Lebanon has seen average salaries plummet by 84 percent over the last twelve months, according to the Beirut-based research and consultancy firm, International Information.
According to the company’s study, Lebanon now ranks among the top 10 countries in the world with the lowest minimum wages in light of the collapse of the Lebanese pound to the dollar. Other nations in this grouping include, Afghanistan, Yemen and Ethiopia.
Lebanon’s deputy parliament speaker Wednesday called for the World Bank representative in the country to be expelled after the official threatened to cut World Bank funding for the coronavirus campaign due to violations by lawmakers.
More than 20 Lebanese MPs received a dose of the Pfizer vaccine, which was supplied using World Bank funds allocated for Lebanon.
Prior to the current economic crisis, a law passed in 2017 set the minimum wage at LBP 675,000, equivalent to $450. At this time the dollar was priced at the old official rate of 1,500 LBP.
It has now dropped to $72.
Article 44 of the Lebanese Code of Labor states that, “the minimum pay must be sufficient to meet the essential needs of the wage-earner or salary-earner and his family,” and according to Article 46, “the minimum pay assessed shall be rectified whenever economic circumstances render such review necessary.”
According to the Central Administration of Statistics, hyperinflation hit 84.9 percent in 2020, compared to 2.9 percent in 2019. Consumer prices jumped 145.8 percent in December in comparison to the same month of 2019.
A higher minimum wage
With no updated legal framework addressing this issue, and no new government in place to approve updated legislation the situation is in limbo.
“[A high minimum wage] would require a law to be enacted which would require a council of ministers to approve it - quite difficult for a caretaking government” Caretaker Minister of Economy and Trade, Raoul Nehme told Al Arabiya English when asked if this was being addressed.
During a radio interview, with Voice of Lebanon, Caretaker Labour Minister Lamia Yammine said that the failure to form a government was unjust to Lebanon’s population, “as the new government must solve the wage problems, and thus, raise it. Meanwhile we formed a committee of specialists to conduct a study on the implications of the high cost of living for citizens.”
In the middle of a deep crisis, increasing wages at the bottom end of the wage scale is a dangerous gamble, the corporate lawyer Majd Harb, told Al Arabiya English.
“When minimum wages rise because of government command, some workers’ gains come at the expense of others’ losses and this is because to stay in business with higher payroll costs, employers have to raise prices, and eliminate jobs that don’t produce at least the minimum wage,” Harb explained.
“This is a transfer of the responsibility from the public sector governed by the corrupt politicians to the private sector who will end up paying the bill for their corruption and their mismanagement,” he claimed.
Low pay and in-work poverty were already major policy challenges before the onset of the economic crisis.
Criticized for being out of date for many years, the minimum wage system has seen formal wages and general labor regulations being shadowed by the fact that close to one out of two (44 percent) workers do not have contracts and are instead employed informally by SME’s.
Many workers find themselves in labor loopholes with little understanding of existing regulations covering employee rights.