Profit sharing in a developing economy: the Egyptian case

Abstract

The objective of the research is to evaluate the degree of success in applying profitsharing as a form of participation in developing command economies, Egypt being the model. Participation is spoken of as a new management ideology to overcome workers' alienation resulting from the introduction of the factory system - and to guarantee their support for its objectives. There are many studies of participation in Western countries whose overriding concern is with the success or failure of application, a subject which is seen to be debatable. Yet in command economies, where the application is compulsory, studies are very rare. This research may help to fill some of the void. Furthermore, the difference between the voluntary application of profit sharing in Western societies and its compulsory application in command economies is of a significance which cannot be too emphasised. Investigation has been performed by questionnaire and through personal interviews with employees from the Egyptian industrial public sector. This information is analysed against a background of the Egyptian environment in order better to understand employees' satisfaction with such schemes. The analysis attempts to highlight existing problems and to answer the question of how to improve the scheme. The research concludes that participation cannot be achieved by law, being subject to culture, tradition, habits, norms and skills of members.Compulsory application of profit sharing has led to many problems which affect its success. The application of such schemes in developing countries which does not satisfy the basic needs of individuals cannot guarantee its effectiveness. Workers behave individually as well as collectively, therefore personal factors such as their individual position in the hierarchy and market place are effective in determining their attitudes. Awareness of profit sharing among shopfloor workers seems to be limited to the money they get, that is the simple cash transaction. Little has been achieved in terms of the wider political goals of raising worker.identity wih the enterprise or state. The research recommends several related procedures be adopted. These are essential elements to the achievement of a political awareness among participants in such schemes.