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Steel demands
 
Date: 12/11/2014

 

Issue No.1225, 11 December, 2014      11-12-2014 02:41AM ET

Steel demands

Industrial action by workers at the Egyptian Iron and Steel Company over unpaid bonuses continues, with no resolution in sight, writes Hayat Hussein

Steel demands
Iron and Steel Company workers’ demands remain unmet

Some 12,000 workers at the Egyptian Iron and Steel Company this week resumed a strike demanding that they receive their annual bonus for 2013-2014, in addition to a delayed three-month bonus on profits from the year before.


The workers launched the strike earlier last month but put it on hold for 10 days after the government promised it would act on their demands. These included the sacking of the company’s chairman and the head of the Holding Company for Metallurgical Industries, and the rehiring of employees who were fired after taking part in a similar strike last year.


The Iron and Steel Company is one of nine subsidiaries of the Holding Company for Metallurgical Industries, which is controlled by the Ministry of Investment.


“How can I give workers a bonus when the company is losing money,” Minister of Investment Ashraf Salman asked this week. He added that the workers were receiving an average wage of LE80,000 a year, which was, he said, “too much.”


Nonetheless, two days after the statement the ministry agreed to pay the workers six months’ pay as a bonus. They refused the offer and resumed their strike.


This is not the first time that the workers have gone on strike for the same reason. In December 2013, after weeks of negotiations, the company’s board of directors approved LE100 million to pay a 13-month bonus for workers to end their strike. The workers had demanded a 16-month bonus, as they had received in previous years, but they accepted a 13-month bonus because of the difficulties the company was facing.


The company, listed on the Egyptian Stock Exchange, announced that its total losses reached LE1.3 billion for fiscal year 2013-2014, compared to LE867 million for the year before.


Mostafa Nayed, one of the workers, told the Weekly that the wages were less than those in the private sector. A winch driver transferring liquid steel earns LE5,000 a month in the company, he said, but his counterpart in the private sector earns LE12,000.


While the government is convinced that the workers have no right to demand a bonus because the company has been losing money for years, the workers are convinced that they have a right to receive their full bonus, which is guaranteed by many state laws.


Some workers have said that what they are demanding is not really a share of the profits but repayment of monthly deductions from their salary that are given back to them in the middle and at the end of the year.
Nayed said that company workers have been working hard and have long called for the government to reform the company to return it to full capacity.


There are many reasons behind the company’s loses, but the main one is the age of the equipment. The steel plant, with two smelting furnaces, was established in 1958 by former president Gamal Abdel-Nasser. A further two furnaces were added in 1974.


Ibrahim said that the huge international development in the industry had cut the cost of the energy used to heat the furnaces to less than 15 per cent of total expenses for international firms, compared to the more than 55 per cent it cost the Egyptian company.


Shortages of coal in recent years have not only pushed the company to shut down three furnaces but also to cut production at the fourth by 50 per cent, with the result that annual production has dropped from one million tons to less than 250,000.


The company produces about 34 types of steel, and 15 state companies depend on its products.
Successive governments since the mid-nineties have promised to upgrade the company but have not acted on the intention. Nayed believes that the neglect of the company is intentional, part of a plan to sell the company under the privatisation programme for public-sector companies begun in 1992.


This week Salman announced a plan to upgrade the company over 48 months with the help of foreign investment. The plan might include construction of a new plant, he said. But until the plan comes into effect, the workers will continue to hold out for a six-month bonus along with the three-month payment delayed from last year, Nayef said.

 
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