Lebanon's public sector: Struggles with billions in salary costs

Report by Ghida Fayad, English adaptation by Yasmine Jaroudi

The challenges facing Lebanon's public sector can be outlined in two numbers: $5.6 billion, the cost of public sector salaries in 2019, and $1 billion, the projected cost for 2024, encompassing both active-duty and retired military and security personnel.

The difference between these numbers amounts to approximately $5 billion between 2019 and 2024. This disparity has its pros and cons.

On the positive side, about $5 billion was being paid in Lebanese lira, with most of it being converted to dollars, which in turn were used to import goods, boosting Lebanon's external trade.

However, the negatives revolve around the decreasing incomes of the public sector, which have fallen far below the minimum living standards in Lebanon.

The problem is that if public sector incomes and salaries are corrected in Lebanese lira, with increases, it could recreate a scenario similar to the wage scale and ranks series that played a fundamental role in Lebanon's economic collapse.

If these salaries are not adjusted, a significant part of the public sector will face a genuine livelihood catastrophe.

Faced with this dilemma, the Lebanese government, the Banque du Liban (BDL), and the banks are tossing responsibilities back and forth among themselves.