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Lebanon’s minimum-wage row on next week’s Cabinet agenda

September 5, 2008

Lebanon's minimum-wage row on next week's Cabinet agenda

BEIRUT: The Cabinet is expected to meet next week to look into the proposal of Finance Minister Mohammad Shatah to raise the minimum wage to LL500,000 ($333) amid indications that this suggestion may not be settled in one session. Labor Minister Mohammad Fneish told The Daily Star on Thursday that he would give his opinion about the debate over the minimum wages during the Cabinet session.

“I have listed carefully to the Consumer Price Index Committee as well as to the private sector and the General Labor Confederation (GLC). But I think the differences between the labor unions and the private sector are as wide as before,” the minister said.

Fneish denied press reports that he had suggested raising the minimum wage to LL750,000 a month.

“I don’t want to get into this game. I will speak my mind at the Cabinet and let the ministers decide on the acceptable salary increases,” he said.

Prices of basic commodities in Lebanon are believed to have risen by more than 63 percent between 1996, when the minmum wage was last increased, and 2007.

The Consumer Price Index Committee says the prices of basic items such as sugar, rice wheat and cereals rose by 7.2 percent in the first seven months of this year, while the Central Bank projected inflation to reach between 13 to 15 percent at the end of 2008.

However, despite this alarming increase in prices of basic items, the minimum wage remained LL300,000, prompting the GLC to stage a few unsuccessful strikes.

Shatah seemed reluctant to consider any salary rise above the LL500,000 ceiling as this step would add more pressure on the treasury.

The minister told Reuters on Wednesday that the salary increase, details of which have yet to be finalized, is projected to add an annual $500 million to state expenditure and will contribute to a 2008 deficit equivalent to around 11.5 percent of gross domestic product.

The minister did not say if the Finance Ministry may look for other options to make up for the $500 million additional cost for the salaries.

With a public debt of more than $44.5 billion, the government of Prime Minister Fouad Siniora is not too keen to increase expenditures.

The International Monetary Fund recently warned that any salary increase in Lebanon would definitely lead to a higher budget deficit and above all a big inflation.

“The specifics of the increase are being worked out. We are trying to come up with a solution that will please all sides,” Shatah told The Daily Star.

He admitted that the government could not fix in one shot what has accumulated over the years, alluding to the rise in the prices of commodities since 1996.

“I repeat my phrase, God willing, that we will be able to settle the issue of the minimum wages before the end of September,” Shatah said.

He added that as far as he was concerned, the new salary scale for the public sector has been determined.

“It is up to the labor minister to submit his proposals for the private sector,” Shatah said.

GLC chief Ghassan Ghosn reiterated his total rejection for the proposed LL500,000 minimum wage, which he described as offensive and ridiculous.

“No one can convince me that this trivial LL200,000 will improve the lives of the limited-income families,” Ghosn said after meeting Social Affairs Minister Mario Aoun.

He added that the GLC would accept no less than a LL960,000 minimum wage and anything short of this level was a waste of time.

Ghosn said he feared the Cabinet might raise the Value Added Tax ceiling from 10 percent to 12 percent in 2009.

“We will not allow the government to apply any new tax under the pretext of recovering the losses incurred by the salary increase to the public sector,” he warned.

Written by Hisham · Filed Under BUSINESS, LEBANON NEWS 

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