Deep divides still stand in the path of Lebanon's salary scale
Ministers agreed not to separate the issue of the salary scale in principle and the means to fund it
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The Cabinet failed again Monday to pass the controversial salary scale as both the private sector and labor groups remained deeply divided on whether to raise the salaries of civil servants and teachers substantially. The ministers delved into ways to find sources of revenues for the salary scale but no major breakthrough occurred during their meeting.
Speaking to reporters following the Cabinet session, Labor Minister Salim Jreissati said ministers agreed not to separate the issue of the salary scale in principle and the means to fund it.
“As a result of discussions, the Cabinet decided against separating the issue of salary scare and its financial necessities because they make a unified package of measures,” he said.
Finalizing the draft for the salary scale, Jreissati said, should be accompanied by “administrative and financial reform measures” that take into account people’s interests and the basics of the national economy.
Jreissati also said that Cabinet will continue discussing means to secure funds for the public sector wage hike.
Leading businessmen, merchants and bankers, who held a broad meeting at the Phoenicia Hotel in Beirut, called on authorities to dispose of any plan to endorse the salary scale or contemplate new taxes to fund this bill.
The head of the Economic Committees and former Minister Adnan Kassar made it clear that the private sector was united in rejecting the endorsement of a wage hike during such critical times.
“This meeting is an opportunity to review the economic situation in the country and its direct impact on the livelihoods of the Lebanese,” Kassar said at the opening of the meeting.
He underlined the importance the news media plays in conveying the economic facts and their serious implications to both officials and the society.
“We want to make it clear that the meeting of private sector is not directed against the public sector and school teachers. ... The private sector is committed to its social responsibility and even exceeds the corporate social responsibility,” Kassar argued.
He stressed that Lebanon’s public debt now stands at 136 percent of the country’s GDP as all economic indicators are negative.
Kassar said that even Central Bank Governor Riad Salameh had expressed deep reservations on the plans to pass the salary scale or introduce new taxes, warning that inflation could jump by 2-3 percent and the balance of payments would record even a high deficit.
Kassar said any uncalculated salary hike could erode the incomes of the people if prices and inflation soar due to the income increase.
“Some countries suffering from deep economic stagnation were compelled to cut the wages of civil servants by 30 percent and increase the value added tax by 23 percent,” Kassar said.
Echoing those fears, Beirut Chambers of Commerce president Mohammad Choucair sarcastically said that if the government’s aim was to bankrupt companies, impoverish the people and empty the state’s treasury then it was headed in the right direction.
He added that Prime Minister Najib Mikati and some of the ministers in the Cabinet were successful businessmen and for this reason they should realize that any hasty step would further undermine the economy and compel some companies to lay off staff.
He wondered how the government could ignore the advice of the International Monetary Fund and the World Bank, both of which have warned against making any commitment to raise wages as this would have catastrophic effects on Lebanon’s public debt.
“When the government took over, GDP growth was 9 percent and in less than a year GDP growth is now below 1 percent,” Choucair said.
Earlier in the day, the Union Coordination Committee, which groups public and private school teachers as well as civil servants, staged a small rally near Baabda Presidential Palace as the Cabinet was meeting.
The committee reiterated its demands for higher wages and threatened to cripple the country with open-ended strikes and sit-ins if the government refrains from approving the new salary scale.
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