Expatriates and Egyptian workers in post-revolution Egypt
El Maadi is favoured by expats for being a quiet, leafy suburb of Cairo, but never was it quieter than in early February 2011, devoid of the usual 4x4s, grocery shoppers, or crowds of Western students around the American College at lunch time. Although many of the Western expatriates working and living in Egypt stayed during the protests which shook the country earlier this year, the vast majority were either evacuated by their employers, or left voluntarily. BP, Shell and Vodafone were amongst the hundreds of companies staging evacuations for their ‘non essential’ staff in Egypt. Chaos reigned at Cairo airport as over one million (according to official estimates) tourists and foreign nationals tried to leave on commercial flights. It is perhaps significant that during these pivotal weeks in Egyptian history the bulk of the expat community were absent. They returned, most in late February, to an evolving Egypt which had embarked on revolutionary changes on its own terms.
It is not only expats who are getting to grips with a new Egypt; the Egyptian public are equally bewildered as they find their feet post revolution. Amid the chaos of the power vacuum the emboldened public are capitalising on the atmosphere of change to push for labour reforms. In the public sector of the Egyptian economy there has already been progress; in February Samir Radwan, the Finance Minister, announced a pay rise of 15% for workers. The question now, for multinationals, is what effect this will have in the private sector. But with investment coming widely from Arab, Western and pan-Asian countries there is no single answer. Another question entirely, is what the revolution will mean for expatriates working in the development sector, who find themselves torn between exerting maximum influence in this period of transition and sitting back to allow an Egyptian-run revolution. One thing is for sure for the expatriate community: in the heart of the Arab spring change is rife both personally and professionally; for expats as individuals, and more widely for the firms they work in.
To start with a look at changes in the personal sphere of expat existence, it is necessary briefly to outline a mini ethnography; expats can be split, very broadly speaking, four ways. The most significant population are Arab and Gulf nationals working in construction, engineering, textiles, ceramics or other factory based industries (though a lesser percentage of secondary sector industries are also run by pan-Asian multinationals) or in managerial roles of large privatised businesses, such as Omar Effendi. Tending to be relatively well integrated into Egyptian life, Arab and Gulf expatriates have settled against the backdrop of a close friendship between Mubarak and the Gulf states. During Mubarak’s push for privatisation in the 1990s many state owned companies were sold off to Arab investors and it’s no secret that the low sale prices for land and other national assets were off-set by money passed directly to Mubarak.
Another significant demographic, Western expatriates, can be split loosely into three groups; teachers and those in the tourist industry, Westerners working in NGOs, development roles or embassies, and, most prominently, workers for oil and gas companies such as BP, Shell or BG. BP alone has produced more than 40% of Egypt’s oil and gas yields and has invested over $17 billion in the country to date.
There is also a broad spectrum of Western multinationals for whom the main workforce are Egyptians. In the retail sector, Carrefour has been operating in Egypt since 2002 and the German company Metro is Egypt’s self proclaimed ‘largest supermarket chain’. In banking, Citibank, HSBC and Barclays all operate in Egypt. Egypt also has a thriving telecommunications industry in which, notably, Vodafone is a powerful player. The revolution has unveiled the scope of varied priorities held by the expat demographic and the Egyptians they work alongside. Reactions are typified by confusion, optimism and alarm; whilst most Western expats fear for their personal security, their Egyptian colleagues are eager for change. NGO workers are excited by a potential pace of transformation they would not have dared hope for in January. Meanwhile, the non-Western investors worry that, in a changing labour market and as-yet unsettled political structure, they will be pushed into unfamiliar territory.
For many expatriates the events of February will have marked a permanent end to their time in Egypt as worries over security heighten. An estimated 40% left during the revolution and it will be unclear for many months what percentage of those will return. Anti-Western sentiment is not the main issue; those who attended the protests reported little tension towards Westerners, although some did note an increase in xenophobia after Al Jazeera’s Arabic channel was taken off air, leaving only state news to inform the Arabic speaking public. Rather, the issue is security, especially for expats with young families. Having enjoyed a notably low level of violent crime, there has been a sharp increase in petty theft and muggings since the police, their integrity shattered, have all but vanished from the streets. The British Foreign and Commonwealth Office report that crime has risen since the 11th of February, especially in expat-heavy areas like Maadi and Zamalek, where shops were looted and even gunfire heard during the revolution itself.
Additionally, there are political disruptions to worry about. Thousands still gather in Tahrir square in reaction to clashes between conservative Muslims and Coptic Christians (who make up 10% of Egypt’s population). Although Muslims and Christians marched together during February’s protests, the impending election is bringing religious conflict back to the fore of Egyptian life.
Whilst expats hope that the passing of the referendum and securing of early elections in September will allow greater security in the months to come, many do not realise the extent of Egyptian dissatisfaction with the poll. Most of those at the forefront of the revolution, for example the Youth Coalition, wanted a NO vote and, having failed to get it, will be stepping up the pressure before the coming elections. Even amongst those who voted YES, disappointment is rife since, in retrospect, the supposed first ‘free election’ is seen by many as a farce. The referendum consisted of a yes/no vote on changes to nine articles of the Egyptian constitution but, after the referendum was over, the army made some changes to the remaining 60 articles, under the pretext that the whole constitution had been rendered void by their own (unconstitutional) seizure of power. Legitimacy qualms are nothing new for Egyptian elections but it comes as a frustration that there is still a lack of transparency. Furthermore, having had their aspirations for democracy kick started in January, Egyptians are watchful not to now be short-changed, and troubles in September seem an unhappy inevitability.
But what worsens the situation for expats in Egypt is that their fear is bounded by impotence. Expats have never had a voice in the running of Egypt and even those who attended the protests are quick to point out that the revolution was, from the start, exclusively Egyptian. Up until as late as March there were strict restrictions from Western firms like BP on travel to Tahrir square, assuring a literal distance between expat workers and Egyptian revolutionaries. Even within NGOs, Western expatriates are careful to give newly forming Egyptian parties and movements space to evolve independently. There has, of course, been a rush to assert influence in this pivotal period. Sixteen NGOs together making up the Forum of Independent Human Rights Organizations, provided a ‘Roadmap for a Nation of Rights and the Rule of Law’ which outlined recommendations for constitutional and legislative reform. This collective, including the Cairo Institute of Human Rights Studies, The Arab Network for Human Rights Information and the Hisham Mubarak Law Centre, have grouped to engage in dialogue with political parties like the Social Democratic Party as well as less structured movements like the Youth Coalition. There is even a push towards talks with the Muslim Brotherhood. But newly forming political parties are wary of too much connection with foreign NGOs, wanting to preserve the revolution and all it hopes to bring as an Egyptian victory. For expatriates working in the development sector, this is an exciting time steeped in intellectual debate and the euphoria of possibility, but tempered by the need to take a back seat and assist rather than lead the developing democracy in the coming months.
But one area in which Western NGOs are particularly supportive is the labour reform movement which has rejuvenated since the revolution. It is these labour reforms, from which the potential professional changes for expats stem, which affect how the companies they work in do business in Egypt going forward.
On May 1st thousands of Egyptians returned to the symbolic Tahrir square to celebrate Labour Day, rejoicing in new rights to congregate for political purposes but also calling for labour reforms. These include the raising of the minimum wage (private sector workers want to see the 15% rise in public sector wages echoed across the board), improved access to trades union, fairer ethics in the work place and the assurance of longer term contracts or, for those currently working non-contractually, any kind of formal contract.
These changes should have a limited effect on Western multinationals, who already pay Egyptian workers a decent salary (though, to be clear, this is when compared to fellow Egyptians, not expatriate colleagues) and operate by Western norms when it comes to employment conditions. For them, cheap labour is not and has never been the reason to locate in Egypt. Rather, expansive oil and gas reserves and strategic trade links have been the root cause of Western investment. Furthermore, for oil, gas and construction industries who work closely with Egyptian partner firms, better industrial standards will facilitate smoother development and operation of projects.
But for Arab and Asian multinationals, labour protests threaten their current methods of operation and it is these firms who have seen protests in recent weeks. As yet, the response is limited. International construction consultants Dar Al Handasha who are based in Lebanon experienced protests by their ‘Coffee Boys’ in the wake of the revolution. These workers wanted increased salaries and complained that the amount of overtime they were allowed to work had been reduced. Their demands have yet to be met but are representative of the sorts of issues that will have to be addressed if labour reforms are successfully implemented by the future government.
The most serious protests have been in companies which were relatively new to private ownership. Under Mubarak there was a push towards private sector investment and participation in the global economy. Many formally state run industries were sold off to foreign investors who, looking to increase profits, slashed benefits and lowered salaries. After the revolution, the pent-up grievances of workers are finding a platform. For such companies, increases in minimum wage and trades union might be a deterrent to work in Egypt, pushing Arab and Asian investors out and leaving leeway for growth for Western multinationals already operating to international labour standards.
Of course the system in Western companies is still far from ideal. Whilst workers are contracted, the contracts are often short term and therefore lack the benefits of more permanent members of staff and allow swift dismissal. Discrepancies in wages between Egyptian and expat staff also exist across the board; not only in multinationals but in NGOs as well. One NGO worker confirmed that most donors insist that a cap be placed on local wages so that the money they give cannot be used to top up the salaries of Egyptian workers.
But these are issues which are unlikely to be addressed in the initial wave of post-revolution changes. Basic contracts and decent salaries are the first battle to be fought and so in the months to come it will be Arab and Asian multinationals rather than Western companies who face the majority of strikes and who are called to reconsider their approach to Egyptian workers.
Also capable of shaking non-Western multinationals is public demand for an end to corruption. Since the fall of Mubarak, there has been widespread criticism of his drive for privatisation. In April, Major General Mohammed al-Assar announced that the military were opposed to the ‘selling of Egypt’, complaining that Mubarak had sold off too much for too little to private investors in exchange for money handed directly to the government, causing redundancies and cuts to benefits for workers.
That is not to say that Western multinationals have had no complicity with the Mubarak Regime. Vodafone Egypt, which is 55% owned by the Vodafone Group (Telecom Egypt make up the remainder) was also criticised for compliance with the government after shutting down phone networks in Egypt on the command of Mubarak. BP too have been accused of letting the American Chamber of Commerce in Cairo pressurise the US into renouncing suggestions that Mubarak should hold fair elections. Even the American University in Cairo has faced condemnation for its ties with the former government and dubious conduct during the revolution.
But whilst Western companies are not exempt from criticism of being hand in glove with Mubarak’s government, what sets them apart from Arab and Asian investors is that they are fully capable (and fully willing when needs must) of complying with the due processes of ethical business.
One young man working for Vodafone Egypt praised his employers for their fast response to revolution-inspired objections. Previously, ‘outsourced’ employees working the same jobs as those hired directly by Vodafone Egypt received lower salaries, fewer benefits and enjoyed less authority, but this has been amended post-revolution. Western multinationals, he said, have faced few protests because ‘they already have the experience of dealing with these sorts of critical issues’.
The crucial role of the trade union movement, therefore, is to push for greater protection for workers in non-Western multinationals. There is hope that the new government will assist in enforcing fair standards across the board, but in the interim more dialogue is needed between employers and employees. In an era where Egyptians have publicly divorced themselves from their governmental leaders, their police force, and in many cases their bosses too, direct discussion with employees is the only way to ensure a stable and happy work force.
However in the short term, eager though Egyptians are for labour reform, jobs are too scarce for workers to push their luck with demands. The continuing difficultly of forming trades union in Egypt leaves many without any option but to cling to the jobs they have. The CTUWS (Centre for Trade Union and Workers Services) has recently voiced concerns about a law drafted on the 23rd March which would permit the imposition of fines and in some cases periods of imprisonment against those who stage sit-ins and protests. Egypt has a poor history when it comes to trades union. All must affiliate with ETUF (Egyptian Trade Union Federation), which had strong links to Mubarak’s government in order to be legal, and even this is made difficult by imposing a minimum membership requirement of 50 people from the same company as well as a government-set joining fee. What’s more, two thirds of ETUF have to be in favour of action for a strike to get the go-ahead.
The desire to push for early elections – which may limit the extent of reform – is understandable in the context of Egypt’s current chaos. There is widespread worry about Egypt’s economy (the Minister of Finance reported a 7% shrinking of the economy between January and March); furthermore, until the political situation settles it is virtually impossible for firms to get planning permission or funding for new projects. But likewise, progress is near impossible without a stable, satisfied and adequately paid work force.
Whilst some of the emerging left leaning parties, such as the Workers Democratic Party, are eager for increased nationalisation, most welcome investment from overseas. The interim government are already taking steps towards making it easier for multinationals to invest and operate in Egypt, simplifying procedures for setting up projects and expanding into multiple franchises. A fund of LE1 billion has also reportedly been created to encourage investment. But encouraging investment is only half the game. If Egypt is to facilitate more equal, business-like relations with multinational investors, then labour reforms are a crucial starting point. By renouncing Mubarak’s ‘selling’ of Egypt, and aligning itself with the clearer (at least nominally) business models of western nations, the new government can move toward a future where multinationals provide much needed jobs for Egyptian employees rather than contribute to labour malaise and national underemployment. And expats, though they may be justifiably wary in the short-term, should look forward to working within a fairer, more productive state come 2012. What the Arab uprisings have proved is that true stability requires a fair labour market in which workers are treated with dignity, an asset that cannot be bargained for any less than the fair price.
However, this is only one scenario of how the future will play out in Egypt. It is also possible that continued strife will make business-as-usual impossible for Western multinationals for a prolonged period, re-opening the door to Gulf investors more used to dealing with Arab nations. And even if Egypt does democratise its government, there is the question of where the rest of the Middle East will be left if Egypt turns its economy west. Having shifted its stance towards Israel, Egypt’s political movements look to be eastward bound, in which case labour policies deterring Arab investment could leave the nation doing the splits, as it attempts to stride one way economically and another geopolitically. The answers to these questions lie beyond the horizon of the expatriate perspective. The one clear issue is that Egyptians have a unique opportunity to steer the course of their country, leaving expats and their firms little choice but adapt to the demands of a new Egypt, whatever those may be.