On January 13, 2015, the workers of Egypt Company for Textile, also known as the Mahalla Textile Company, went on strike for four days demanding the distribution of the remaining part of their profits for the fiscal year 2013-2014 – two months’ salary. They also requested a clear timetable for the company’s development plans, investigating corruption cases, prosecuting corrupt people and sacking the company’s general director.

On January 13, 2015, the workers of Egypt Company for Textile, also known as the Mahalla Textile Company, went on strike for four days demanding the distribution of the remaining part of their profits for the fiscal year 2013-2014 – two months’ salary. They also requested a clear timetable for the company’s development plans, investigating corruption cases, prosecuting corrupt people and sacking the company’s general director.

Misr Spinning and Weaving Company, also known as El-Ghazl factory, in El-Mahalla El-Kubra is one of Egypt’s major companies. It has a long history of worker struggles and a record full of strikes which often distressed the government. “They say that workers are thugs and do not want to work,” says Mohamed Abd, a member of the Campaign. “This is not true because, in their strikes, workers always demand that their company is developed because that will ensure workers and their families a decent life and even create jobs for their children,” he added.

On the fifth day, the morning shift’ workers were surprised to see some workers, loyal to the administration, standing at the company gates with clubs and sticks in their hands on the pretext that some thugs were planning to attack the company. However, they soon attacked the workers and ordered them to start working at once. They shouted: “Work or they will close this company as they did to the other ones. Work to maintain your livelihoods!” Workers were threated with punishment if they did not comply.

Two days later, the workers were forced to end a strike and the company administration referred 13 worker leaders to investigation. They were charged with inciting workers to go on strike and obstructing production. “All the workers who demanded their rights to developing and protecting such a vital industry were sacked,” says Abd.

People are burdens on development

In the beginning of 1992 and after issuing Law No. 203 of 1991 which transformed the Egyptian public sector into a business sector, the government announced its plan to sell its shares in the public companies in the context of implementing the economic reform programs. However, the huge number of labourers blocked this plan.

The law also entitled the management to decide punishments at their whim. The public-sector textile companies and factories adopted a policy to continuously reduce wages to force people to quit. The reform slogans were translated into reducing the wages to cut budget spending!

This policy coupled with management’s arbitrary decisions to force workers into early retirement increased the unemployment rate, created a black labour market subject to supply and demand, expanded the informal sector, and led to the emergence of new forms of labour such as seasonal workers.

Mohamed Kasem, CEO of the Egyptian International Company for Trade and head of the Readymade Garments Export Council, said there are currently 32 public-sector companies whose accumulated losses reach L.E. 30 billion due to the lack of labour (they have 60,000 workers instead of the needed 90,000).

“How come that skilled labour is treated as a burden and that plans are made to get rid of them through all possible and, maybe, impossible ways,” wonders Mohamed Abul-Fotouh, a teaching assistant in the Department of Economics in the Faculty of Economics and Political Sciences, at Cairo University, in a report issued in April 2005 about the impact of international trade agreements on the textile workers.

“How did people become a burden while they are the base and aim of any development? They only become a burden when development stops and the production process becomes unable to make use of their capacities, when machines are neglected instead of being maintained and renovated, when production lines are disrupted instead of expanding their capacities, when economic policies are unable to expand the market and open its closed doors and when the company’s administrations are satisfied with complaining about the piled up stock and the products which cannot compete. All of that makes people a burden and corruption rife,” says Abul-Fotouh.

Nevertheless, the textile industry in Egypt still represents the second largest industry in the private and public sectors after the food industry and employs the second largest number of workers after the food, beverages and tobacco sector. There are one million textile workers representing one third of the total industrial labour. Their annual wages reach L.E. 1 billion (US $128 million), which constitutes the livelihood for more than four million people, not to mention workers in cotton farming and other related activities.

“The textile industry is powerful. It absorbs the high unemployment,” says Mohamed Fathi Anbar, member of the Campaign. “The deterioration of this industry has larger social implications than those of a financial crisis.”

Workers’ solutions

“The committee we formed contains different groups from different places and factories and its aim is to protect the national industry and industrial workers,” says Anbar.

The committee’s first conference was held in December 2014 in the Culture Palace in El-Mahalla El-Kubra described in the committee statement as “the first industrial city” and its workers as “having the greatest interest in the development of Egypt’s industry”. The committee has called on researchers, scientists and those interested in the textile industry to contribute their research papers to “revive this staggering industry.”

The most useful paper in the conference was presented by the textile department in the General Association of Engineers in Gharbia about “barriers and reasons of the deterioration of the textile industry and the proposed solutions.”

The study suggests that the core problem lies in opening Egypt’s economy without protecting the local industry. The tariffs on garments was reduced to 22% and on textile products from 12% to 5% which undermined the ability of the local production to go on with all the Egyptian industry’s accumulated problems let alone smuggling garments and fabrics which cost the Egyptian textile companies L.E. 4 billion in losses.

Another problem is the government insistence on crushing this industry. Despite all the dilemmas in the textile industry, the government overburdens it with 27 taxes, let alone the interests imposed on loans which vary between 18-22%.

The study starts its diagnosis from the first cycle, namely the cotton which is besieged by other crops that produce organic energy, the increasing dependence on the exported cotton, the piled up local cotton (which is not marketed), the high costs of production requirements, the fluctuating prices of crops and the government’s abandonment of farmers.

The study cited the Chinese example in the 1980s when it expanded its local production. The Chinese government imposed a system of farming shares, took crops at subsidized prices different from the international prices, paid farmers in advance and provided them with soft loans.

On top of the paper recommendations came the focus on cotton farming through the establishment of a subsidy fund to balance prices; activating Decision No. 51 of 1968 on the farming cycle which specified the cotton farming areas; and providing a package of incentives and support measures.

As for the textile sector, the study suggested the restructuring of old administrative methods which assigned five direct and indirect service workers for each production worker, merging small companies into larger ones, rescheduling the large companies’ debts on long-term installments, upgrading the old machines, training and qualifying workers on modern industrial methods.

The study stressed the need to adopt modern sales and marketing techniques, improve quality, and introduce anti-dumping/anti-smuggling legislation.

Finally, the paper recommended the establishment of a supreme council for cotton and textile industry to be headed by the prime minister and composed of the ministers of agriculture, industry, finance, investment and labour and representatives from the Chamber of Textile Industry and the Association of Textile Workers, the textile department in the Association of Engineers, the departments of textile and printing on textile and clothes at the Faculty of Applied Arts. The council should meet on a monthly basis to discuss the sector’s problems.

Government solutions

In an attempt to remedy the situation, the Holding Company for Textile made a bid to develop and restructure 25 of 32 state-owned companies. The project was awarded in March 2015 to the U.S. Warner Office for Consultations in cooperation with the Egyptian Sahara Group, owned by Akmal Kortam. The cost of developing these companies is about L.E. 5 billion (US $638 million), to be self-financed through selling some of these companies’ unused lands and assets.

Indeed, the Warner Office counted the unused lands and assets to be sold to finance the development and restructuring process and to relocate some companies such as the Vestia Company for Readymade Clothes in order to benefit from the price of their property.

When the Warner Office issued an initial study which included a situation analysis and a plan to move workers, the latter, especially the workers of Vestia Company became outraged. They objected to the plan whose details were not revealed. That angered workers who considered the whole thing another attempt by the government to get rid of them.

“What are the criteria and requirements against which the Holding Company chose Warner Office,” wonders Abd. “Does Egypt lack the needed technical expertise and skills?”

Due to the ambiguity of the deal, the People’s Committee condemned the Warner Office report. “We proposed many solutions to all entities but to no avail,” says Anbar who proposed that banks should become partners in the boards of directors based on their debts values.

“Reforming this sector requires reconsidering many laws including Law 203 of 1991 which gives the Holding Company for Textile all powers without control which opens the door wide to nepotism and favoritism. Law 12 of 2003 should also reconsider the relationship between employees and employers,” he added.

“Change is more important,” says Abd, stressing the need to change the corrupted administrations and the state policies on the textile industry. “Change comes before development,” he added.