Social security reforms: Private sector wages to double in Lebanon

Report by Lea Fayad, English adaptation by Yasmine Jaroudi

With the increase in the public sector, attention has turned to Lebanon's private sector.

In numbers, the minimum wage in the private sector is set to double from LBP 9 million to 18 million.

Additionally, transportation allowances, which currently stand at around LBP 11 million monthly, will contribute to private sector employees now earning a minimum of $324, compared to approximately $400 in the public sector.

Moreover, educational scholarships for private sector employees will increase from LBP 6 million to 12 million for those with children in private schools and from LBP 2 million to 4 million for those attending public schools.

These increases will be announced next Tuesday during a meeting between the Labor Ministry and representatives of employers and workers, following an agreement among all concerned parties.

However, will employers formally declare these new salaries to Social Security and factor them into end-of-service compensations?

Here lies the problem: the majority of companies either evade declaring to social security or understate the actual salaries, partly to reduce subscription costs and partly because they lack trust in the system.

According to Social Security's numbers, only 10% are being reported, which has led to significant revenue losses for Social Security and hindered its ability to increase social benefits.

Social security sources emphasize the need for this 10% compliance rate to increase to at least 50%, coinciding with the raise in the minimum wage. This would enable the institution to enhance its healthcare coverage from the current 40-50% to 80-90%, restoring levels seen before the 2019 crisis.