Salaries increased by 11 percent in Lebanon  in 2012, said a report by international management consultancy Hay Group, which forecasted a further increase of 8 percent in 2013. The report, which compiled data from 144 private sector organizations that employ more than 13,000 individuals, said the largest salary raises were given to junior employees
“Junior and clerical level workers in the private sector have received 15-percent pay rises on average, while senior managers have received slightly more modest rises of 7.6 percent,” the report said.
Most surveyed businesses said the increases were needed to close the gap between wages and the rising living costs, the report added.
“However, it had an impact on overall payroll costs for private sector organizations which have risen by 12 percent this year compared to a 7-percent increase between 2010 and 2011,” Mirna Charaf el-Dinne, the author of the report, said.
While the raises were offset by the rising cost of living in 2012, salaries are expected to increase above inflation levels in 2013, the report added.
“The outlook for 2013 suggests a different story as the latest forecasts from the survey participants show a pay increase that would be well above inflation,” Charaf el-Dinne said.
Business participating in the survey projected an average pay increase of 8.2 percent in 2013. “These figures are therefore relatively high given the [salary increase of 2012], and that the outlook for economic growth is minimal,” the report added.
“Profits are under pressure already and growth has been sluggish in 2012.  It’s going to be a strain, especially for smaller businesses and less profitable sectors, to grow in this climate,” Charaf el-Dinne said.
The report also finds that bonus now forms a larger proportion of the pay mix, suggesting that companies are striving to reward high performers.
Consistent high performance is the main factor taken into consideration when deciding on promotions, according to 88 percent of companies in comparison to only 36 percent in 2009, 70 percent in 2010 and 86 percent in 2011.
“The [cost of living increases] coupled with the economic environment mean companies have to be more cautious with recruitment which will not help to pull Lebanon into economic recovery,” Charaf el-Dinne said.