Operating a Business

flag Egypt Egypt: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Limited Liability Company or LLC
Number of partners: From 2 to 50 shareholders.
Capital (max/min): Minimum EGP 1 000 divided in equal shares, fully paid up front when formed.
Shareholders and liability: Their responsibility is limited to their contribution.
Joint Stock Company (public limited company)
Number of partners: Minimum 3 shareholders.
Capital (max/min): EGP 250,000  of which 10% must be fully paid when formed. EGP 20 million when offering shares for public subscription, fully paid up.
Shareholders and liability: Their responsibility is limited to the contribution amount.
Limited Partnership
Number of partners: One general partner, unlimited number of limited partners.
Capital (max/min): Minimum EGP 250,000.
Shareholders and liability: General partners' liability is unlimited. Limited parters' liability is limited to their contribution.
Sole Propietorship
Number of partners: One natural person.
Capital (max/min): No minimum capital required.
Shareholders and liability: Responsibility limited to the capital allocated therefor.
General Professional Associations
Egyptian businessmen's Association
 

Business Setup Procedures

Setting Up a Company Egypt Middle East & North Africa
Procedures (number) 5.00 6.28
Time (days) 12.50 19.51

Source: Doing Business - Latest available data.

 
For Further Information
Consult Doing Business Website, to know about procedures to start a business in Egypt.
General Authority for Investment and Free Zones (GAFI), an investment guide for Egypt
The United States Commercial Services Guide, information on the business, political and economic context
The Competent Organisation
GAFI has a role in guiding and promoting foreign and Egyptian investments. It helps the investors in their administrative steps. GAFI has created a single point of liaison known as a One-Stop Shop counter. The formalities for setting up a company are done at this counter. The One-stop Shop counter thus provides useful documents on law no. 8 of 1997 for encouraging investments, guarantees, exemptions, company creation procedures, the different zones with special statutes to the investors. For speeding up the setting up process, GAFI is authorised to grant temporary licences for starting the project.

The ITIDA (Information Technology Industry Development Agency) was established by law no. 15 of 2004. It is attached to the Ministry of Information Technology and Communication. ITIDA guides investors for executing their projects with a single counter which helps them with various relevant administrative authorities, particularly it is the e-signature regulatory authority. This allows both public and private interests access to esignature authorisation.
Since 2006 the IDA (Industrial Development Authority), which comes under the Ministry of Commerce and Industry, has been responsible for developing and facilitating industrial establishments. In connection with the governing bodies the IDA recovers, prepares and sells land for developing industrial zones by foreign and Egyptian promoters. The State develops the road network and other networks for these lands. The IDA also offers a one-stop shop for industrial investors to give them information on the available lands and help them get the permits for industrial operations.

 

Recovery Procedures

Principle
The procedure is to put the company under supervision, which does not necessarily lead to bankrupcy.
Bankruptcy Laws
The main problem of the law on bankrupcy is the length of the administrative procedure.  The average length of time it takes to finish the procedure is 4 months.  The cost is considerable, approximately 20% of the goods.  The recovery rate is 16.8 cents on the dollar.

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The Active Population in Figures

201820192020
Labour Force 29,275,34729,776,95629,077,255

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 49.36%47.91%47.87%
Men activity rate 74.58%75.25%75.19%
Women activity rate 23.63%20.02%20.00%

Source: International Labour Organization, ILOSTAT database

 
Employed Persons, by Occupation (% of Total Labour Force) 2015
Agriculture, forestry and fishing 25.8%
Construction 12.1%
Wholesale and retail trade; repair of motor vehicles and motorcycles 11.8%
Manufacturing 11.2%
Education 8.9%
Transportation and storage 7.7%
Public administration and defence; compulsory social security 7.2%
Human health and social work activities 3.0%
Accommodation and food service activities 2.6%
Professional, scientific and technical activities 1.6%
Information and communication 0.8%
Electricity, gas, steam and air conditioning supply 0.8%
Water supply; sewerage, waste management and remediation activities 0.8%
Administrative and support service activities 0.8%
Financial and insurance activities 0.6%
Arts, entertainment and recreation 0.5%
Mining and quarrying 0.2%
Real estate activities 0.2%
 

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
The length work is 8 hours per day, 6 days per week with a maximum of 48 hours per week, and a rest obligation of a minimum of 24 consecutive hours in a week. There is a minimum 1 hour of rest for a day of work. If an employee works for more than 8 hours per day, he has a right to a 35% bonus for day work and 70% bonus for night work.
  • Maximum Duration
The maximum length of work is 48 hours per week.
Working Rest Day
24 consecutive hours per week of compulsory rest.  Week-ends are Fridays and Saturdays, if the 24 hours are not given during those days, they have to be compensated by another day.
Paid Annual Vacation
21 days minimum paid holidays, of which 6 are consecutive.  30 days if the employee has been in employement for more than 10 years, and/or if he is aged more than 50 years.  Additionally, there are 16 days of public holidays per year.
Retirement Age
60 years.
Child Labour and Minimum Age For Employment
Officially, 3 to 15% of children work.  According to observers, in reality, children are an important part of the active population, most of the time in the informal sector, therefore difficult to quantify (selling in the streets, seasonal agricultural work).  According to the Human Rights Watch, the conditions are difficult, between 9 and 11 hours of daily work in precarious sectors.
Informal Labour Market
Egypt's labor force has grown steadily in recent years, with upwards of 700,000 new entrants into the labor market each year. Official statistics put the labor force at 26.7 million. Unemployment officially stood at 11.9% at the end of 2011, though experts estimate the real level of unemployment, particularly among youth, to be much higher. Nearly 6.5 million people work in the informal sector, that is to say 40% of the active population. These people's work conditions (timetable and health) are generally very bad.

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The Cost of Labour

Pay

Minimum Wage
The minimum wage in Egypt as of 2020 is EGP 2,000 per month (Ministry of Labour).
Average Wage
The average Egyptian salary is EGP 2,167 per month in 2016 according to the ILO (lastest available data).
Other Forms of Pay
  • Pay For Overtime
30% of the normal salary.
  • Pay For Rest Days Worked
If it is a normal annual vacation day (not a week-end), the salary is doubled.
  • Pay For Overtime at Night
70% of the normal salary.
 

Social Security Costs

The Areas Covered
Unemployment, sickness and maternity, old age and work injury
Contributions
Contributions Paid By the Employer: The social insurance contribution of the employer is 18.75% of the total social insurance salary (although the country is developing a new system which will be implemented within a 15-year period and over six phases).
Contributions Paid By the Employee: On monthly base salary: 14%, capped at EGP 1364.
On variable salary: 11%, capped at EGP 2 795 per month.

NB: current upper limit for the first quarter of 2018, likely to be elevate in July and December each year.

Competent Organization
Ministry of Social Solidarity
MOSS Official Site (Arabic)

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Management of Human Resources

 

Recruitment

Recruitment Agencies
Recruitment agencies or head-hunters are private companies commissioned by employers.  They often have their own rules.  They require registration in their database first, before being able to submit candidacy.  They often have their own websites for classifieds and job announcements and can insist upon their own job interviews.
Recruitment Websites
Jobs in Egypt
Arabo Egypt: advertisement site
American Chamber of Commerce in Egypt
 

The Contract

Type of Contract
The work contracts are governed (in order of importance) by legal provision, collective agreement and individual negotiation. The two types of contract frequently used are the limited duration contract and the open-ended contract. There is also the temporary work contract which is used with the purpose of giving the employee a well-specified assignment. There is no maximum duration. The occasional work contract exists in the case of a specific assignment and its duration cannot exceed 6 months. The seasonal work contract is often used in the tourism sector, which is required to be updated every year at around the same fixed date. This type of contract cannot be renewed. Dismissal / layoff criteria are also very rigid compared to the employment conditions which are very flexible.

Breach of Contracts

  • Retirement
70 to 90% of active workers have access to retirement benefits.  It is possible (even compulsory) to retire at the age of 60, depending on the sectors:
- Pension is paid automatically on a monthly subscription booklet;
- The active worker saves through out the years a sum of his choosing, for his retirement, which is paid to him afterwards;
- The active worker opens an investment fund managed by a private company.  He could therefore possibly benefit from an additional percentage;
- From the age of 65 years, the State pays an additional EGP100.
  • Dismissals
The constraints of dismissal are very rigid unlike the conditions of hire which are extremely flexible.
  • Other Possible Methods
Expiration of the contract, resignation, collective dismissal...
Labour Laws
Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.
 

Dispute Settlement

 

Conciliation Process

  • Legal Framework
Labor Law no 12 of 2003 governs all employment relationships.
  • Procedure
In the case of a dispute between employer and employee, the State Labor Office first tries to resolve the matter amicably.  If no agreement is concluded, the two parties can resort to an arbitration committee and file a complaint within 45 days or more.
 

Judicial Structures

  • Legal Framework
See the International Labor Organization.
  • Competent Legal Body
It is a committee made up of two judges, a representative of the Ministry of Labor and Immigration and two members of the Federation of Egyptian Unions.  The compensation determined by the committee cannot be less than two months salary.  However, matters normally take two to four years to be resolved.  In effect, these are complicated undertakings.
 

Social Partners

Social Dialogue and Involvement of Social Partners
There are 23 trade unions (labor unions) which are represented by the ETUF (Egyptian Trade Union Federation).
Unionisation Rate
Union membership is around 20%.
Unions
Egyptian Trade Union Federation
Regulation Bodies
Ministry of Labor (in Arabic)
 
 

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Latest Update: May 2022