Economic Committees: Govt. Wage Hike is Major Blow to Economy
إقرأ هذا الخبر بالعربية
The Economic Committees condemned on Thursday the government’s approval of Labor Minister Charbel Nahhas’ proposals over the wage hike in Lebanon, deeming it “a major blow to the economy.”
The head of the authorities Adnan Kassar said: “We hope the Shura Council will reject the decision.”
He noted after an emergency meeting for the Committees: “The industrial, commercial, and tourist institutions cannot support the government decision because of the political crisis.”
He also hoped that the government would retract the decision as it is “a blow to the most important basis of stability in Lebanon.”
“This was a purely political decision as it did not take into account any economic considerations,” added Kassar.
He renewed his commitment to the previous agreement that was reached with Prime Minister Najib Miqati, calling on parties and civil organizations to mobilize to pressure the government to retract its decision.
“The repercussions of the decision will not only affect the employers, but the employees as well,” warned Kassar.
On Wednesday, the Free Patriotic Movement, Hizbullah and Amal dealt a blow to Miqati after they voted in favor of a wage boost decree proposed by Nahhas hours after the Economic Committees and the General Labor Confederation agreed with minor changes on a previous proposal made by the PM.
Fifteen ministers voted in favor of Nahhas’ wage hike decree while 11 voted against it.
Minister Wael Abou Faour abstained from voting while Ministers Salim Karam, Faisal Karami and Nazem al-Khoury did not attend the session that was held at Baabda palace.
The new cabinet decision calls for raising the minimum wage to LL868,000 from the current LL500,000 – a sum that includes a LL236,000 transportation allowance.
Workers earning less than LL1.5 million receive an 18 percent increase while salaries between LL1.5 million and LL2.5 million receive an additional 10 percent on the second salary bracket. Wages above LL2.5 million will not earn an additional increase.
The raise is effective as of December 1, 2011.
The GLC and the Economic Committees, which had been bickering on Miqati’s proposal in the past week, made a last-minute deal ahead of Thursday’s cabinet session by agreeing on a LL675,000 minimum wage.
Miqati’s original proposal that was approved by the cabinet on Dec. 7 called for increasing the minimum wage to LL600,000. The PM had made his suggestion despite a decree proposed by Nahhas, who on Thursday retaliated by pushing ahead his proposal.
22 December 2011, 18:07
07
@thunder
I agree totally with your comments. we are living in a freightening period, of the outcome is unknown to say the least.
unfortunately, they talk about the new middle east order, and this decision alone is worse than all efoorts in that direction. it will cause civil unrest against everything and we will all end up paying the price f such stupid uncalculated decisions.
22 December 2011, 18:28
19
From an Economist- part 1
The issue is not about wage adjustment. Sooner or later, wages must increase to match the loss in purchasing power due to inflation. The problem underlies with our currency and monetary policy. More specifically, the primary objectives of the Lebanese Central bank (LCB) is (should be) to fight inflation, promote economic growth., and provide financial stability.
The first two objectives and more importantly the first one are not under the control of the LCB because our currency is pegged to the dollar. Given that we import most of our goods and services, inflation has been rampant as the dollar was losing value against the Euro. What can the LCB do to fight inflation and prevent loss in purchasing power? nothing.
22 December 2011, 18:29
19
From an Economist- part 2
There is no escape from increasing wages. The economy is not growing enough to counter any negative supply shocks such as this one.
The main issue that needs to be addressed is government debt. It is a ticking time bomb. On one hand, a large part of the debt is held by the LCB. Therefore, it contributes significantly to inflation over time.
Wage hikes will certainly expediate the collapse of the government and the currency.
Solution???
Cut the deficit+ gradually float the currency until we get a flexible exchange rate in few years + fight corruption. This gives the power to fight inflation back to the LCB.
Obviously, none of that will happen in Lebanon. the only thing that will happen is a financial crisis at some date in the future. Who will pay the price? the poor and the remaining middle class.
22 December 2011, 18:31
04
it has its bright side..we are a country which imports 80 pct of its goods,it is benefiting to devalue the lira, anyway it is coming....it is good for the lebanese living outside lebanon and earning in hard currencies,,, and not so good for the residents.
it is impossible to have hizballah and improved economics, like mixing oil and water,it dosnt need an einstein to notice that
22 December 2011, 18:57
06
“This was a purely political decision as it did not take into account any economic considerations,” added Kassar.
That's exactly what Walid Aboud said after he voted for the bill, ministers voting for something they think will be bad for the Lebanese people and hi8nder the economy is Aoun's idea of reform and change just like lobbing cannon shells from the safety of the Baabda palace shelter was his idea of liberation..
The workers union and economic Committees had an agreement yesterday but Nahhass ever so the blind Communist ideologue could not veer off his close minded dogma and to hell with everything.
22 December 2011, 19:18
33
Wow, politics at its best. $600 a month is too much for the minimum wage? Groceries, rent, petrol, diesel for heating...
$600 is barely even keeping up with the inflation since the last wage hike. While some companies are making massive profits, the employees barely even get enough to survive to the next month. As the divide in wealth increases at an unprecedented rate in this country, we still have people who complain about giving the poorest few in the country an extra $200 a month.
22 December 2011, 20:07
110
thundern the reason geha is ok with your comments is that neither you nopr geha know what you are talking about. Ask the economists (and not the capitalists ) about inflation and don't compare what is uncomparable. how the hell can you compare lebanon to greece? seriously? where did you read this in Blanche neige book? if you want a serious economic conversation, you can ask for my email in private i'll link you with some respectable think tanks and economists who'll explain a + b for you... and i advise you in my turn, study the greekc ase carefully ;) (for a boss who's not payin taxes since 1992 now, (all businesses included), some liras plus or minus on one's salary are not an economic vector of hyper inflation ;) ;) ;)
22 December 2011, 20:15
04
Charbel Nahhas is a Marxist after all. What do you expect. They are always on the side of labor unions (the workers)"proletariat" vs the "burgoise" the job creators. It's the classic Marxist playbook.
22 December 2011, 20:26
40
Wasn't it the economic committees that agreed to increasing the minimum wage to 645,000LL and the transportation allowance to 189,000LL?
So the extra 4,000LL a month is going to destroy the Lebanese economy?
Oh wait, I forgot this... Including the transportation allowance in the salary increase Social Security payments. Yup, supporting our social security will destroy our economy (definitely not a tax loophole). I get it now.
22 December 2011, 22:50
04
Maybe if they cut all the ministers and MPs Salaries for 10 years and save that HUGE amount of money we will be in a much better shape. But of course this is not right since those millionaires can not afford a new car every year and fancy dinners every night1 so maybe this is not a good idea
23 December 2011, 00:56
07
from economics views the best way to improve the economy is to create jobs protect local producer and increase imports . in an economy like Lebanon increasing the minimum wages will have a negative effects i.e. it will increase the cost of living and will increase unemployment .with the political situation in Lebanon and the present of a terrorist groups like Hezbollah you will not bring outside investments which we desperately need
the private sector which is the engine to the economy will pay the price
bad news from Lebanon and it is getting worst .
23 December 2011, 01:20
05
i guess it s better to let the prices increase without justification and impoverish the people...
lebanese don t earn salaries, they earn just pocket money!
it s a shame to give such low salaries to people and hear the employers threaten as usual the fear of unemployement if we touch the salaries! i wish they could live a month on the salary of an average lebanese, and you would see them all crying...
why are the youngs escaping to find a decent job abroad? and the politics beg them to come back to live in misery, what a shame...
23 December 2011, 05:06
09
Actually, the Lebanese crisis is very similar to the Greek case. The Greeks kept on raising wages to catch up with EU standards while their economy was shrinking; thus unable to create more jobs. The largest revenue for any government is taxes which in turn helps it pay off its debts. If the economy is not growing as is the case in Lebanon now, the government sooner or later will not be able to finance its debts and its cost of borrowing will sky rocket. Greece would love to exit the euro currency and have its own devalued currency in order to become more competitive and reduce its budget deficit. Thus, creating more jobs, jump starting its economy, and collect more taxes, and ultimately more revenues to pay off its debts. However, for Greece this is not possible. Lebanon is not tied to a common currency per se. One of the options will be devaluation of the Lira. So, I agree about the similarity of Lebanon and Greece, and no it is not a Blanche Neige story book.... it is real indeed.
23 December 2011, 05:18
08
@Friedman: correct me if i am wrong: your "private" email is pompous_jerk@lovemyself.com?
23 December 2011, 07:52
05
18 minutes ago Minister Fadi Abboud to VDL (93.3): The cabinet's approval of the wage hike proposal might lead to the bankruptcy of big institutions and the prices will witness an increase.
23 December 2011, 10:58
02
@dagger
Abboud put his party before reason and his conviction...who does that!?! This government is a pathetic farce!
