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Egypt’s Textile Workers Finally End Strikes; Gov’t Capitulates to Their Demands

After twelve tense days of protest, Egyptian textile workers finally put an end to their strike, finalizing an agreement with the government over the disbursal of an annual bonus.

The demonstrators largely work at the Weaving and Textile Company in Mahalla, the biggest public textile company in Egypt. Reportedly, as many as 12,000 workers joined the strike, also protesting a newly implemented minimum wage and recent ouster of Fouad Abdel-Alim, the former head of all public sector textile companies.

The yearly bonus was scheduled to be dispensed by the very end of December of 2013. Abdel Alim, said, “All textile workers will be paid the delayed installment.” It remains unclear how long the protests will continue. “We will make a final decision whether to go on striking or to end it Tuesday morning when more workers will be present,” he said.

Egypt’s Economic Ministerial Committee finally approved the payment in full, which amounts to $22.5 million. Workers pledged to continue their strikes until their demands were met, further stymieing an already slumping textile industry.

The workers at the Weaving and Textile Company have a long history of protests, often leading the opposition to what they call Egypt’s military junta. They spearheaded strikes against former Prime Minister Mubarak in 2006 and 2008, and were active in the uprising that brought about his ouster in 2011.

Further, textile workers have distanced themselves from Mursi and his Muslim Brotherhood and, joining with students in Mahalla, declared themselves “autonomous” from the state under his control. Now, under the “junta” they find little cause for celebration, striking in both August and October of 2013. Indicative of the distrust among revolutionaries, the textile workers are in continual conflict with whatever power assumes control of the state and the state-run textile industry.

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Saddled with unmanageable debt and distrust of its constituents, the current Egyptian government has made some small steps toward rapprochement. Its December announcement to restructure textile manufacturers with the assistance of $725.7 million put up by banks has partially alleviated the concerns of the 60,000 people employed in the industry.

Additionally, an agreement reported in the Egyptian Daily Al-Hayat one week before the referendum will provide a loan of $7.1 million from a coalition of twelve banks, headed by the Central Bank of Egypt, to the Weaving and Textile Company in Mahalla.

Beset by internal chaos, Egypt has persistently maintained that its textile industry remains strong, despite mounting evidence to the contrary. Now, its government is finally acknowledging the negative impact it has suffered from political tumult. One anonymous source, speaking to the Egypt Independent, said, “The government is really serious about saving the industry.”

A consortium of banks, including the National Bank of Egypt, has formed to discuss the matter. In advance of the potential financing, a Ministerial Committee has been convened to compile an exhaustive list of textile industry assets. Much of the money would be used to rebuild dilapidated factories and update increasingly outdated textile manufacturing machinery.

The textile industry in Egypt is state run and, as a consequence of stubborn political unrest, has been badly battered. In 2013, the Holding Company lost an estimated $2.9 billion. Also, the general consumption of cotton by Egyptian weaving and spinning mills recorded a 1.7% decline between March and May 2013. The consumption of imported cotton also experienced a marked decline, dropping 6.3%, according to data provided by the Central Agency for Public Mobilization and Statistics (CAPMAS).

The U.S. has imported $847 million worth of textiles and apparel from Egypt so far this year, down almost 4 percent from the same period in 2012.

Osama Saleh, the Minister of Investment, attributed the losses to degraded textile equipment and the increasingly dire financial circumstances of its workers. Fouad Abdel Aleem, chairman of the Holding Company, said that the steady rise of the price of cotton has also taken its toll on Egypt.

Egypt’s exports received a short-lived boost in December 2012 from the devaluation of its currency. However, businesses have struggled to capture these gains since the general economic condition continues to deteriorate and the garment industry is so dependent upon its own imports of yarn, fabric, and various accessories.

And the situation in Egypt could worsen given the general expectation of nationwide energy blackouts. The country has suffered a series of winter power outages, a worrisome sign that the hot summer weather, and the rise in demand for energy to fuel air-conditioning, will crush their system. Mohammed Shoeib, managing director of the energy division at Egypt’s Citadel Capital, said, “The expectation for next summer is the darkest summer that Egypt has ever seen. It is clear that the demand for electricity needed is more than what the government can provide.”