Adjusting Salaries and Wages: Going Around in a Vicious Circle

At its session held on Monday, February 16, 2026, the Lebanese Cabinet approved granting public sector employees across all cadres, as well as contractors and retirees, an increase equivalent to six additional salaries, with full supplementary allowances for military personnel. This sparked a wave of objections spanning a broad spectrum of politicians and opinion leaders, in addition to citizens, and likewise failed to win the approval of public sector employees and retirees, both military and civilian.

This was not the first time the current government had moved to impose fees on a canister of gasoline. It had previously approved them in a session on May 19, 2025, a measure whose implementation the State Shura Council ordered suspended on July 16, 2025, as a result of appeals filed before it. At the time, this was considered an important legal development to halt what was described as an additional burden on citizens amid difficult circumstances, and it was widely welcomed.

Just as the Ministry of Finance, and behind it the Lebanese government as a whole, ought not to embark on arbitrary increases in salaries and wages, it is equally incumbent upon it not to rely on the easiest sources of financing for this increase, by which I mean imposing a fee on a canister of gasoline amounting to 300,000 lira, in addition to 1% on the value-added tax to bring it to 12% instead of 11%, especially given that only a few months have passed since the ruling on the appeal against the previous decision.

It is worth noting the expected inflationary impact of these measures, since raising the cost of fuel is reflected directly in the prices of transport, goods, and services, eroding part of the granted increase and reproducing the very same vicious circle between salary increases and rising prices, without radically addressing market distortions.

Faced with this confusion displayed by the current government in addressing the salary adjustment crisis, a set of questions must be raised regarding the government's failure, since its formation, to take the initiative in drawing up a fair and equitable plan to adjust the salaries and wages of public sector employees while taking into account the state of public finances at the same time:

- The issue of adjusting the salaries and wages of public sector employees and retirees is not a new matter; rather, it is as old as the crisis itself, constituting at once one of its direct consequences and a telling indicator of its continuation and complexity. Accordingly, any delay in addressing this issue within an integrated reform framework will prolong the crisis and exacerbate its economic and social repercussions. - The government's lack of a comprehensive and integrated economic vision, grounded in clear and measurable objectives distributed across a phased timeframe that ensures their sequential and coordinated implementation, constitutes a structural flaw that impedes the achievement of desired results and weakens the effectiveness of public policies in achieving the sought-after economic recovery. - Any serious effort to address the issue of salaries requires linking it to administrative reform that raises public sector productivity and restructures institutions suffering from overstaffing or overlapping powers, turning wage adjustment from a fiscal burden into an investment in administrative efficiency and the quality of public services. - Negotiating with the International Monetary Fund, as an entry point to restoring the international community's confidence in the Lebanese economy and its institutions, does not justify automatically adopting its recommendations or conditions. Experience shows that some of its programs adopted in several countries have contributed to deepening economic and social imbalances, requiring a conscious negotiating approach that takes into account national specificities and balances the requirements of reform with the protection of social stability. - The sought-after economic growth remains out of reach as long as the incomes of a core segment of society are insufficient to cover their minimum living expenses. The imbalance between incomes and the cost of living is not confined in its impact to individuals alone, but reflects negatively on macroeconomic dynamics, undermines the effectiveness of development policies, and weakens the prospect of implementing growth plans and achieving their objectives. - The high salaries approved by the government for regulatory authorities reflect a clear imbalance in standards of fairness among job categories within the public sector, raising legitimate questions about the foundations on which these increases were based. Justifying them on the pretext of attracting talent appears neither sufficient nor convincing, particularly given the nonbinding, advisory nature of these authorities' decisions toward the supervisory authority, which requires reconsidering the philosophy of salaries and compensation in line with the principles of fairness and institutional balance. - The current government shows marked leniency in collecting fees owed on maritime property, depriving the treasury of annual revenues estimated at between $250 million and $500 million, which constitutes fiscal waste with a direct impact on public financial balances and the prospects for sustainable financing. - Addressing the issue of maritime property should not be limited to collecting overdue fees, but must fall within an integrated policy for managing public property that ensures the settlement of illegal occupancy, revalues occupancy fees in proportion to market value, and transforms these revenues into a sustainable resource for the treasury. - The government has fallen short in launching a comprehensive reform and modernization of the tax system to effectively entrench the principle of progressive taxation, directing tax burdens toward holders of wealth and high incomes instead of placing them on low-income and socially most vulnerable groups. - The government lacks a clear and integrated plan to combat tax evasion and to develop mechanisms for collecting fees and taxes in a way that enhances transparency and efficiency. This requires simplifying and facilitating payment methods and updating collection systems, in parallel with tightening oversight and activating accountability tools against defaulters, so as to entrench tax compliance and strengthen the fairness of the financial system. - The current government's approach has not differed from the approaches of its predecessors in relying on increasing indirect taxes and fees that affect various social strata without any real distinction between income levels as a primary source to finance the proposed increase, without bringing about a fundamental shift in the philosophy or means of addressing the matter. This poses problems related to tax justice and the negative social impact of these measures. - Discussions in the Cabinet showed that the Ministry of Finance did not honor its obligation to provide ministers with the study on the cost of the proposed increase and the mechanisms for its distribution, as these data were not circulated 48 hours before the session convened so as to ensure they could review and discuss them in accordance with proper procedure.

Adjusting salaries and wages is a legitimate right for public sector employees and retirees, yet entrenching it in a fair and sustainable manner requires abandoning the logic of ad hoc remedies and adopting the logic of structural reform. The matter is less about increasing figures on payroll schedules than about rebuilding trust between the state and its citizens, through a fair fiscal policy, sound management of resources, and a clearly defined economic vision. Without that, financial decisions will continue to spin in a vicious circle, caught between street pressure, budget pressure, and the erosion of purchasing power, while economic recovery remains postponed.

Translated from Arabic with AI. Read it in Arabic