Adjusting the salaries of public sector employees and retirees, back to square one

The financial and economic crisis in which Lebanon has been floundering is approaching the end of its fifth year, while the sought-after solutions remain trapped in a labyrinth of waiting, with no serious attempt on the horizon by the caretaker government to put an end to the crisis and its repercussions. Indeed, virtually all it does is buy time and make verbal promises that are quickly erased by facts on the ground, while economic reforms (where they exist) remain insufficient to save the country from its crisis, according to an International Monetary Fund report last May.

The vacancy in the presidency of the republic continues for the second consecutive year, accelerating the disintegration of state institutions and the erosion of their authority, while the ongoing confrontations between Hezbollah and the Israeli enemy in southern Lebanon for nearly a year further complicate the situation. Moreover, the Syrian refugee crisis, which has remained unresolved since 2011, and the stalling of their return to their country are increasing the burdens on the national economy and deepening its crisis.

The gravest manifestation of Lebanon's financial and economic crisis lies in the national currency losing more than 95% of its value, stripping the incomes of Lebanese citizens, particularly salaried employees, of their purchasing power, especially those denominated in Lebanese pounds, concurrently with the COVID-19 pandemic and its economic repercussions. The collapse also coincided with the defaulting of the banking sector and the banks' withholding of depositors' savings, restricting withdrawals from them, jointly with Banque du Liban, to modest sums that cover only a tiny fraction of their daily expenses.

Foremost among those harmed by the sharp collapse in the value of the pound were employees and retirees in both the public and private sectors, the vast majority of whom have fallen below the poverty line as a result of inflation that wiped out their purchasing power. Making matters worse was the lifting of subsidies on basic public services, including electricity, medicine and healthcare. This left both the public and private sectors unable to compensate their employees for the decline in the purchasing power of their salaries, or at least part of it, to enable them to continue carrying out their job duties and meeting their living needs.

Notably, according to "Information International", the average wage stood at roughly $71 at the beginning of March 2021 at the parallel market dollar rate at the time, before falling again to less than $30 in December/January of the same year, prior to the approval of wage increases that remain meager when calculated in real terms or by their purchasing power.

Many commercial and industrial enterprises in the private sector have proved capable of regaining their balance, continuing their operations, adapting to changing economic conditions and persevering, albeit with difficulty. These enterprises contributed to relaunching the momentum of their activities without waiting for the reforms required and expected of the state, and moved quickly to pay their employees' salaries in full or in part in US dollars, which helped this sector get back on its feet.

By contrast, the caretaker government still refrains from adopting a scientific approach to adjusting the salaries of public sector employees and retirees. Its attempts are limited to disbursing allowances that are not incorporated into the base salary and are therefore excluded from the calculation of both pensions and end-of-service indemnities, masking an attempt by the government to forfeit the acquired rights of civil servants, military personnel and retirees. Notably, despite the increases approved since 2020, the salaries of public sector employees and retirees have not exceeded 20% of what they were before the collapse.

The government's failure to take the initiative to adjust the salaries of public sector employees and retirees in general, and the salaries of the military and security services and retirees in particular, on scientific foundations that guarantee fairness across corps and job categories constitutes a blatant injustice against them and an infringement upon their acquired rights. Indeed, the temporary salary and wage increases approved to date bear no relation to what employees and retirees actually need to live a dignified life.

Any adjustment of salaries and wages must be carried out according to specific, uniform criteria across all public sector employees and retirees, something the caretaker government failed to abide by when approving the recent increases. Hence, describing the recent increases as arbitrary and unlawful is neither an exaggeration nor unfairness, rather, it is an accurate characterization of an increase that undermines the principles of justice and equality while ignoring economic indicators and the inflation rate that erodes the purchasing power of salaries, wages and the increases added to them.

Although the government, during its session of February 28, 2024, tasked the Civil Service Board with preparing a new framework for salaries and wages within three months ending last June, the agenda for the Council of Ministers session scheduled for Tuesday, September 10, contained no item providing for a plan to adjust salaries and wages. Likewise, the 2025 draft budget law included no allocations earmarked for adjusting salaries and wages. Retired military personnel therefore had no choice but to prevent last Tuesday's session from convening, just as any government session that does not have the adjustment of salaries and wages as the first item on its agenda must be prevented from convening.

Refraining from adjusting salaries and wages on the pretext of the need to preserve a balanced budget is a misplaced excuse, especially since governments often resort to increasing the fiscal deficit to counter contraction and stimulate the economy. That said, we are not advocating here a return to state expenditures exceeding revenues, particularly given that the public budget is in a state of actual deficit and the current balance is nothing more than an artificial one resulting from the exclusion of public debt servicing obligations.

This makes the proposal put forward by the Legal Platform for the Defense of the Rights of Retired Military Personnel, which suggests a scientific formula for calculating new salaries and wages based on proportionality and anchored in Salary Scale Law No. 46/2017 and its amendments, a logical solution for adjusting salaries and wages away from arbitrary increases and unjustified discrimination among different categories of employees and corps. Under this approach, a uniform rate for the required increase can be obtained by dividing the salary and wage allocations earmarked in the 2025 budget by the total aggregate salaries and wages stipulated under the aforementioned salary scale law.

The policy of fleeing forward and the arbitrariness practiced by the caretaker government in its approach to the various issues related to the sought-after solutions to the financial and economic crisis only exacerbate the crisis and render solutions harder and costlier. Consequently, the government's persistent disregard for the link between economic recovery and addressing the root causes of the financial and economic crisis, on the one hand, and an adjustment of salaries and wages that guarantees a dignified life for military personnel, public sector employees and retirees, on the other, puts resolving the crisis and its repercussions out of reach.

Translated from Arabic with AI. Read it in Arabic