By Mohamed Gad

CAIRO, Jan. 28 (Aswat Masriya) – Egypt's ministry of finance stated that the first quarter of the current fiscal year recorded the lowest rate of increase in wages and compensation of employees compared to the same period on the last three fiscal years.

The first quarter of F.Y. 2015/2016 witnessed the adoption of the civil service law, which was later dropped by the elected parliament after its first session on Jan. 10.

In its Financial Monthly report for December, the ministry stated that the increase in wages during July-September amounted to EGP 5.3 billion, representing an increase of 6.6 per cent.

The declining rate of increase in wages compared to past fiscal years is due to the "recent reforms implemented by the Ministry of Finance to control the increase in wage bill."

Expenditure on wages and compensation of employees represents 3 per cent of GDP, according to the report.

With the start of the current fiscal year, the Egyptian government targeted the reduction of the annual increase in wages, limiting it to 5.2 per cent, which represents the lowest increase since the Jan. 25 uprising.

In August, Minister of Planning Ashraf al-Arabi had attributed the declining rates of increase in government employees' wages to the adoption of the civil service law, which aimed to minimise wage differentials among state institutions.

The civil service law, which was issued by President Abdel Fattah al-Sisi in March 2015, enraged broad sectors of public employees, but the government refused to go back on the law and said it aims to reform the state's administrative body. The law even prompted some employees to protest, reigniting labour action in the country after a months-long pause.

During its deliberations on presidential decrees passed in its absence, the elected parliament discussed a vast number of laws including the civil service law. However, the law was not approved by the parliament, with a majority of MPs voting against it 332 out of 468.

The newly elected legislature is constitutionally obliged to review the executive decrees within 15 days of its first session, which was held on Jan. 10, and either approve or reject them.

The Egyptian Cabinet will present an amended version of the civil service law to the parliament, cabinet spokesperson Hossam Qawish said on Saturday.

Despite the government's stated policy to control the increase in wages, the budget deficit has increased to 4.9 per cent of GDP during the first quarter of F.Y. 2015/2016, compared to 4.4 per cent of GDP during the same period last year.

Total expenditure has reached EGP 289.4 billion, comprising 10.2 per cent of GDP, which is an increase compared to the 9.5 per cent during the first quarter of F.Y. 2014/2015.

The Egyptian government aims to reduce the budget deficit as a percentage of GDP during F.Y. 2015/2016, to reach 8.9 per cent compared to last year's 11.5 per cent deficit.

(This article was translated into English by Nourhan Fahmy.)