Strike at DP World's Egypt port could trigger more action

A strike at DP World's Sokhna port in Egypt could be the first of many industrial actions in the country as its citizens continue to demand change, Business Monitor International said in a new report.

Analysts added that the concessions given by Dubai-based DP World to port workers at Sokhna, the sixth biggest port, could trigger similar action at other ports in Egypt.

"The fact DP World so readily agreed concessions, could give workers at other international companies confidence that they too could achieve better wages and working conditions through strike action," BMI said.

The report said that after the fall of Mubarak, Egyptians were becoming more confident that having managed to topple the president they are in a stronger position to demand change in their country, including working conditions and pay.

"While BMI expects further strikes at the country's ports, we believe the Suez Canal will be shielded from industrial action for both domestic and international reasons," the report added.

It said the strike at Sokhna, which lasted five days and is reported to have cost DP World $5m in lost revenue, was resolved following negotiations, in which DP World agreed to pay hardship allowances within 15 days.

"The strike offers further downside risk to our already negative forecasts for the port in 2011...we project a year-on-year decline of 9.8 percent [in container throughput] for the full year and there is downside risk to this forecast if strikes erupt again," BMI added.

BMI said that while it expects individual ports to be affected by industrial action or unrest, it was unlikely such strike action or protests will be allowed to affect the Suez Canal.

"The reasons for this is that Egypt's interim military-lead government will not let anything disrupt the Canal's operations both for domestic reasons (the Canal is a major revenue earner for Egypt) and due to international pressure," the BMI report added.

Analysts noted that despite the fact that Egypt's ruling military council renewed a ban on strikes in April 2011, there has been an increase in industrial action.

Transport workers and teachers are the latest groups to go on strike and BMI said it believes that the increase in industrial action is a show of confidence by Egypt's population that protests can gain concessions.

"A greater number of strikes is therefore to be expected in Egypt and by extension other Arab spring states," the report said.