When the US Kellogg Company bought a majority stake in local snack maker Bisco Misr in January 2015, the Egyptian company’s shareholders walked away with around US$125 million. The Kellogg Company, in turn, gained a foothold in Egypt’s lucrative consumer foods market.
But for the thousands of workers in Bisco Misr’s factories, the deal has proved less profitable. Since being bought out by a multinational, workers say conditions on the factory floor have improved, but wages remain so low that they are unable to pay their bills, have to look for second jobs and have resorted to striking.
Bisco Misr production workers with several years experience still earn as little as LE650 to LE800 per month (US$83 to $102 at official exchange rates).
On October 18, over 1,000 workers at Bisco Misr’s Cairo factory went on strike to demand wages in line with — or at least close to — the LE1,200 minimum wage guaranteed to workers in Egypt’s public sector.
“The labor protests and strike took place among the majority of the company’s workforce in Cairo, of around 1,200 workers. Meanwhile, another 2,200 workers in Alexandria threatened to join the industrial action with the same demand of increased wages,” says Mohamed Shaaban, a local trade union leader at the Bisco Misr company in Cairo,.
Workers say they suspended the strike four days later, after receiving verbal pledges from American administrators that their wages would be increased by payday in January 2016.
Shaaban says that a visiting American administrator “was shocked when a worker presented him with his monthly pay slip receipt, and it amounted to just $90.” In the Kellogg Company’s home state of Michigan, the legal minimum wage is currently $8.15 per hour, and is set to rise to $8.50 per hour in January 2016 and $9.25 per hour in 2018.
One production line worker, who asked to be known as Eid and has been working at Bisco Misr for the past four years for a monthly wage of just LE900 ($115), says he asked company managers, “Are you prepared to bail out your indebted workers from prison?”
“We only received a verbal pledge from a visiting American administrator of the Kellogg Company about the restructuring of the pay scale by January next year,” Eid says. “We asked about what these increases would mean in terms of our new monthly wage, but didn’t get a clear response.”
The Kellogg Company didn’t provide further details about plans for its Egyptian labor force. Company spokesman Philip Dunne confirmed to Mada Masr that they intend to review Bisco Misr salaries in “early 2016,” but did not clarify when a new wage structure might be implemented, or how much workers can expect to be paid.
“We look at market prices for jobs in similar regions and reward accordingly,” Dunne said.
“We do comply with local employment legislation,” he added. However, when it comes to the private sector, Egypt ‘s laws say virtually nothing about worker compensation. The LE1,200 minimum wage applies only to public sector workers.
Reliable figures on wages are also hard to come by. According to state-statistics agency CAPMAS, the average wage for private sector workers was around LE1,900 per month in 2013, but this figure is likely skewed by higher salaries for managers and skilled workers.
Desperate workers threaten to strike again
Bisco Misr’s workers say they have been led to expect a wage increase come January, and hundreds of workers at the Bisco Misr factory in Cairo’s Sawwah district have warned they may resume strike action if their pay packets don’t increase.
“We hope we don’t have to resort to striking again by the end of January. Several workers, myself included, are seriously considering resigning if the wage hikes or bonuses aren’t disbursed. This means the company would have to hire other workers, and then train them to take over our poorly-paid jobs,” said Hamada, a production worker. Like other workers interviewed for this story, he said he feared workplace retribution if his full name was published.
Hamada says working conditions have improved since the Kellogg Company’s takeover, but despite working full-time for the past three years at Bisco Misr he is not able to cover his family’s expenses. Hamada says he currently earns a total of just LE 860 ($110) per month. Married with two children, he hasn’t been able to pay his electricity bill for the past three years.
“I am constantly worrying about my family’s financial crisis and our uncertain future. I am worried that our utilities will be cut-off. I worry about the thought of my wife or kids falling ill and needing hospitalization. How will I pay for any of this on the wages I earn?” he says.
Hamada takes these concerns with him to and from the Bisco Misr factory everyday. “There’s no real incentive for us workers to continue laboring day after day, for years on end, if we continue to get paid such poor wages. Others have to work second jobs to make ends meet,” he says. “Increased wages will lead to increased production, and improved quality.”
Union leader Shaaban explained that starting wages for production-line workers at the company are around LE650 to LE700. Workers with ten or more years experience may earn around LE1,400 to LE1,600 ($178 – 204) — “which is obviously insufficient remuneration for this duration of service,” he says.
“This while chief administrators and senior board members earn as much as LE40,000 to LE60,000 ($5,100 to $7,660) per month. This discrepancy in income makes workers even more displeased with their low wages,” says Shaaban.
The Bisco Misr company and Kellogg Company take pride in their claims of corporate social responsibility and supporting the advancement of developing countries, Shaaban asserts. “So why don’t you support your own workers in this developing country, by paying them livable wages?” he asks.
Following questions from Mada Masr, the Kellogg Company released a statement: “Across all of Kellogg we are proud to set high workplace standards. We are committed to a safe and fulfilling work culture for our employees and provide programs to support their health and wellness. Throughout the whole company, we follow shared values, principles and behaviors that provide high quality and great tasting foods in a responsible manner.”
Shaaban conceded that the Kellogg Company is making inroads in terms of improving industrial safety standards, decreasing workplace injuries, retaining a 5 percent quota for disabled workers amongst its workforce and revamping workspaces, despite workers’ grievances over their salaries.
“Over the past few months, the Americans provided us with new uniforms, masks, gloves, and fire extinguishers, along with more inspections of hygiene and safety standards. They are indeed adjusting working conditions, improving the quality of production lines, along with installing new air-conditioning, and new paint jobs,” added production worker Eid.
“Yet, what we are genuinely hoping and bargaining for is that this restructuring of the company includes raising our wages to an adequate level, in light of rising prices,” Eid says.
Shaaban, Eid, and Hamada all hope to be paid in line with the public sector minimum wage.
“It would be a good starting point,” says Eid, adding, “LE 1,200 per month wouldn’t be sufficient for a young man in good health, let alone one who is married and has children.”
“It is the Egyptian administration of Bisco Misr that has been keeping our wages so low over the past few years. Since its takeover, the American company and its administration has slightly increased our wages with some token bonuses, yet by July and August we were expecting significant wage augmentation. But it was only after our [October] strike that we received pledges for increased wages by January,” Eid adds.
Another production-line worker, Mostafa, says he needs a second full-time job to make ends meet. Several of his coworkers are doing the same, he says. “After an eight hour shift of exhausting manual labor, plus a two hour commute to and from work, I simply don’t have the time or energy to work another job,” Mostafa says. “I’ve seen some of my coworkers who do work a second job come back to their shift on the production line, and they are clearly drained of energy and unable to work to their fullest extent.”
“When we ask our Egyptian administrators for modest bonuses to augment our wages, they act as if we are greedy and ungrateful workers. This, while they sit in their air-conditioned offices and get paid tens of thousands of pounds each month,” he adds.
“The ball is now in Kellogg’s court,” says union leader Shaaban. “This national company [Bisco Misr] is a highly profitable company, it always has been. If they want to uphold their image as an ethical and just multinational corporation, they absolutely must raise wages for their workers.”