Delta Industrial Company Ideal, Egypt's major refrigerator and electrical appliances manufacturer which was privatised last year, met with their syndicate committee last week to protest what they considered an arbitrary decision by the Workers' Fund to cut by 20 per cent the compensatory bonus received when they retired.

"The Workers' Fund has no right to decide such a thing on its own. The whole procedure is illegal," said Ahmed Fouad, director of the Quality Department at Ideal.

To be taken seriously, the protesting workers summoned the police and made a report to them. The arrival of police resulted in a total change in the stance of those in charge of the fund. "The new administration is quite understanding and will support the fund to make sure that every worker gets his full rights," said Ali Mahdali, head of Ideal's Syndicate Committee. Retired workers received promises to obtain their full bonus later this month.

Although this scenario is not uncommon, and the government's privatisation programme has been at a social cost in the form of unemployment among laid-off workers, the case of Ideal is different. Its workers have perhaps suffered more than others. The company's early retirement plan was set up after 75 per cent of its shares were sold to two major companies, Olympic Electric and Zanussi. Thus, it was the new administration, and not the government, which devised and implemented the retirement plan.

Founded to support workers and their families in cases of illness, retirement or death, the company's Workers' Fund, established in 1982, kept accurate records of its resources and expenditure. "The fund had no resources except our money. Seven and a half per cent of every worker's salary was cut every month to finance the fund," said Fouad. Two years ago, the fund stopped informing workers of its financial status, he added.

"We no longer know how much money is in the fund," said Eliya Youssef, an engineer who has been with the company for the past 25 years.

The reason given for reducing the compensatory bonus, according to Fouad, is that there are not enough financial resources for all retired workers. But this is not acceptable to the newly retired workers. "Each worker should receive his bonus for which he paid money in the past. It is his money, not the company's," said Fouad.

Although a month has elapsed since the first group of some 1,500 workers retired, none has received his pension. "We do not expect to get our pensions for six more months," said Fouad.

Ninety files are referred to the Social Insurance Authority every week, according to Mahdali. The authority must calculate pensions for retired workers. "We are dealing with a big number of retired workers, and it will take time before everything is settled," he said.

Mahdali wondered why workers are complaining since they will receive their compensatory bonus this month.

Fathi Ibrahim, one of the workers, said, "It is not fair to expect us to spend this money to fulfil our basic needs until we are able to get a regular pension. With the help of this bonus, we intend to start a new project, otherwise, we will remain unemployed."

Ideal was privatised in January, 1998. According to the assessment made by the government, the company was sold for a total price of LE315 million. The package included four factories for the production of washing machines, refrigerators and furniture, more than 20 exhibition sites, and many stores and service centres scattered around the country.

"Ideal was sold at a very low price," engineer Youssef claimed. The inventory at just one of Ideal's store sites is worth millions, he added.

"Ideal was a profit-making company, but when we inquired why it should be sold, we were told it is the state's policy," he said.

One year after privatisation, 3,000 workers, some of whom had been with the company for as long as 25 years, decided to retire. "We forced no one to retire," said Mahdali. "It was a well-thought-out decision on the part of each worker. Many of them admitted they no longer were able to meet the production requirements of the new administration," he added.

Yet workers denied that they were incapable of making greater efforts to increase the volume of production.

"A year before privatisation took place, we were paid 14-months worth of our pay as a bonus because of our excellent performance," said Fouad.

"In fact, since privatisation took place things started getting worse," said Ibrahim Mohamed, a worker, who indicated that while his salary remained the same, bonuses and incentives were cut in half. "The incentives used to be almost double our salaries. We counted on them to make a living," he explained.

Pressed on how the four factories could operate in spite of the sudden drop in the number of workers due to retirement, Haj Hassan Abdallah, director of the Production Monitoring Department, said that these workers were immediately replaced by temporary, inexperienced labourers who are paid LE7 per day.

"Since they are not appointed, they will not cost the company any money for pensions or social or medical insurance, and they can be dismissed any time in case of a recession," he said.

"It is not just the case of Ideal's retired workers that is the crux of the matter. The story is that Egypt's labour force is being wasted. Thanks to the government, we are rendered unemployed at the age of forty-five," said Youssef.

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