Recruitment Agencies in Egypt: A Backdoor to Forced Labour

Published September 13th, 2021 - 10:18 GMT
These contractors circumvent the law by acting as “middlemen” and forcing workers to sign contracts that strip them of their employment rights.
Highlights
These contractors circumvent the law by acting as “middlemen” and forcing workers to sign contracts that strip them of their employment rights.

By Ehab Zaidan

 In Egypt, recruitment agencies, known as ‘labour supply companies’ are on the increase despite Egyptian laws that prohibit employing workers through a third party labour contractors. These agencies work to place workers in government owned companies as well as multi- national ones for a percentage of the employee’s salary reaching between 10-22%.

These contractors circumvent the law by acting as “middlemen” and forcing workers to sign contracts that strip them of their employment rights.

Thirty two years old Hazem Fathi was recruited in Cairo by the International Business Services company (IBS), to work in the maintenance department of Telecom Egypt, a government owned entity. Fathi says: “I entered the company on my feet and left it with a disability, unable to walk without the use of crutches.”

According to the contracts of several workers, employees recruited through ‘labour supply companies’ (or recruitment agencies) receive half the amount of wages received by their counterparts who were recruited directly by the company or factory for which they work.

How The Companies are Founded

‘Labour supply companies’ circumvent the law either by registering themselves as suppliers of security and cleaning services, an activity permissible by lawin Egypt, or as an employer, according to labour activist Wael Tawfiq.

Labour lawyer Yasser Saad explains: “These labour laws were passed at a time the state was promoting itself as being economically open (for business), and offered investors guarantees at the expense of workers (rights).”

Article 16 of Egypt’s Labour Code stipulates: “The employer may advertise the vacancies through various mediums, and even assign consultancy offices to review candidates applications, to assess, recommend, or assist in selecting the best candidates for these positions. But employers may not contract workers through a labour contractor or entrepreneur.”

IBS Egypt’s Largest Labour Supplier

International Business Services IBS, was established in 1984 operating initially as a service provider for businessmen, then expanding it services to institutions including technical and administrative services. Their services were later updated to include medical services and project management.

On its website, the company proudly identifies itself as being Egypt’s “leading outsourcing organization” or labour supplier, with a 227 affiliated companies in various business sectors.

Labour activist, Wael Tawfiq, says that the reason why major companies in Egypt seek the services of recruitment contractors is that they may wish to move their investments from one country to another, adding that “oil, cement and fertilizer companies want to distance themselves from the use of toxic materials or hazardous activities which may affect their  (Staff) stocks and market value.”( Basically to escape future liability).

Exxon Mobil… Profiting from Labourers

In its 2019 business report, Exxon Mobil proudly states that its billion dollar profits were due to their “supply chains” and that its products were manufactured in certain countries then exported to others. The company owns 20 production plants around the world, and its products reach 130 countries. Exxon Mobil Egypt exports its motor oils to 45 European and African countries, and has signed cooperation agreements with European and Asian car dealerships in Egypt.

On its website, Exxon Mobil, listed in the NYSE, states that it employs 400 workers (in Egypt), while its business report states that the number is closer to 1000. The corporation engaged four ‘labour supply companies’ to recruit 600 workers, none of whom received their rights (as employees) as stipulated in Egypt’s Labour Code.

On July 6th, 2009, Exxon Mobil contracted the ‘Ideal Agencies Company’ which identified itself as an importer and exporter of electro mechanical equipment. Twenty days after signing the contract, and to be more aligned with the nature of its contract with Exxon Mobil, Ideal Agencies amended its description to include the management, operation and service of heavy transport fleets.

By following the trail of contracts signed between Exxon Mobil and several ‘labour supply companies’, it is clear that Exxon Mobil is in full control of everything related to the contracted employees, including their relationship with the ‘labour supply company’ and Exxon Mobil.

The recruitment agency is usually committed to providing a list of workers with qualifications that meet the criteria set by the corporation, then Exxon Mobile will select the workers, determine their wages, set up their operation schedules and work regulations, including measures pertaining to rewards, punishments or promotions.

The corporation has also given itself the right to dismiss any worker due to inappropriate appearance or behaviour, without specifying what those would be, in addition to prohibiting worker’s access to its premises for reasons determined by the corporation only. According to Osama Jamil, a labour law specialist, Exxon Mobile uses ‘labour supply companies’ only to evade upholding workers rights as stipulated by the Egyptian labour laws. 

Contract provisions are often used as basis for arbitrary dismissals like in the case of 42 years old Yasser Mahmoud, a worker in the distribution department at Exxon Mobil, Alexandria, and treasurer of the company’s workers union.

Before filing his lawsuit which is still pending against the corporation, Mahmoud says: “This company unjustly terminated my employment, without any compensation, merely for supporting my colleagues in demanding they are justly treated.”

When union members decided to step in and negotiate with Exxon Mobil to improve working conditions or demand the compensation for dismissed workers, the corporation decided to arbitrarily dismiss all members of the union’s council.

Exxon Mobil has not responded to any of our inquiries that are supported by documentation. The same applies to the labour supply companies we contacted such as Top Service, Al-Khudari Centre and Ideal Agencies Company.

“The state commits to upholding worker rights… and protecting them against work related risks… and prohibits their arbitrary dismissal.” These are excerpts from Article 13 of Egypt’s amended constitution for the year 2019. However, government owned Telecom Egypt broke the law by contracting a labour supply company, leaving the government to foot the bill.

Article 13 of Egypt’s constitution stipulates: The state commits to upholding worker rights, and works on building balanced work relationships between the two sides of the production process. It ensures means for collective negotiations and works on protecting them against work related risks, ensures that health and safety conditions are met, and prohibits their arbitrary dismissal. All that according to the processes stipulated by the law.

Worker Hazem Fathi fell off a ladder during his work at Telecom Egypt. His injury was officially documented, and the company covered the costs of an operation to repair a cruciate ligament, which unfortunately failed.

Later, while undergoing physical therapy before repeating the operation, Hazem was suddenly informed by IBS of his dismissal from the company without any compensation. The medical report issued by the Council of Specialized Medical Centres confirmed that Hazem suffered from a completely torn cruciate ligament.

Worker Ahmad Husseini suffered from a skull fracture and brain concussion from an injury at work, and after a one week stay at the hospital was prescribed by his doctors complete bed rest at home. That is when IBS decided to inform him of his dismissal from work.

Telecom Egypt has failed to answer the inquiries sent by the reporter of this investigation, and we also have not received any response to the inquiries sent to IBS.

TITAN Cement, the World Bank and the Exploitation of Egyptian Labourers

The World Bank, established to support global development, is profiting from the exploitation of Egyptian workers. It contracted labour supply companies to recruit workers for the Belgian cement company, TITAN, in Alexandria. The International Finance Corporation, a member of the World Bank Group, had 80 million Euros invested in TITAN, amounting to 1/6 of the company’s capital.

The International Finance Corporation responded that it sold its shares in TITAN back in 2019, but has not yet responded to inquiries regarding the violation of the rights of workers prior to that date.  

No action was taken after workers and their families filed complaints to the World Bank that the company had violated the IFC’s Performance Standards on Environmental and Social Sustainability, approved by the World Bank in 2012.

In order to increase its margin of profit, the cement company, listed in the Athens Stock Exchange, made cuts in its obligations towards its workers, decreased their number from 730 employees to 278, and then appointed 425 workers through labour contractors like Yathreb, Anwarco, and IBS.

The workers went on strike in 2013 demanding equality with their counterparts who were officially listed as part of the company’s workforce. Three days later, security forces ended the protest and arrested 80 workers. The company accused 28 workers of detaining 15 company administrators on its premises, destroying properties, and assaulting security personnel. On June 28th, 2016, ‘Al-Dakheela’ Criminal Court acquitted all the accused workers.

Yet, TITAN decided to terminate the employment of all workers recruited through the labour supply companies, including Mohammad Hamed Eka, former president of the TITAN workers union, who came out empty handed after 13 years of service.

Mohammad, Yasser and Hazem fell prey to labour supply companies with which they signed contracts that deprived them of their labour rights. Hazem suffered a permanent disability that left him unable to walk hence unable to support his family. Yasser and Mohammad have been struggling to find work to support their families as well.

Lawyer Yasser Saad from the Legal Cooperative for the Support of Labour Awareness says that the presence of labour supply companies as a ‘middleman’ between workers and employers enables the latter to evade providing workers and their families with health insurance, and manipulate the duration and amount of social security remitted on behalf of employees, which will impact their retirement pension paid to the worker and his family after his death.

Workers are also denied severance pay. Their employers do not pay any annual salary increments and evade the distribution of 7% of the company’s profits among its workforce, as stipulated by the country’s Labour Law. Therefore, workers become subject to arbitrary dismissals without any form of compensation, according to Saad.

Shukri Qishta, former president of Exxon Mobil’s workers union says: “Labour supply companies either provide workers with very low quality health insurance cover or none at all. They would rather dismiss workers than pay for their medical treatment for an illness or work related injury.”

According to Qishta, a permanent employee hired directly by the company receives a salary twice to seven times that of employees contracted through recruitment companies, for doing the same type of job. The latter is denied some services and benefits provided by the company, which violates Article 79 of the Egyptian Labour Code and Amnesty International’s Equal Remuneration Convention No. 100 of 1951.

Absent Control

Egypt’s Ministry of Manpower is legally tasked to oversee the execution of the provisions of the country’s Labour Code, and has departments formed specially to monitor the proper implementation of the law in different establishments.

The law has vested employees of this ministry with the judicial powers to monitor and investigate that corporations abide the law in their treatment of employees. However, labour lawyer Yasser Saad says that this “rarely takes place in reality.”

Shukri Qishta, former president of Exxon Mobil’s workers union, accuses the employees at the Ministry of Manpower of turning a blind eye to the illegal activities of labour supply companies. Unionist Wael Tawfiq also accuses the government of not dealing seriously with recruitment companies’ infringement of employees’ rights, using the pretext of its hope to maintain foreign investments (in the country’s economy). 

The Ministry of Manpower’s Media Advisor, Haythan Saad Eldeen, denied the existence of labour supply companies in Egypt, while the Minister, Mohammad Sa’afan, chose not to respond to any of our inquiries regarding this matter. The Ministry of Trade and Industry also refused to comment on any of the violations regarding the registration of labour supply companies in Egypt.

The Government Foots the Bill

The arbitrary dismissal of workers and the corporations’ refusal to cover the treatment costs for any illness or work related injury, places an extra burden on the Egyptian government which finds itself obliged to provide a monthly unemployment salary to workers who lost their jobs. The number of unemployed workers receiving salaries from the government’s Takaful and Karama program reached 3.6 million Egyptians, and the monthly payments amounted to 1.2 billion USD, according to the Minister of Social Solidarity, Niveen El-Qabbaj.

The Ministry of Social Solidarity issued Hazem Fathi a “Disability ID card” that enables him to receive treatment and facilitates certain medical services at a lower cost. The government is also providing health insurance for the cancer treatment of workers like Saeed Emran, a former worker at Exxon Mobil who was recruited by the labour supply company Top Business.

Due to the long periods of litigation, which may go on for years, most workers prefer to avoid bringing lawsuits against their employers requesting they are justly re-numerated and compensated. Labour lawyer, Yasser Saad who receives tens of complaints monthly regarding arbitrary dismissals says that litigation is exhausting for workers and their families both financially and emotionally, hence the scarcity of such lawsuits. This is despite the fact that Egyptian law criminalizes the activity of labour supply. In 2014, an Egyptian court issued a ruling against the labour supply company Top Service for contracting labour without a license.

Yasser filed a lawsuit, which is still pending, to demand appropriate compensation after his arbitrary and unjust dismissal by Exxon Mobil and the labour contractor. Hazem, who was dismissed by Telecom Egypt after sustaining a permanent disability also filed a lawsuit. Both workers have lost their source of income and have to deal with the grim reality facing the future of their families.  

This investigation was conducted with the support of Arab Reporters for Investigative Journalism Network (ARIJ).

The views expressed in this article do not necessarily reflect those of Al Bawaba News.


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