Since the onset of the financial crisis in October 2019, salaries have deteriorated by more than 35% at best, considering that the minimum wage is now set at 4.5 million Lebanese pounds, as determined by the Index Committee last week, which is less than $100 (based on the current black market exchange rate of 49,000 pounds, down from $450 during the "golden days" when the exchange rate was 1,500 Lebanese pounds). This minimum wage applies to around 450 employees registered in the National Social Security Fund. Higher salaries, calculated in brackets, have seen their actual value drop to about 10%.
The increases approved by the Index Committee have taken place in stages (with meetings involving the Minister of Labor, a delegation from the ministry, economic bodies, the General Labor Union, and representatives of workers and employers), starting with a raise of 1.325 million pounds to the minimum wage of 675,000 pounds, followed by another 600,000 pounds, setting the current minimum wage for employees registered in the social security at 2.6 million pounds, and finally, an increase of 1.9 million pounds to reach 4.5 million pounds.
This amount, which does not equal $100, is insufficient for the monthly food costs of one individual, let alone a family with a spouse and children. Furthermore, this salary is expected to continue to depreciate daily with each rise of the dollar.
Regarding the limitation of the Committee's decision solely to this amount as a minimum, Bassam Asmar, president of the General Labor Union, explained that "the committee was supposed to meet before the holidays to raise the minimum wage when the dollar exchange rate was around 36,000 pounds before approaching 50,000 pounds, with 'Sayrafa' rising from 30 to 38,000 pounds, which resulted in a third of the salary value depleting within a matter of days."
As for additional benefits that were approved, he mentioned that the daily transportation allowance was increased from 95,000 to 125,000 pounds, family compensation and school grants were multiplied by three, considering that the latter is now set for three children instead of two, bringing the total to 18 million pounds over a year.
Asmar believes that with the increase of the declared minimum wage to 4.5 million pounds, the social security fund will receive 3 trillion pounds, in addition to the state's obligations which the Ministry of Finance previously paid to the fund amounting to 1.2 trillion pounds, totaling 4.2 trillion pounds, contributing to a 50% to 60% increase in benefit provisions.
For private school grants, the amount increased from 2 million to 6 million pounds per child, totaling 18 million pounds for a family with three children. For public schools and universities, the grants increased from 1 million pounds per child to 3 million pounds.
How the Committee's decision will be implemented remains the most critical issue, given that the amount is minimal relative to escalating inflation levels. Asmar stated that "the caretaker Prime Minister Najib Mikati promised to find a legal solution to expedite the implementation of the Committee's decisions. After the Minister of Labor signs and the necessary procedures are completed, the decrees (regarding transportation, school grant values, the number of children benefiting from the grant set to three, and salary increases) can be referred to the State Council for legality assessment. An agreement was reached with the Prime Minister to expedite matters either through mobile decrees or through a cabinet session, which brings this issue into the political bargaining sphere, urging the need to isolate living conditions from political bickering."
Why is the minimum wage limited to only 4.5 million pounds? Regarding the slow response of the Index Committee to salary increases amid the ongoing surge of dollar values, and the limited increase in the minimum wage registered within the social security limits, which is insufficient even for electricity bills, Asmar stated that "the problem lies in employers' fears over the impact of increasing the cash flow in circulating Lebanese pounds on end-of-service compensation, which is settled through adjustments. The cash flow amounting to 77 trillion pounds is substantial and increases inflation daily, compared to 14 trillion pounds before the financial crisis."
Small and medium-sized enterprises account for 67% of all businesses registered with the social security, equivalent to three employees out of every 20 or 25. If wages are significantly increased, these businesses may face bankruptcy due to their limited income. Therefore, the Index Committee, according to Asmar, attempted to establish a balance between insolvent businesses, those unable to pay wages, and those that lay off employees as opposed to those that operate regularly. Significant businesses and factories do not even comply with the minimum wage, as their salary payments range from 10 to 20 million pounds, noting that some of those businesses which are limited to Beirut and Mount Lebanon pay part or all of the salary in cash dollars due to the dollarization of raw material imports and production.
Economists oppose this logical sequence dictated by the Index Committee when determining the minimum wage, arguing that it should fluctuate with changes in the black market dollar exchange rate, rather than at the slow pace observed today. This would positively reflect on the revenue from social security contributions, raising their health coverage back to previous levels.
What is the minimum wage required for a family to survive? A study conducted by the General Labor Union, when the dollar exchange rate was at 35,000 pounds, indicated that the minimum necessary for a family of five to barely survive, not thrive, would be 20 million pounds. This number was also determined by a study from "International Information," which found that a family needs around 23 million pounds monthly to cover the costs of living, including electricity bills of 2.5 million for basic utilities such as lighting, a refrigerator, and a television, as well as housing, healthcare, and education needs.
The assumed amount of 20 million pounds increases to 30 million in light of inflation rates, which are not only local but also global due to the Russian-Ukrainian war, leading to a global price rise of 20% to 25%. This situation exacerbates Lebanon's condition amidst ongoing political maneuverings, speculation, and substantial losses affecting the national currency against the US dollar's increasing exchange rate, which is reaching record highs in Lebanon's history.
**Salaries Below One Million!** It is noteworthy that there are still individuals receiving salaries ranging from 600,000 to 900,000 pounds to 1 million pounds monthly, approximately $15 to $20 based on the exchange rate of 49,000 pounds. For instance, a worker in the Ministry of Social Affairs, particularly in the largest poverty programs, earns 800,000 pounds a month, while daily workers providing maintenance services at the Lebanese University earn 700,000 pounds each. Even maintenance workers at the Electricité du Liban under the "Lina Mattar" company still receive 40,000 pounds a day, which is less than one dollar for their daily wage. Similarly, water delivery workers in Lebanon earn between 800,000 pounds and 1 million pounds, while Beirut port workers' salaries have only reached 2 million pounds a month after the increase.**
