Three complete years have passed since the Lebanese pound began its free fall, and there is still no clear standard for wage correction. The dollar keeps soaring, while the purchasing power of workers’ incomes continues to decline. The material and in-kind benefits given outside of the basic salary quickly dissolve in the "furnace" of rising prices. They neither suffice to secure basic needs nor help increase social security revenues to improve health and social benefits.
During a time when prices of various goods and services have risen by more than 2000%, the basic wage for workers has only increased by 385%. This year, it was raised in two phases: the first at the end of May, increasing by 1,325,000 Lebanese pounds to reach 2 million pounds, and the second came less than a month later, with an increase of 600,000 pounds to make the declared minimum salary in the private sector 2.6 million pounds. Officials have considered this increase as a "cost of living allowance for workers subject to labor law." It is essential for the minimum wage to "ensure the minimum living standards for workers," which this meager increase cannot achieve.
**Wage Erosion**
It is certain that the figure of 2.6 million pounds, equivalent to 64 dollars at today's real exchange rate, is insufficient to cover living expenses. It is even unable to secure electricity from subscription generators. Most private sector enterprises have been giving periodic or monthly increases to their workers in dollars or in pounds without incorporating them into the basic salary. However, these increases, which ensure workers can reach their jobs daily, do not adhere to a clear or equitable standard. They remain far less than what workers earned in dollars before the crisis. Most wages today fall even below the minimum that was set at 450 dollars based on an exchange rate of 1,500 pounds.
In reality, most companies refuse to grant workers what would equate to their pre-crisis wages, whether in dollars or as a proportional amount in pounds. This stems from several considerations, the most significant being that products are currently sold at lower prices than before the pound began to collapse. For example, a loaf of bread, which used to cost 1,500 pounds or about one dollar, is now sold for 22,000 pounds, approximately half a dollar. Similarly, a famous local biscuit box that cost 4,500 pounds or 3 dollars before the crisis now costs 85,000 pounds, less than 2 dollars. A certain brand of tahini, which weighed 950 grams, was priced at 8,000 pounds or 6 dollars, and today it costs 160,000 pounds, around 4.2 dollars. The list continues with products that are now selling for about 30% less than their prices before the crisis.
**Linking Wages to Production**
In addition to declining selling prices, companies cite reduced revenues and lower returns due to decreased consumption and rising costs, particularly electricity. Hence, a serious idea emerged among some labor representatives to ensure fairness in wages for workers and their firms: to give workers a wage that corresponds to what their salary would have bought in terms of goods produced by the factory they work in.
For instance, if Rami worked in a tahini factory earning 2.2 million pounds, and the price of the product before the crisis was 8,000 pounds, Rami’s salary allowed him to purchase 275 produced units. When the price of the same unit increased to 160,000 pounds, Rami should earn 44 million pounds to afford the same 275 units of the goods produced. This increase would still be less than what the worker received in dollars before the crisis since Rami's salary would be 1,000 dollars instead of the 1,500 dollars he earned prior.
**Achieving Fairness**
The importance of this proposal for workers' sources lies in its fairness. This approach varies within a single establishment depending on the salary previously received by each individual. It allows for a living standard close to what workers experienced before the collapse. For institutions, it does not impose additional burdens since wages are linked to the produced goods rather than a general average that could be profitable for some and costly for others. Furthermore, this proposal is considered dynamic, decreasing as the dollar falls and the prices of goods in the market drop.
**Minimum Living Cost for a Family**
This proposal aligns with numbers from "International Information," which indicated in a report that the minimum cost of living for a Lebanese family of four today amounts to 23 million pounds per month. It assumes that the family eats only eggs throughout the month, averaging 6 eggs per person, buys clothes from second-hand stores, and sends their children to the nearest public school without incurring transportation costs. Therefore, the actual minimum living cost is significantly higher than this figure for most Lebanese families.
**Economic Contraction**
Economic expert and member of the Indicator Committee, Dr. Anis Boudeib, who hopes that wages will be calculated as workers propose, argues that this proposal is unrealistic and unlikely to win approval from employers. The reason being the overall contraction of the economy, which has also reflected a decline in the size of production institutions, which are no longer operating at the same capacity as before 2019. This can be inferred from the GDP (Gross Domestic Product) index, which considers a measure of income per individual, having dropped from about 56 billion dollars to less than 20 billion today.
**Indicator Committee Returns to Session**
The Indicator Committee, which tries to reach an equitable wage figure approved by employers, workers, and the state, received an invitation from the Minister of Labor to meet next Thursday. "There is a serious trend towards raising wages once again, especially since what was granted in previous increases has evaporated due to rising prices," according to Boudeib. However, this does not mean that the incentives given by employers can be included within salaries or that a wage equivalent to at least the prior minimum of 450 dollars can be reached.
Despite most private sector institutions opting to pay part of the salary in dollars generally, Boudeib's proposal in the Indicator Committee to give workers a productive dynamic increase to help improve their purchasing power has not received the desired response. This is because this proposal relates to what is known as the moving scale of wages, which employers try to avoid, along with increasing compensation for social security. According to him, "employers insist on starting reforms, establishing a recovery plan, and agreeing with the International Monetary Fund on a serious reform program before discussing changing the minimum wage."
Everyone is betting on an improvement in the economic situation to take steps toward adopting a real wage increase. This process, which should be accompanied by reforms, will be implemented in phases until 2024, according to improvements in productivity and economic growth.
