Streets near the People's Assembly (the Lower House of the Egyptian Parliament) have become an arena for workers' sits-in. Hunderds of workers and employees, who were denied their pay cheques, have shed light on what many lawmakers and economists described as "the ugly face of privatisation". Since it was launched in early 1990s, the privatisation programme has never been under fire by so many experts from different political spectra and even from members of the ruling National Democratic Party (NDP). MP Zakaria Azmy of the NDP described a report released by the Ministry of Manpower as "a trial of privatisation", demanding an investigation by the Public Prosecution into the collapse of some privatised firms. While privatisation is regarded as a way to improve the operating efficiency, bolster corporate governance and wipe out corruption, other side effects have erupted, sending the whole process back to square one. "In Egypt's case, privatisation isn't a problem in itself. The problem is in the way the Government handles public-sector firms and in the way receipts are spent," Sherif Shawqi, a researcher at Alexandria University, told the Egyptian Mail in an interview. "The Government sells profit-making companies and use revenues to finance early retirement schemes, pay public-sector debts and pump the remainder into the State budget. No penny has been reinvested in other assets," Shawqi explained. In 1991, Law 203 was endorsed to open the way for the Egyptian Government to plan the sell-off of 314 State-owned companies. By 1997, 190 of these companies were divested, making around LE17 billion ($3b) in revenues, according to the Ministry of Investment. "The Government has been selling assets to finance consumption. That's a mistake from an economic perspective. You sell assets in order to get other assets," he argued. "If these companies were profit-making, why they were sold off in the first place? The whole privatisation policy should be reconsidered. Profit-making firms shouldn't be privatised," he said. Total receipts from selling off State-owned firms totalled LE39.3 billion from 2004 until 2008. In the wake of the global downturn, the north African country netted roughly LE1.5 billion from privatised assets in the fiscal year (FY) 2008/09, according to the Ministry of Investment. "There should be a balance between privatisation and its social cost. High unemployment rates and early retirement schemes are a social cost that should be compensated for," he added. Today there are 153 State-owned companies left out of 314 firms back in 1991, and many experts and officials call for a halt. Some MPs demanded the return of four privatised companies, which have collapsed, to the State's domain, referring to Amonseto Textiles, Tanta Flax and Oils Company, the Egyptian Telephone Company (QuickTel) and Nubaria Company for Agricultural Engineering. "The Government is ready to get these loss-making firms back to reform their organisational and financial restructure... This won't be nationalisation, but a sequestration," Egypt's Minister of Investment Mahmoud Mohieddin told a parliamentary session last week, adding that around LE20 billion were spent on restructuring State-owned firms. But MP Azmy rejected the idea, wondering how would these firms return to the State after "being looted"? Between the hammer of price hikes and the anvil of unemplyoment, workers of four privatised companies have no other recourse but to make a stand outside Parliament. But what have the Ministry of Manpower done to defend these workers? "The Ministry has made a lot to preserve labour rights in four privatised companies... I filed a report with the Public Prosecution against Ayman el-Heggawy, the Chairman of QuickTel, for incurring losses amounting to LE230 million and refusing to pay wages," Minister Abdul Hadi was quoted as saying by the local press last week. "Although el-Heggawy paid salaries up to LE40,000 to some employees, he stopped paying wages and bonuses for around 900 workers in QuickTel," she said. Around 1,000 workers at Tanta Flax and Oils Company and 756 others at Amonseto Textiles have been in the doldrums for months. "Privatisation has positive and negative aspects. No-one can deny some privatised firms were success stories in the 1990s. Al Ahram Beverages and Mobinil are good examples of privatisation," Hany Riyad, an analyst at Cairo-based Financial and Legal Consultants Centre, told this newspaper. Labour at the country's public-sector firms fell from one million in the 1990s to around 373,000 in 2009, according to official reports. Unemplyoment stands at around nine per cent of the country's workforce estimated at 23 million in 2009. "The Government should intervene whenever workers' interests are at stake. Law 203 needs to be amended in a way that allows the Govevrnment to expropriate sold off firms in case of any serious transgression and workers' interests are a red line," Riyad added.
