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Wage compensation not only means giving back the soul of wage earners, it is a much-needed economic measure to slow down the decline in consumption, including the closure of institutions and lay off workers, and to slow down the rapid decline of families into poverty and emigration, as families cannot bear this great collapse without foundations. Real, or relying solely on the targeting of the poor program that the World Bank seeks to develop as an alternative to increasing wages, as well as an excellent tool for the client. The importance of this program can be useful to combat existing poverty, but not to prevent more families from falling into poverty, and it cannot be a long-term policy, but rather an ad hoc program to help families overcome poverty. .
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The justification for this massive pay increase is clear and unequivocal. Price inflation has reached a very high level, while the value of the Lebanese pound against the dollar has rapidly collapsed this year, leading, according to World Bank estimates, to an increase in extreme poverty rates of 10 % to 22%, and about 45% of residents in Lebanon are below the upper poverty line. According to the statistics of the Central Administration of Statistics, price inflation in August 2020 reached 120% compared to August 2019, and the increase in some of them exceeded the level of 500%, especially for goods not supported by dollars BDL. This inflation occurs despite the fact that 300 commodities are now imported on the basis of the exchange rate of 3,900 pounds, but this support did not prevent their prices from increasing by 34% between June 2020 and August 2020. This also has implications for the monopolistic structure of the markets that support the flow of profits and the accumulation of assets to the owners of capital. .
Until the end of 2019, food and non-alcoholic beverages represented 20.6% of the household consumption basket, but the inflation rate in this item only reached 367% at the end of August 2020, while the rate of Inflation in the housing, water, gas, electricity and fuels category was 12%, highlighting that it represents 28.5%. Health, which represents 7.8%, has also been inflated by 15%, while the prices of furniture, appliances and home maintenance have increased by 664%, knowing that it represents 3.7% of the consumer basket of households. Clothing and footwear also grew 413%, representing 5.4% of the household consumption basket, and the prices of alcoholic beverages, tobacco and tobacco increased 437%, representing 1.6% of the household consumption basket.
Before this price inflation, the average individual income was $ 7,764, or $ 648 per person per month, and the minimum wage was 675,000 pounds, or the equivalent of $ 445. Today, after the deterioration of the exchange rate, the International Monetary Fund sets individual income at around $ 2,740, and the minimum wage is less than $ 100, which means that purchasing power has deteriorated by 83% in one year.
The next government is not expected to reconsider wages quickly, rather it is a battle of political, economic and financial balances. The balance of power does not favor the workers before the current power that favors the owners of capital and rentier activities. Originally, it seeks to reform the existing economic model instead of going towards a new form of social contract that imposes different balances. The current authority, which assigned Saad Hariri to form the government, did not assign him on the basis of an economic and social program, which means that the salary increase project will be just a poverty time bomb. Nor is it possible to rely on the General Union of Workers, which has become a mere instrument of power that moves it according to options against the interests of the workers. This path was clearly demonstrated through the “political devaluation” of the exchange rate for a period of days during the consultations that led to Hariri’s nomination. If Hariri’s project is to sign a program with the International Monetary Fund, then the Fund’s first precondition for any firm is to liberalize the exchange rate or unify prices in the market. Today, the fund adopts the exchange rate on the basis of 6000 lira against the dollar, which means that it is necessary to increase salaries to the level indicated by the consulting center. And the second of the Fund’s previous demands for any program is the approval of an austerity budget that will inevitably lead to the destruction of the wage share of GDP after killing government investments. Among the things that the IMF would strictly require of any future government as a precondition for signing a program with it, is the issuance of a law that regulates restrictions on withdrawals and transfers, locally and abroad. Such a law has become necessary for what is not necessary if it was issued as seen by the dominant political forces, in addition to integrating with the demand for austerity and the unification of the exchange rate and its liberalization. Consequently, it is not possible to issue such a law in light of the contradictory monetary policies implemented by the Central Bank of Lebanon, once by expanding the issuance of cash and once through monetary tightening. In other words, fiscal and monetary policies cannot support issues like rising wages and social empowerment.
The biggest fear is that the government will seek a piecemeal implementation of the fund’s demands, based on its vision of dealing with losses through privatization of public properties, implementing an austerity program without clear controls on transfers and withdrawals, and delaying increases. wages while you can. In other words, the government will implement a program in itself worse than the IMF program.
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