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Salaries: an unsound compromise
Published on 18/10/2011 in L'Orient - Le Jour
The wage increase decided by the government disappointed a large number of people, except probably the most concerned parties, namely those employees whose salary is below 1.8 million Lebanese pounds. The concern to avoid any risk of security incidents ensuing from the demonstrations that were held in the context of the general strike seems to have been the major motivation for such an unsound measure. In fact, the regional situation and the tension it is generating in Lebanon should be taken seriously and one should not view the cautious approach adopted by Prime Minister Najib Mikati as being excessive. However, the decision to increase salaries undoubtedly entails complex economical and social results and therefore, such decision cannot be taken hastily.

I understand the disappointment of entire categories of employees, especially the managerial staff, who are dissatisfied with the increase in salaries which they deem insufficient. I also particularly understand the employers’ worries in such difficult conditions, as they are often truly unable to apply the increases enacted by the State. Therefore, it is very likely to remain in a vicious circle of inflation and weak growth.

The only way to prevent this vicious circle is to establish a global economical plan that would take into account the interests of employees and employers, as well as the economy as a whole.

The proposals that were generated by the price index Committee are worth considering, namely: for the employer, to compensate the salary increase by a decrease in social contributions and to finance a health insurance through taxation instead of making the workforce incur such cost exclusively. In fact, it is illogical to make the workforce bear the cost of health insurance while they ought to be encouraged. However, while cost transfers are easy on paper, they are much more difficult to apply in reality. On one hand, the increase in salaries is higher than the reduction of social contributions. Therefore, the impact in terms of cost remains significant for enterprises. On another hand, assuming that the State succeeds in financing the comprehensive health coverage, can we seriously envisage such a reform without first undertaking the reform of the National Social Security Fund (NSSF)?

In order to move forward in the right direction, I believe we should avert two dangers. The first is to consider the last-minute compromise on salaries as a solution, at the risk of postponing the debate on ways of modernizing our economy and improving the workforce wages and social conditions. The second risk is the temptation to move too fast and too far, since the country is in a precarious economical situation and changes must operate softly and smoothly.