CAIRO: Investment Minister Mahmoud Mohieddin announced a halt to sell-offs of public sector companies Wednesday, saying that such companies will remain in government hands regardless of whether or not they are making a profit.
Mohieddin, speaking during the 4th Conference on Investment in East Delta Governorates added that funds will be pumped into losing public sector companies.
The minister was quoted as saying on the Investment Ministry’s website that
LE14 billion was invested in public enterprise companies during the last financial year, and that LE 6 billion has been invested so far during the current financial year.
Mohieddin added that laws regulating land use make changes in the use of company-owned land subject to the approval of an administrative body.
The 325,000 workers in the public enterprise sector will be made permanent after a year of employment rather than the current three years, and the entire public enterprise sector will receive a two-month bonus payment in two installments the minister announced.
Malak Reda, a senior economist at the Egyptian Center for Economic Studies, said that several factors lie behind Mohieddin’s announcement of a halt to sell-offs: Problems in the privatization where companies bought by investors are returned to the government when they make losses, and global financial conditions.
Reda added that many of the companies that remain in the government sector are not an attractive proposition to investors because of their large workforce and the difficulty of laying-off employees.
Reda pointed to the large numbers of labor protests Egypt is currently witnessing as a “signal that something is going wrong … rules protecting workers’ rights are not being enforced”.
The decision to make public enterprise workers permanent employees after a year rather than three years is aimed to counter social unrest, Reda suggested.
“The key thing is that people complain that they have been working in a company for years and have been promised that they would be made permanent. While being made permanent doesn’t prevent them from being laid off, it gives them greater security”.
