The cost of an employee in Egypt: pay, insurance and raises, worked example

When your feasibility study says the business needs three workers at EGP 8,000 each, you are probably using the wrong number. The cost of an employee in Egypt is not the salary. It includes your share of social insurance, the raise the law requires every year, the days you pay wages while the worker is on leave, and the cost of finding a replacement when someone leaves. Every pound you leave out raises your true fixed costs, and with them the number of units you must sell each month to cover your expenses.

This article gathers the mandatory figures from their sources: the minimum wage, social-insurance rates, the 2026 insurable-wage limits, what the new Labour Law adds, and the salary tax brackets. Then it works through a full illustrative example for a small bakery, step by step, from salary to monthly and annual cost, the cost of one working day, and what all of it does to your break-even point.

What you actually pay: the cost of an employee in Egypt, layer by layer

Think of employee cost in layers. The first layer is what you agree with the worker. The layers after it are set by law or by the nature of the job. If your study only shows the first layer, your fixed costs will be understated.

1. Gross pay, not net

Gross pay is the amount before any deduction. The worker's social-insurance share and salary tax are deducted from it, and what reaches the worker's hand is net pay. An everyday example: if you agree on EGP 10,000 gross, the worker will not receive EGP 10,000. They receive less, and the difference is neither your money nor theirs; you pass it on to social insurance and the Tax Authority on their behalf. In the study, the number that matters is gross, because that is what leaves your account.

2. The employer's social-insurance share

This is a cost you pay on top of gross pay; it is not deducted from the worker. It is 18.75% of the insurable wage under Social Insurance Law No. 148 of 2019¹. We explain below what the insurable wage is and its limits, because it is not always equal to the salary.

3. The annual increment

The law requires a yearly increase of at least 3% of the insurable wage². This is not an optional bonus; it is an increase that belongs in years two and three of your study.

4. Paid leave

Workers receive full pay on their leave days. If someone must be present every working day, such as the only cashier in a shop, you will need cover or extra hours from others on those days, and that cost does not show up in the salary.

5. Recruitment, training and equipment

A job advertisement, training days when a new hire is paid before reaching full productivity, a uniform, personal tools. These are small per worker, but they recur every time someone leaves and you hire a replacement.

The private-sector minimum wage

The National Wages Council raised the private-sector minimum wage to EGP 7,000 a month, from EGP 6,000, effective 1 March 2025³. In late October 2026 the minimum was still EGP 7,000, with discussion of a new increase expected to begin before the end of 2026 and no date yet set for the council's next meeting³.

There is a detail many people miss: what counts inside the EGP 7,000? According to Masrawy's report of the Minister of Labour's statements in February 2025, the wage, whether stated in the contract or actually paid, may not be below EGP 7,000 a month including the social-insurance share⁴. In a report on the previous EGP 6,000 decision in January 2025, the same outlet quoted a Ministry of Labour source as saying the minimum covers all amounts the worker receives over the year divided by 12, including the worker's and the employer's social-insurance shares⁴. Al-Mal also reported, on the EGP 7,000 decision, that it follows the Labour Law's definition of wage, including the employer's share of social-insurance contributions³. In practice, on this reading, it is gross pay plus the employer's insurance share that must not fall below EGP 7,000.

These are statements and reports in the press; we could not review the text of the official decision itself, so do not base a decision to cut pay on them. How the rule applies to your case (allowances, variable incentives, part-time work) is a question for your accountant or for Maher Consulting Firm. In a feasibility study, the safer assumption is pay of at least EGP 7,000 before the employer's share, with the full insurance cost added on top: an error in that direction makes your study more cautious, not more optimistic.

Remember also that the minimum wage is a legal floor, not a market price. In many trades you will not find a skilled worker who accepts the minimum, so ask what people are actually paid in your trade and area before you write the number down.

Social insurance: rates, the insurable wage and its limits

Social Insurance Law No. 148 of 2019 sets two fixed rates: 18.75% paid by the employer and 11% paid by the worker and deducted from their pay, 29.75% in total¹. These rates are fixed by law and cannot be changed by agreement in the contract¹.

What is the insurable wage?

The insurable wage is the pay on which contributions are calculated. In general it includes basic salary, the job wage, bonuses, incentives and commissions, with certain amounts and allowances excluded where the law says so¹. So a fixed monthly incentive you give a worker usually counts, and it is not right to calculate insurance in your study on basic salary alone.

The 2026 floor and ceiling

The National Organization for Social Insurance raised the minimum insurable wage from EGP 2,300 to EGP 2,700 and the maximum from EGP 14,500 to EGP 16,700 a month, effective 1 January 2026⁵. Two consequences follow:

• If a worker earns less than EGP 2,700, for example part-time, contributions are calculated on EGP 2,700, not on actual pay.
• If a worker earns more than EGP 16,700, contributions stop at EGP 16,700: you pay 18.75% of EGP 16,700 only, and the rate relative to their full pay falls below 18.75%.

The insurable-wage limits change over time; they were raised from EGP 2,300 and EGP 14,500 to the current 2026 figures⁵. Check them at the start of each year, and in a three-year study do not assume the ceiling stays fixed if some of your staff earn above it.

Registration and fines

Every worker must be registered with the National Organization for Social Insurance when the employment relationship begins¹. Failing to register, or registering with an incorrect wage or period, exposes the employer to a fine of EGP 20,000 to EGP 100,000 under Article 168, and the penalty may be doubled for a repeated violation¹. Some small-business owners think they save money by delaying registration, but a single fine can equal years of the employer's share for one worker.

If your business is in a governorate where the universal health insurance system has started, ask your accountant or the insurance office about any contribution the employer pays to that system and how it is calculated, and add it to the same table.

What the new Labour Law adds to the cost

Labour Law No. 14 of 2025 was issued on 3 May 2025 and came into force on 1 September 2025². Several of its provisions affect your cost calculations directly:

• Annual increment: at least 3% of the insurable wage, with temporary exemptions for employers who meet the conditions². Note that the base is the insurable wage, not full pay, so for a worker above the ceiling the minimum increment is calculated on EGP 16,700.
• Annual leave: as the sources summarise it, 15 working days in the first year, rising to 21 days from the second year and to 30 days after 10 full years of service².
• Maternity leave: four months' paid leave, up to three times over the employee's service². If your team is small and relies on one employee in a role that cannot go uncovered, plan for temporary cover in the study.

These provisions are not only for large companies. A shop with three workers owes the increment and the leave just as a firm with three hundred does. What we list here are the items with a direct financial effect as the sources summarise them, not a full account of the law; contracts, termination and working hours need legal review for your situation.

Salary tax: why it matters to you even though the worker pays it

Salary tax is borne by the worker out of gross pay, but the employer usually withholds it at source each month and pays it over, as Andersen's guide explains⁶. It affects you in two ways. First, you are responsible for calculating and paying it correctly. Second, and more important for the study, if you promise a worker a "net" salary, you carry the tax and insurance on top of it.

Tax is calculated on annual income after a personal exemption of EGP 20,000⁶ and after deducting the worker's social-insurance contributions⁶, then the following brackets apply:

For very high incomes, above EGP 600,000 net a year, Andersen's table shows the lower brackets falling away step by step⁶. That does not affect the pay levels in this article's example, but ask your accountant if you employ someone at that level.

Worked example: the cost of three employees in a small bakery

Illustrative example: a small bakery hires three workers on fixed monthly pay. The pay levels are assumed; the rates and limits are the official figures above. We assume all pay counts as insurable wage and that staff work six days a week. Every figure was calculated in code.

• Production worker: EGP 8,000 gross a month.
• Cashier and sales: EGP 9,500.
• Production supervisor: EGP 18,000.

Step 1: the insurable wage for each worker

The production worker (8,000) and the cashier (9,500) fall between the limits, so their insurable wage equals their pay. The supervisor earns EGP 18,000, above the ceiling, so their insurable wage is EGP 16,700.

Step 2: the employer's share

• Production worker: 8,000 × 18.75% = EGP 1,500.
• Cashier: 9,500 × 18.75% = EGP 1,781.25.
• Supervisor: 16,700 × 18.75% = EGP 3,131.25, which is about 17.4% of full pay rather than 18.75%.

Step 3: monthly and annual cost

EGP 35,500 a month in pay becomes a cost of EGP 41,912.5. The employer's share alone is EGP 6,412.5 a month, or EGP 76,950 a year, about 18.06% of total pay rather than 18.75% because of the cap on the supervisor's insurable wage. Leave this line out of the study and your fixed costs are understated by roughly EGP 77,000 a year.

Step 4: what each worker takes home

This step does not change your cost, but it explains to the worker why they do not receive the amount in the contract, and it helps you answer if they ask for a particular "net" figure. We calculate the worker's share (11% of the insurable wage), then annual taxable income = annual pay − annual worker contributions − 20,000, then tax by bracket. Net pay here is before any other small deductions. Note that the minimum wage is never compared with take-home pay.

The production worker's calculation: annual pay is EGP 96,000 and annual contributions EGP 10,560, so taxable income is 96,000 − 10,560 − 20,000 = EGP 65,440. The first 40,000 is untaxed, the next 15,000 at 10% is EGP 1,500, and the remaining 10,440 at 15% is EGP 1,566, so annual tax is EGP 3,066, or EGP 255.5 a month. The gap between what you pay for this worker (EGP 9,500) and what they receive (EGP 6,864.5) is EGP 2,635.5 every month.

Step 5: year two, after the mandatory increment

We apply the minimum increment of 3% of the insurable wage and assume the insurable-wage limits do not change (a simplifying assumption; the limits are revised periodically):

The annual cost in year two is EGP 516,443.25, up EGP 13,493.25 (about 2.7%) on year one, with no new hires. The supervisor's employer share does not change because their insurable wage is still at the ceiling. In practice you may need more than the minimum increment to keep good staff, so use a larger raise in your study's pessimistic scenario.

This figure is also a lower bound for another reason: the insurable-wage ceiling rose by about 15.2% in 2026 (from EGP 14,500 to EGP 16,700). If it rises by the same proportion again, to about EGP 19,234, the supervisor's new pay (EGP 18,501) is no longer above the cap, and the employer's share for them becomes EGP 3,468.94, an extra EGP 337.69 a month or EGP 4,052.25 a year, taking year-two cost to about EGP 520,495.5.

Step 6: the cost of one actual working day

At six working days a week there are 312 days in a year. Subtract 15 days of annual leave in year one and 297 days remain, before public holidays. The team costs EGP 502,950 in year one, so one actual working day costs about EGP 1,693.43 for the team: about EGP 383.84 for the production worker, EGP 455.81 for the cashier and EGP 853.79 for the supervisor. This figure helps if you price a service by the hour or day, or compare a permanent hire with a day worker.

Step 7: how many loaves to cover the team?

Assume the contribution margin, the selling price minus direct cost, averages EGP 20 per unit sold. To cover the team's cost alone (EGP 41,912.5 a month) you need to sell about 2,096 units a month, or about 81 a day over 26 working days, before rent, electricity or any other expense. If you counted pay alone (EGP 35,500), you would think 1,775 units were enough. That gap is exactly what happens when insurance is forgotten in a break-even calculation.

The "net salary" trap

Many workers ask how much they will actually take home. If you answer with a net promise, you take on the full burden of tax and insurance. Illustrative example: you promise a worker EGP 10,000 net a month.

• For EGP 10,000 to reach their hand, gross pay must be about EGP 12,380: EGP 1,361.8 of insurance (11%) and about EGP 1,016.14 of tax are deducted each month, leaving about EGP 10,002.
• Then you pay your own share: 12,380 × 18.75% = EGP 2,321.25.
• Your full cost: EGP 14,701.25 a month.

Compare that with a contract at EGP 10,000 gross: it costs you EGP 11,875 and the worker receives about EGP 8,307.5. The difference between the two promises is EGP 2,826.25 a month to you, for a single worker. So always agree gross pay and write it in the contract, and explain to the worker roughly what they will receive after deductions.

Common mistakes when calculating employee cost

• Putting only salaries in the study: the most common mistake; in our example it understates fixed costs by about 18% of pay.
• Calculating insurance on basic salary only: the insurable wage generally includes incentives, commissions and bonuses, so calculate it on what the law includes, not on basic pay alone.
• Forgetting the floor and ceiling: a part-timer on EGP 2,000 pays contributions on EGP 2,700, and a worker on EGP 25,000 stops at EGP 16,700.
• Holding pay flat for three years: the annual increment is mandatory and the minimum wage is reviewed, so years two and three must be higher than year one.
• Promising a fixed net salary: it leaves you carrying any later increase in tax or insurance, and raises the cost as shown above.
• Delaying insurance registration: a fine of EGP 20,000 to EGP 100,000 can exceed everything you thought you saved.
• Ignoring absence and staff turnover: if the cashier leaves and you need two weeks for a replacement to train alongside another colleague, with an advert at an assumed EGP 1,000, that is about EGP 6,640.63 (half a month of their full cost of EGP 11,281.25 plus the advert) in our illustrative example.

How employee cost feeds your feasibility study

Staff cost appears in four places in a feasibility study, and it must be consistent in all of them:

1. Start-up costs: pay during fit-out and pre-opening training, at full cost including insurance. Details are in startup costs in Egypt.
2. Monthly fixed costs: gross pay plus the employer's share, often one of the largest fixed costs in service and retail businesses.
3. Cash flow: wages are paid every month whether you sell or not, so they are among the first drains on cash in the early months. See cash flow for small business.
4. The income statement for later years: after the annual increment, under all three scenarios. The income statement article shows where each line goes.

Before you decide on headcount, ask: does the business need this many people from day one, or can it start with fewer and hire when volume reaches a set level? Each hire you delay by six months reduces the deepest cash need in the study and brings the break-even month closer.

How Kleverz helps

Kleverz is an AI-powered feasibility study platform. If you are still at the idea stage, the free idea check takes about 5 minutes and gives you a verdict (proceed, adjust, validate first or avoid), a Kleverz Score out of 100 across five dimensions, the top 3 risks, and a first step for the next 48 hours.

Once you know the pay you will offer, the detailed study is built on the numbers you enter: price, direct cost, expected volume, team, city and capital. It calculates start-up costs and fixed monthly costs including the employer's social-insurance share, a month-by-month cash flow for the first 12 months and a yearly summary over three years, monthly break-even revenue and the units needed per product or service, the operating break-even month, the payback month, the deepest cash need and a recommended capital that adds a two-month reserve. It shows optimistic, realistic and pessimistic scenarios, the main risks and indicators to track, and a week-by-week plan for the first month, delivered within 24 hours of payment confirmation, in Arabic or English. When you decide to go ahead, Maher Consulting Firm, the human consulting arm, handles company formation and procedures.

Frequently asked questions

Sources

1. Andersen Egypt. التأمين الاجتماعي في مصر (in Arabic) (2026-07-01) — secondary source; Andersen Egypt. Social insurance in Egypt (2026-06-30) — secondary source. Checked 4 November 2026.
2. EY. Egypt enacts new labor law with changes affecting employers beginning 1 September 2025 (2025-07-22) — secondary source; Deloitte Middle East. Egypt: New Labor Law entering into effect (2025-09-03) — secondary source. Checked 4 November 2026.
3. Al-Mal News. اعتبارًا من مارس 2025 .. رفع الحد الأدنى للأجور للعاملين بالقطاع الخاص إلى 7000 جنيه (in Arabic) (2025-02-09) — secondary source; Al-Dostor. تحركات مرتقبة لبحث رفع الأجور بالقطاع الخاص قبل نهاية 2026 (in Arabic) (2026-10-25) — secondary source. Checked 4 November 2026.
4. Masrawy. تصريحات وزير العمل حول تطبيق الحد الأدنى للأجور 7000 جنيه بالقطاع الخاص (in Arabic) (2025-02-10) — secondary source; Masrawy. مصدر يكشف لمصراوي أسباب عدم زيادة الحد الأدنى للأجور لبعض العاملين بالقطاع الخاص (in Arabic) (2025-01-12) — secondary source. Checked 4 November 2026.
5. NOSI. رفع الحدين الأدنى والأقصى لأجر الاشتراك اعتبارًا من 1 يناير 2026 (in Arabic) (2025-11-30). Checked 4 November 2026.
6. PwC Worldwide Tax Summaries. Egypt — Individual — Taxes on personal income (2026-08-17) — secondary source; PwC Worldwide Tax Summaries. Egypt — Individual — Deductions (2026-08-17) — secondary source; Andersen Egypt. Egypt's Personal Income Tax in 2026 (2026-01-26) — secondary source. Checked 4 November 2026.