Egypt's economic reform meets unprecedented wave of labor resistance

The first time the 27,000 employees at Misr Mahallah Spinning and Weaving factory went on strike, it was with the feeling of a doomed effort that they nevertheless had to make.

After all, independent labor activity is illegal in Egypt and in the 1980s the government had called out the troops on striking workers, killing scores.

Then the unexpected happened.

With dozens of other factories going on strike around the same time late last year – pressing similar demands to those at Mahallah – they won.

Government officials caved in to most of their demands in the hopes, analysts say, that it would stave off the emergence of a politicized labor movement at a time when the regime of President Hosni Mubarak was taking a beating from the domestic press and a more assertive Muslim Brotherhood, the country's most popular opposition movement.

"The government is worried about a social explosion," says Mustafa Basyouni, the labor correspondent for Al Dustour, an Egyptian daily. "When the government saw solidarity strikes popping up, that pushed the scales in favor of accommodation."

If that was in fact the intention, it failed. In the past year, Egypt has seen an unprecedented wave of strikes, sit-ins, and demonstrations at its factories – at least 300 of them involving well over 150,000 workers, amounting to what labor historian Joel Beinin calls the "biggest mass movement in Egypt" since the 1950s.

The workers at Mahallah went on strike again in September and again wrung concessions out of a skittish government.

This week, it's Egyptian tax collectors who are striking, complaining that they can't live on salaries of about 350 pounds ($60) a month. About 55,000 tax collectors walked off the job, and Tuesday, when about 500 of them sought to march on the Cabinet building in central Cairo, they were blocked by riot police.

Inspired by that strike, workers at the government's Ministry of Health have also threatened to walk out.

Egypt's labor unrest can be tied to the liberal economic policies of a wing of Mr. Mubarak's ruling National Democratic Party (NDP) that is led by the president's son, Gamal. He is a former banker who at the moment looks the likeliest candidate to succeed the elderly ruler.

Under the stewardship of an economic team seeking to throw off Egypt's Arab socialist past in favor of free market economic policies favored by the International Monetary Fund, Egypt's stock and property markets have boomed and dozens of state companies have been sold to private investors. Foreign investment in Egypt tripled last year to $6 billion.

But the country's economic recovery has been a jobless one, with stagnant wages falling well behind double-digit inflation rates and workers feeling squeezed by layoffs at both government and private factories as the government seeks to cut the dead wood from the national economy.

For average workers, there has been precious little of the trickledown that the government promised would be the fruit of economic reform, and patience appears to be wearing thin.

Mohammed Kamel al-Sayyid, a political science professor at the American University in Cairo, says the country's labor unrest could, over the long term, prove one of the greatest threats to the stability of the system, as a generation of Egyptians brought up to count on government jobs for life confront a new reality.

"This unprecedented wave of worker strikes certainly seems connected to the government's liberalization policies," he says. "I'm not saying there's going to be a revolution, but there's this ongoing process of deterioration in public trust. How many cops do you have to put on the streets to counter all this public frustration?"

That frustration was in evidence when the Mahallah workers gathered on the shop floor last December to debate the merits of the strike. Participants recall that many were apprehensive about the government's reaction and that it was a mood of desperation, not optimism, that carried the day.

There were rumors that the government was seeking to sell the sprawling, out-of-date factory to private investors, which would almost certainly mean layoffs. And with base wages stagnant at about $50 a month in recent years, against annual inflation that has been above 10 percent, they decided they had very little to lose. While the government has avoided mass layoffs at its factories, it has sought to depress wages by withholding bonuses and encouraging early retirement.

The spark for the first strike was government-owned factories failure to pay a profit-sharing bonus. Hanan Ali, who has worked at the factory for 20 years and whose monthly salary reaches 240 Egyptian pounds ($43) describes the feeling that taking the risk for that bonus felt like the difference between death and survival.

"Why am I striking? I have two children, my husband died seven years ago … and I pay 200 pounds a month for rent. It's becoming impossible for us to live. This is why I'm striking."

Though labor activity has tapered off recently, there were at least 35 strikes across the country in November, according to the Egyptian Workers and Trade Unions Watch, a nongovernmental organization.

While disgruntled workers have not coalesced into anything resembling a united political force, corrupt companies, industries being left in the dust by competition from emerging heavyweights like India and China, and a generation of Egyptians who came to rely on steady, albeit low-paid work, have created a major challenge for the Mubarak regime, analysts say.

"Important elements among the Mahallah strikers are now framing their struggle as a profoundly political fight with national implications. They are directly challenging the economic policies and political legitimacy of the regime," Mr. Beinin wrote in a recent piece for Middle East Report Online.

Hisham Fuad is hoping to push things further. The labor activist, who was been networking with factories across the country, says he sees signs that the labor movement could be politicized. "The mills are making connections with each other; we can see a movement away from purely economic demands.

"In Mahallah's September strike, we saw lots of overtly political slogans attacking the NDP."

The Mahallah plant was founded by Mohammed Talat Harb in the 1930s, a famed Egyptian nationalist who was one of the country's first domestic entrepreneurs to challenge the foreign businessmen who dominated the country's economy at that time. It became a symbol of Egyptian progress, and by the time it was nationalized in the 1960s, it was the largest factory in the Middle East and Africa, with about 50,000 workers.

That history explains why it's been central to the emerging workers movement.

Though government employees today, most of the Mahallah workers speak with barely disguised contempt of their current employer, particularly allegations in the state-owned media that their strikes have had more to do with "outside agitation" than economic grievances.

They also allege corruption among the officials overseeing the factory as one reason for its economic struggles.

"Our movement is completely independent of any political forces or parties. All our demands are economic and simple; we just want fair wages," says Ahmad el-Naggar, who makes about $50 a month at the plant.

"The corruption of this country is present here at this company. If our strike has anything to do with politics … it is the failed politics of the government, and not any intervention from political parties," he says.