The death of a sector

“Egypt is known to the world for its quality long-staple cotton.” This line would resonate to almost all Egypt’s schoolchildren taught to take pride in their country’s agricultural wealth, marked most notably by its long-staple cotton.

But today this marker of pride is only to be found in school textbooks. In reality, it has receded against the import of cheaper short-staple cottons from Asia amid lower motivation to grow it given dwindling government support. The industry itself has been increasingly weakened in the face of growing imports of ready-made textiles and garments, which have flooded Egypt’s markets. 

The bygone pride extends to the textile industry, which once generated billions of pounds in profit and employed hundreds of thousands.

Today, the ageing sector hosts a mere 60,000 employees while until the 1990s, it was the home of some 360,000. Estimates of losses in the sector today range from LE6 billion to tens of billions of pounds with contradictory official figures making it difficult to ascertain the actual levels.

Dozens of textile factories and production lines have been shut down nationwide since 2011, while thousands more workers have either been laid-off or are in precarious employment.

Workers in many of these companies blame this state of affairs on administrative corruption, planned and unintentional mismanagement, profiteering and misallocation of funds.

These deteriorations are arguably among the primary reasons driving public-sector textile workers to the forefront of industrial actions nationwide since 2006.

In response to increasing industrial actions, threatened state officials since the Hosni Mubarak era were pressured to offer monetary concessions to disgruntled workers. Yet these concessions have not kept this once-vital sector of the economy from impending collapse. Workers and analysts argue that doling out money to quell labor unrest among public sector textile workers is not a sustainable long-term solution, but a short-term remedy.

Most recently, on August 28, the Ministry of Finance, Holding Company for Textile Companies, and the state-controlled General Union of Textile Workers paid LE140 million to workers in 32 public sector textile companies nationwide.  

But this is not halting industrial actions — and many of these are centered around company corruption, in addition to financial demands.

“Ahead of our demands for improved wages and working conditions, our primary demand has been to hold managers accountable for their mismanagement,” says Sayyed Habib, a former worker and strike leader with the Misr Spinning and Weaving Company in Mahalla, which saw a mass protest and partial strike on August 26.

“Following our strikes, we are generally presented with some sort of bonus. Yet these pay raises function only as temporary painkillers, they do not resolve the large problems of mismanagement at our company, or other companies. These monetary painkillers may help workers get by, but they don’t help in the company’s advancement,” he adds.

Employing some 20,000 workers, the Misr Spinning and Weaving Company in Mahalla is the largest textile mill not only in Egypt, but the entire Middle East. This mammoth company has been at the heart of Egypt’s labor movement and industrial actions for the past six years.

“Workers at our company have repeatedly gone on strike demanding our profit sharing payments, yet have first demanded the removal and prosecution of corrupt management officials,” says Habib, who has become a labor rights advocate at the Center for Trade Union and Workers’ Services in Mahalla City.

He explains that instead of being sacked or held accountable for their mismanagement, “corrupt officials have actually been promoted from managing our company to managing the Textile Holding Company, which oversees all public sector textile companies.”

Kamal al-Fayoumi, a worker and strike leader at the Misr Spinning and Weaving Company in Mahalla is skeptical about the government’s response to these actions. “We don’t sense any willingness on the part of the authorities to step in and address these many problems; instead we find them washing their hands,” he says.

Financial figures indicate that until 2006, the company generated around LE100 million in profits per year. Yet since 2008, the company has incurred losses amounting to LE1.5 billion.

“In person and in writing, we’ve called on the successive governments to take action against corrupt and inept administrators who have incurred these massive losses to no avail,” Fayoumi says. “Both administrative and financial corruption has led to these losses. It appears to be an intentional plan of certain officials to drive these public sector companies into the ground — so that they are deemed to be failures, and thus open the way to privatize these companies.”

And this has indeed been happening, yet not without troubles.

Since the late 1990s, numerous committees have been established to salvage the state-owned textile companies — often resulting in privatizations, mass-layoffs and factory closures.

But three public-sector textile companies, which had been privatized under the Mubarak regime, had their privatization contracts nullified via court order in 2011. The state has repeatedly declined to reabsorb these three companies back into the public sector — thus leaving thousands of workers in a state of limbo.

Ragab al-Sheemi is one of nearly 3,000 workers at the privatized Shebin al-Kom Misr Spinning and Weaving Company whose ownership has been contested for more than three years now.

“We’ve lost all faith in foreign investors. We want our company to be returned to the public sector and administered by Egyptians,” he says. The company in which he has been employed for nearly two decades was sold to Indian-Indonesian investors in 2007. These investors changed the company’s name to Indorama Shebin Textiles, and slashed the workforce to less than a third of its original size, and yet were unable to render the company a profitable enterprise.

Previously a public sector company — as is the case with the other two companies, Tanta Flax and Oils Company and the Nile Cotton Ginning Company — the Shebin al-Kom Spinning and Weaving Company was issued an Administrative Court verdict in 2011 which nullified its privatization contract. These companies were found to have been sold for less than their market value in corrupt business transactions.

None of these three companies has been reabsorbed into the public sector.

On April 17, 2013 the Dokki Misdemeanors Court sentenced former Prime Minister Hisham Qandil to one year in prison and his removal from office for failing to uphold the Administrative Court’s previous verdict regarding the Nile Cotton Ginning Company. Qandil is still appealing the verdict.

“We’re tired of temporary remedies; we demand lasting solutions to the problems facing the industry,” Sheemi says.

Sheemi is being paid only his basic wage from the Textile Holding Company, while production in the Shebin al-Kom Spinning and Weaving Company has come to a near standstill over the past two years. This precarious situation of employment and production is almost identical in the Tanta Flax Company and the Nile Cotton Ginning Company.

Propositions have been made to salvage the industry.

Habib recommends that raw materials, including Egyptian long-staple cotton be brought back into production.

“Egypt’s textile industry is a chief pillar of Egyptian economy — we cannot and will not let it collapse,” Fayoumi says.

While he welcomed the Finance Ministry’s most recent effort to appease disgruntled textile workers in the public sector — through the payment of LE140 million to some 60,000 workers for bonuses and monetary assistance in preparation for their children’s return to schools —Fayoumi explains that this is not a sustainable solution to the problems of the textile workers or companies.

“We’ve had two uprisings within 30 months calling for bread, freedom and social justice yet we don‘t see any genuine move on the part of the ruling authorities to realize these popular demands, to get to the roots of Egypt’s economic problems, or to actually solve them.”

Abdel Fattah Ibrahim, president of the General Union of Textile Workers, who was promoted on September 7 to president of the state-controlled Egyptian Trade Union Federation, agrees. He says he has presented a list of recommendations to the Finance Ministry including a resumption of local cotton cultivation, restructuring public sector textile companies both financially and administratively, along with increased investments, and modernization of machinery.

“Government officials will move to revive this devastated industry. However, this revival depends on their willingness to swiftly address the industry’s many problems,” Ibrahim says. “It also depends on how much they’re willing to invest in order to salvage it.”

Jano Charbel 

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