Cairo: Egypt's parliament has approved a pension and social insurance law that raises the retirement age, forces employers to contribute to pension payments and introduces unemployment cover for the first time. A clause threatening jail for violations was dropped after complaints from company executives.
The law, designed to cut public spending and boost growth, will raise the retirement age to 65 from 60 for workers entering the workforce from 2012. It also stipulates the establishment of a pension and unemployment fund for each employee, in the public and private sectors, into which employers and employees will contribute, a parliament official said. The Finance Ministry forecasts the bill will save the government money and increase GDP growth to 9 per cent in 2012 after it comes into effect, from 5 per cent GDP growth last year.
It should also help Egypt in its aim to cut its budget deficit from 7.9 per cent of GDP in 2010-11 to 3.5 per cent in the following five years.
"We have approved the final draft of the bill," Abdul Aziz Mustafa, vice speaker of the People's Assembly, told Reuters. "The law will now be raised to the President for enactment." The law does not include prison terms for executives of firms that violate the law, after heated complaints from many who said tough penalties in the draft could harm businesses.
