Longer working hours and tax hikes to fund pay rises in Lebanon
New pay increases for public sector workers in Lebanon will be funded by tax hikes an increase in VAT
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The long-awaited new salary scale draft law [in Lebanon] will be tied to an increase in working hours of civil servants and a tax hike on luxury goods, State Minister Marwan Kheireddine told The Daily Star.
“The plan has been drafted in a way that focuses on increasing public sector efficiency, reducing cost and increasing revenues for the state,” State Minister Marwan Kheireddine, who serves on the committee that finalized the plan, told The Daily Star.
Kheireddine said he expected the draft law to be passed by the Cabinet during a key session Thursday, when a major demonstration is planned by the Union Coordination Committee – the teachers and civil servants coalition leading a monthlong open-ended strike to demand wage increases.
The Cabinet planned to increase the value added tax on luxury goods from 10 to 15 percent, he said, explaining that low and middle income families would not be hit by tax hikes.
Cars priced at over $25,000, alcohol and luxury food products are some of the goods to be taxed, the minister said.
Another source to fund the wage hike would come from fees imposed on real-estate developers who wish to amend current zoning regulations to allow for the building of additional floors, Kheireddine added.
The amendment of zoning regulations would only apply to new buildings. Completed construction works would be excluded, he explained.
Though the Cabinet secured revenues to fund the wage hike, the minister said their collection would take some time, which in turn required the government to pay the salary increases in installments over a period of four years.
The UCC has warned that their strike would go on if the government decided to pay the wage hikes in installments. Head of the UCC Hanna Gharib was unavailable for comment Tuesday evening.
The minister added that working hours at the public sector would be extended to 5 p.m. as opposed to 2 p.m., and that Saturdays would become a day off.
The draft law would also allow the government to reposition civil servants currently appointed in overstaffed departments to understaffed ones, the minister explained. He added that this would allow for a temporary employment freeze, another key aspect of the plan.
The employment freeze would be upheld at each public department until each ministry develops a restudied organizational chart for its departments, in coordination with the State Ministry for Administrative Reform.
“One of the problems of the public sector is that we have organizational charts from the 1950s and the 1960s, but the whole world changed and there is a desperate need to restudy work functions in the public sector,” Kheireddine said.
Private school teachers will join the major protest on Thursday, when the Cabinet is expected to tackle the issue of the wage scale, Gharib said Tuesday during a rally near the Justice Ministry in Beirut.
“The association of private schools will go on strike Thursday and join public school teachers,” Hanna Gharib told protesters.
The Private Teachers Association has previously taken part in the open-ended strike that was launched by the UCC in February.
However, private school teachers across Lebanon resumed classes after President Michel Sleiman vowed to push for the Cabinet to refer the draft law to Parliament by March 21.
Senior Lebanese economists voiced support for increasing public sector wages in a statement Thursday.
“The demands of the UCC are just and the draft law should be referred to Parliament. The new wage scale is nothing but a needed correction of wages, which have lost a big percentage of their purchasing power since 1996” when they were last amended, the statement said.
The wage hike, the statement added, is even more importance given the inability of the government to provide a social safety net “that guarantees a decent living.”
Inbound and outbound flights from Rafik Hariri International Airport will be suspended for a period of four hours Thursday from 10 a.m. to 2 p.m. due to strike action by staff members who have demanded to be included in the new wage hike, the airport said Tuesday.
The Economic Committees, which groups business and employers associations, have repeatedly warned against referring the new wage scale to Parliament, arguing that any increase in salaries would inflict major economic losses on the country.
Kheireddine, however, insisted the committee drafting the law was immune to pressures from the UCC and the Economic Committees.
“We did not succumb to pressure exerted by either group. Giving more, as asked by the UCC, would have been disastrous and not giving anything, as demanded by the Economic Committees, would have been unfair. This proposal, we believe, will be good for the economy,” he said.
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