CAIRO (Reuters) - The Egyptian government will give public-sector employees a salary increase of at least 20 percent this year, more than previously promised, Prime Minister Ahmed Nazif said in an interview with state newspaper al-Messa.
"There are studies under way on the real resources with which the next social raise will be financed so that it will be more than 15 percent. In any case it will not be less than 20 percent," it quoted Nazif as saying in the interview, seen on the newspaper's website http://www.almessa.net.eg/ on Thursday.
The draft budget for the fiscal year 2008-2009, which is on its way to parliament, allows for a 15 percent rise in salaries, slightly above inflation of 14.4 percent in the year to March.
Analysts have said the inflation rate for the poor is higher than the average because they spend more of their income on basic foodstuffs, which have risen sharply in price.
Finance Minister Youssef Boutros-Ghali said this week the government was considering a higher raise, but the increase should not push up the budget deficit, projected at 6.9 percent of gross domestic product.
Asked where the money might come from, Boutros-Ghali told Reuters: "Anywhere. I don't want to talk about it yet because I would rather have them (parliament and the ruling party) come up with the idea, but we have a few ideas."
The prime minister gave no further details of where the government would find the extra money.
Manpower Minister Aisha Abdel Hadi said after meeting President Hosni Mubarak on Thursday that in a speech next Wednesday to mark May Day Mubarak would announce "pleasant news ... of benefit to workers and everyone". She gave no details.
Mubarak said in a speech on Thursday the government would continue to subsidise food, which currently accounts for about a fifth of all government subsidies.
"The priority in all our efforts will be to continue to make available basic foodstuffs to citizens, whatever its cost or the burden of subsidies on the state budget," he said in remarks carried by state news agency MENA. "We will continue with more subsidies for essential commodities and ensure they reach those who deserve them."
The cost of food subsidies would grow to 20 billion Egyptian pounds in the 2008/9 fiscal year from 15 billion pounds this year, which ends June 30, Boutros-Ghali told Reuters this week.
Egypt's economy grew 7.1 percent in the last fiscal year, its fastest in at least two decades, but poverty remains a problem.
About 20 percent of Egyptians live on less than $1 per day, the U.N. said last year.
Egypt has seen a wave of worker unrest over the past year, culminating in riots which started in the Nile Delta textile town of Mahalla el-Kubra on April 6. Three people were killed and more than 150 people were injured over two days.
