It may not be correct in economic science to apply the popular saying about justice and social niceties, "Better late than never." For, as one of the prominent founders of the United States, Benjamin Franklin, said in the mid-18th century, "Time is money." His statement soon transformed into an economic rule relied upon by millions worldwide. The foundation, therefore, begins by calculating the "opportunity cost," meaning the benefit that could have been obtained by the state had it not neglected the opportunity to correct wages many months ago. It preferred time over money, even though suppliers are scarce for it, albeit to varying degrees in favor of money despite everything.
### The Increase Quickly Surpassed
On the ground, this reality became evident with the issuance of decrees granting productivity compensation to public sector employees and adjusting their temporary transportation allowance just about a week ago, specifically on July 28th. The increases came more than a month and a half after the open general strike and ten months after employees only attended their offices on Wednesdays. They were quickly outpaced just two days later. As soon as the government approved raising the daily transportation allowance to 95,000 Lebanese pounds, the "Union of Drivers and Transport Workers in Lebanon" announced that the fare within Beirut (service) became 50,000 Lebanese pounds. This was a result of Prime Minister Najib Mikati not fulfilling his promise at the end of last year to financially support the sector, to provide drivers with a financial card, and to exempt their vehicles from mechanical fees and inspections. Consequently, the transportation allowance has now fallen 5% below the actual cost for an employee commuting to and from work in Beirut, not to mention those coming from other districts and provinces. Additionally, what was given today as a transportation allowance is 55% less than what was provided in 2019, when the daily allowance before the crisis was 8,000 Lebanese pounds, while the transportation fare within Beirut was calculated at 2,000 pounds.
### Addressing the Results
If we add to the increase in transportation allowance the colossal rise in the cost of private generator subscriptions calculated at 20,000 pounds per kilowatt-hour, the dollarization of school fees, and the health coverage dollar capped at 6,000 pounds while employees are charged at the market exchange rate... we would see that all the increases granted to public sector employees from the extra salary and productivity allowance have lost their economic utility. "This is the natural consequence of limiting remedies to the results of the economic crisis while avoiding addressing the fundamental causes," according to financial and economic researcher Professor Maroun Khatir. He argues that "limiting the solution to the public sector crisis to superficial measures like salary increases only serves to buy time, resulting in the aggravation of the crisis so that its repercussions far outpace the measures taken." This was clearly observed as the cost of transportation quickly surpassed the increase in the allowance from 8,000 pounds to 24,000 in July 2021, then again exceeded it with the rise to 64,000, and surpassed it today with the third increase to 95,000 pounds, which will likely be exceeded again regardless of any future increase.
According to Khatir, the problem is that "the public sector, in and of itself, is one of the causes of the crisis the country is currently experiencing, even if its employees' demands are justified. It is an overstaffed, unproductive sector filled with corruption, suffering from political and sectarian clientelism, and controlled by power sources." Therefore, as long as the solutions lack the courage to delve into the depths of the crisis in the public sector and remain confined to the superficial, they will not succeed in finding logical and sustainable solutions. The economy is recording negative growth and suffering from tremendous inflation due to internal and external reasons, which necessitates looking for comprehensive solutions.
### Funding Through Printing Money
Another equally serious problem, which can be considered a "turbo" for pressurizing the engine of internal collapse, is financing increases through money printing. While serious remedies require activating oversight mechanisms, purging administrations of corruption, increasing tax compliance, and preventing evasion, we see the opposite occurring, according to Khatir. "Delaying reforms in the public sector and replacing them with pumping more funds from printed money or increasing book fees, while failing to collect them, drives further inflation and rising prices." Professor Khatir believes that "relying solely on minimal and superficial piecemeal reforms across various levels does not heal the sick economy, as the solution must be comprehensive." He stresses that "any solution must start with securing political stability, enhancing productive sectors, restoring investments, and increasing tax collection after regulating borders and establishing the rule of law and institutions over land, sea, and air. This will inevitably lead to increased revenues and a greater capacity for benefits without resorting to printing money and raising fees and taxes, including the customs dollar, which negatively impacts the economy and will only result in book entries without real achievements."
What is happening in Lebanon regarding reforms demonstrates one of two things: either a dubious collusion among the power blocks to protect each other from accountability and preserve their private interests at the expense of the country and economy, or utter foolishness. The inability to definitively conclude between the two hypotheses leads Khatir to assert "the authority's submission to the International Monetary Fund's conditions and its complete obedience to its orders without genuine negotiations that reveal the peculiarities of the Lebanese situation and the difficulty in enacting real reforms without fundamental changes in politics." In response to this submission and to record possibly illusory achievements, the ruling authority, from his perspective, "seeks to enact reforms superficially. This has been noticeable in 'capital control,' the general budget, banking secrecy, the recovery plan, and linking customs dollar increases with salaries. There is a lack of seriousness in addressing solutions, knowing in advance that under the absence of political stability, Lebanon will not be able to enact these reforms since any of them require establishing the state's sovereignty over its territories. Therefore, what is being done is merely fulfilling the Fund’s demands superficially, rather than substantively, making negotiations in themselves and their outcomes unconvincing to observers and other citizens."
The interim measures addressing the predicament of salaries, wages, and social benefits for the public sector have entered a vicious cycle. Beyond the fact that the measures taken are outside the comprehensive correction of revenue processes, they are patchwork solutions that do not touch the heart of the salary issue and come too late. Living costs, transportation prices, generator subscriptions, and health and educational services soon outstrip financial provisions. They quickly become futile, bringing us back to square one. Thus, the futile standoff continues indefinitely.
