Stories of informal sector under economic reform program

CAIRO - 19 August 2017: In the heart of Cairo, specifically in Haram street, a man sits waiting on the roadside on the off-chance that someone may pass by and pick him up to tear down a bathroom, or remove some debris.

On the other side of the road, another young man with a piece of cloth wanders around cars, offering to wipe windowpanes and windshield in exchange for a few pounds.

Meanwhile, a worker at a gas station is pumping fuel in cars and staring at the drivers’ faces, waiting for tips that today he probably won’t end up getting.

These are some of the daily scenarios of informal workers who are facing tougher times than they’re used to with inflated prices and painful economic reforms that have left them, and others they depend on for income, struggling to make ends meet. Informal workers are not officially employed by either private or governmental institutions with fixed salaries, but rather offer different services for other citizens in return for tips or daily pays with no contracts or legalities involved.

Those informal workers represent a large sector of the population that is geographically spread across the nation. Nevertheless, it is difficult to place this segment within the hierarchy of social classes or find exact statistics on the sector because they are informally employed.

In 2014, the Middle East Institute estimated the number of informal jobs in Egypt to be around 10 million, according to Mohamed El Dahshan, professor of development economics at Cairo University. In the same year, another study conducted by the Egyptian Centre for Economic Studies (ECES) reported that informal jobs represent 65% to 70% of the size of the formal economy.

Egypt’s annual inflation stood stable at 30.9% in June, according to statistics released by the Central Agency for Public Mobilization and Statistics (CAPMAS). A sector that is excluded from government services and with little rights or securities, the current economic situation puts the informal labor market in a more vulnerable position given that those who employ or tip them are becoming poorer themselves.

Meanwhile, middle- and upper-middle-class citizens are struggling to meet life requirements, especially that the increments were mainly imposed on the products and services which they frequently consumed. This means that the workers who relied heavily on tips from satisfied customers will face drastic income slashes as customers stop tipping altogether in efforts to cut their own spending. Whereas the government continues to support low-income citizens through the social safety net included in the plan for the reform program, tipped workers remain marginalized.

Gas Station Attendants:

Fueling anger

The majority of individuals working at gas stations do not receive monthly salaries from the station administration; so they rely on the tips they take from the clients as their only source of income. However, some stations pay monthly salaries ranging between LE 140 to LE 200.

At Mobil gas station on Sudan street, workers tell us that the tips they receive daily have seen significant decreases after the fuel price hikes because customers are already paying hefty prices to fill their tanks and so they have little to spare on tipping.

Rawash Mohamed, a worker in his late 40s, said he usually collected between LE 50 to LE 90 per day in tips, but after the recent price hikes, such amounts are rare.

“The reduction did not affect tips only, but the fuel sales as well were affected. Now, we sell 7,000 to 8,000 liters of fuel, while we used to sell 10,000 to 15,000 liters per day,” he continues.

Mahmoud Abdel Salam, a graduate of the Faculty of Commerce who currently works with Mohamed at the station, says he starts his shift at 8 am and finishes at 3 pm, then leaves to another informal job to earn his living.

“Many of the workers at the station are working second jobs as the tips we receive from the clients are not enough to sustain a life and amount to nothing amid the price hikes,” Abdel Salam adds.

Mohamed, on the other hand, suffers from health issues that prevent him from taking up an additional job after his work shift at the station. “I can’t do any other job beside my work here, yet my financial conditions are worsening. I’m required to help my daughter get married, but I cannot afford the home appliances whose prices skyrocketed,” the worker says.

“It is not only about the tips, but people now pay for the gas with a frown on their faces, they sometimes even leave without saying thank you,” Mohamed concludes.

Jacks of all trades

Amr Ahmed, 35, goes to Al Etimad in Imbaba every afternoon, and joins dozens of other men coming from different governorates looking for any job with a daily pay.
“Every day I come here and wait until anyone assigns me a job. I might get one job per day, such as moving furniture for LE 400 to LE 600, but I could spend 10 days or more without any work,” Ahmed says.

Ahmed explains that each one of the workers waiting for gigs would have around five assignments per month, earning about LE 1,000.

“Still, LE 1,000 is nothing with the [latest] price hikes. People no longer hire us like they used to; instead, they do their jobs themselves,” he says.

“I came from Al-Ayyat village in Upper Egypt to work here and improve my income, both my wife and my 15-year-old daughter are also working as housemaids; we are all working to eat, drink and pay the apartment rent,” he explains.

Another worker sitting next to Ahmed agrees, “I sometimes work for one day and stay 10 [days] without any work, so I would have less than LE 1,000 to spend for the whole month,” he says, adding that he supports his wife and children back in Fayoum, his hometown.

Amongst those day workers are some who already work as housekeepers but do not receive monthly salaries. Instead, they receive symbolic amounts every month from each apartment in the building, ranging between LE 20 and LE 30. So they are forced to look for other jobs like carrying sand to construction sites, moving heavy appliances or removing debris to make ends meet.

The Bawab:

Making ends meet

Nabil El Sayed is a door attendant for a building in Mohandeseen who receives LE 1,100 a month, a salary he says cannot cover increasing prices. “I do some cleaning, such as washing furniture or carpets, or even clean dogs’ houses. I also sometimes do infrastructure and electrical work,” the 40-year-old El Sayed says. “I do anything to get extra money. Any amount will make a difference with me; even if it is five pounds.”

“I’m supposed to pay for my children’s school fees, buy food and clothes for feasts, provide medical care and send money to my parents, but my income doesn’t cover all this,” says another door attendant of a three-floor villa in October City.

He makes LE 600 for taking care of the villa, and when he asked for an increase, they rejected saying they already offer him a room where he stays with his family.

Similar to door attendants, many women have formal morning jobs and informal evening jobs as housemaids to make ends meet.

Self-declared worker

The informal street profession known in Egypt as sayes (a parking attendant) appeared as a solution for those who are seeking a source of income and cannot get proper jobs. Many have taken up the job without a work permit for the extra money.

A street valet, who preferred to speak on condition of anonymity, says he gets around LE 1,000 monthly for parking cars. “I am supposed to finish preparing for my marriage, but I cannot even afford the infrastructure work on my apartment,” he says.

Valets could also be employees receiving monthly salaries from their formal jobs that are not sufficient to cover necessities, so they resort to other jobs to make money from the tips.

A security guard receives LE 1,200 from a car dealership, but to improve his condition, he puts stones in front of the dealership so people would pay him to park their cars.

Difficult Times Ahead

“As long as inflation is increasing, conditions of those relying on tips will never improve, but will worsen even more. It is the first time in Egypt’s history to witness this size of inflation,” Aliaa El Mahdy, the former dean of the Faculty of Political Science and Economics at Cairo University tells Business Today Egypt.

El Mahdy said that the government cannot do anything for this segment; the solution is to call on the private sector to increase the salaries of the middle-class citizens. This solution, however, is difficult under the current conditions.

“I personally used to leave LE 4 or LE 5 as tips. Now, I leave the change which might be LE 2 or less,” El Mahdy says. “Under the economic reforms, only two categories are impacted: those whose salaries are frozen, and others whose income relies on tips.”

“The value of the pound has decreased to 25%, which means that LE 1,000 is as good as LE 600. Hence, the money they already receive can do nothing in light of the soaring prices.”