15% average raise in wages in major companies in Egypt during 2023

A recent study by Target HR Services for HR and Wage Research in the Middle East showed that the largest companies operating in Egypt intend to apply a salary raise of an average of 15% with the fluctuating exchange rate of the Egyptian pound, which started last year and persists to this day, with a global record wave of inflation.

The study of the Cairo office of US company, Mercer, also confirmed that 25% of companies participating in their research will raise their salaries by 12%, while 75% of companies will apply for a 20% raise.

47% of companies surveyed will implement the raise starting this January, 24% of them will start implementing the raise in April, and the rest of the companies will implement it over the course of the year.

Dollars instead of Pounds

The survey showed that 3% of the largest companies operating in Egypt, which pay their salaries in Egyptian pounds, intend to replace it in whole or in part with the US dollar or any other currency, while 97% of the companies will keep using the local currency.

Companies participating in Mercer's survey indicated that 95% of them paid their salaries in 2022 in Egyptian pounds, while 3% paid in dollars or foreign currency, and 2% paid in Egyptian pounds denominated in dollars.

25% of the 296 companies surveyed indicated that the adequate rate of rise in salaries in the new year is 10%, while 75% of them believed that the best rate is 14%.

37% of the companies preferred to raise their salaries in January, while 25% of them thought it would be better to raise salaries in April, and 15% would raise their salaries in March.

Responding to currency fluctuations

48% of the companies implemented additional measures in favor of their employees to counter the effects of exchange rate fluctuations. 37% of these companies approved an exceptional raise in salaries. 34% of them raised salaries by a lump sum, 17% of them raised the relocation allowance, 13% of them added a temporary additional amount, and 19% of them took other measures.

23% of the companies surveyed took actions to raise their workers' entitlements, but have not implemented them yet, while 29% stated that they would take no action against currency fluctuations.

73% of the companies only added one benefit to their employees' entitlements, while 17% of them added two benefits, and 10% of them added 3 or more benefits.

91% of the companies had only one exceptional salary raise, but 9% of them applied for multiple raises during 2022.

It is worth noting that annual Inflation in Egypt escalated by 21.3% in December, compared to 18.7% in November, according to data from the Central Agency for Public Mobilization and Statistics.

Inflation accelerated at its fastest pace in five years, accompanied by rounds of the Egyptian pound plummeting in value against the dollar.

Plummeting value of the Egyptian pound

The Egyptian pound received a heavy blow by losing 14.15% of its value in one day, declining to 32.15 pounds against the US dollar at the end of official transactions after starting at 27.6 pounds.

The Egyptian pound dropped against the dollar to an all-time low in the transactions of Egyptian banks earlier, rendering the dollar at 32.15 pounds in a number of local banks.

Thus, the Egyptian pound hit an all-time low against the dollar, down by 51.16% compared to a year ago at 15.7 pounds per dollar.

This happened a day after the International Monetary Fund (IMF) announced the details of Egypt's economic reform program, under which Egypt obtained the international institution's approval to borrow $3 billion as part of the Fund’s extended facility.

Egypt, according to the program, will adhere to a flexible exchange rate to adapt to the dynamics of the balance of payments and avoid the re-accumulation of imbalances, in order to support competitiveness, according to the IMF, which added that the Central Bank of Egypt will ensure that the exchange rates will reflect supply and demand for foreign currencies in the economy, after it stopped providing foreign currencies directly from reserves of government entities revenues, to allow this demand to be reflected in the interbank forex market.