On March 30, 2023, caretaker Minister of Labor Moustafa Bayram in conjunction with the Price Index Committee, a government committee tasked with adjusting the private sector minimum wage, announced a raise in the minimum wage to LBP 9,000,000, or $92 a month. While a raise in the minimum wage appears as a step forward in allowing workers to meet their basic needs, it is a far cry from the adjustments required to address the issues affecting the labor market in Lebanon, one that is characterized by exploitative working conditions.
As the situation in Lebanon deteriorates further, it is estimated that more than 400,000 people have fallen under the poverty line, with few social protection resources to fall back on. The precarity of employment and subsequent rising unemployment, the lack of decent jobs, soaring inflation, the devaluation of the Lebanese pound, and the considerable loss of real wages are all directly contributing to the rise of economic insecurity and inequality. The shortage and inadequacy of jobs in the Lebanese labor market, however, is hardly a new development. In fact, the compounded political and socioeconomic crisis of the last few years has only served to aggravate the already poor quality of jobs in a labor market, which have been perpetually plagued with informality and lack of social protections, and where 63 percent of the working population were working informally with no social security or benefits in 2022. Moreover, the Lebanese government has failed to undertake necessary reforms and implement an adequate rescue plan in order to address the impact of the crisis on the welfare of the population and the deteriorating circumstances in the labor market.
Both the state of the labor market—where poor working conditions and layoffs are the norm—as well as the government’s deliberate delay of reforms is not surprising. This current situation can actually be attributed to the post-civil war reconstruction schemes laid out by then-Prime Minister Rafik Hariri’s government, which eventually paved the way for an economic system that prioritizes temporary and unsustainable economic growth at the expense of a stable labor market and the socioeconomic well-being of the population.
The structure of development and labor
The 1990s post-civil war era saw a neoliberal, trickle-down economics approach to development. The post-war plan primarily focused on infrastructural development and reconstruction, the liberalization of foreign trade, and increased opportunities for foreign direct investment, largely ignoring and failing to address the poverty and inequality resulting from years of conflict and inflation. Despite efforts made by the General Confederation of Workers in Lebanon (GCWL) in opposition to these policies, the government sidelined the demands of workers in favor of the interests of the political and financial elites.
A collective push was then made by the political class to quell labor movements by aggravating sectarian strife and enforcing state-sanctioned repression, all of which significantly undermined the efforts made by unions and the working class in urging the government to meet their demands. Since then, the GCWL became a de facto extension of the ruling class, used as a tool to suppress the demands of workers and prevent improvements to working conditions and the wages of workers.
Lebanon’s economy became heavily reliant on investment in the financial and real estate sectors; in comparison to other sectors, the latter did not employ a considerable amount of workers. In fact, the financial and real estate sectors employed only 3 percent of workers in 2019, yielding an employment sector that was not creating enough jobs to keep up with new entrants into the labor market.
The state of the labor market
Wages, working conditions, and protections for workers in Lebanon fall short from internationally defined standards; it is particularly stark in the ever-expanding informal sector. Workers in the informal sector are hardly afforded any protection or benefits, could be dismissed at any moment’s notice, and have a much higher likelihood of being exploited for longer working hours and lower wages.
The International Labor Organization’s 2018-2019 labor market survey noted that job creation was likely to be concentrated in the service sector, where high levels of informality and layoff risks are rampant. The survey also indicated that 5.4 percent of Lebanese workers were engaged in elementary occupations or unskilled work, while 50 percent of non-Lebanese workers—including migrant workers and Syrian and Palestinian refugees—worked in those sectors. This means that migrant and refugee workers are more likely to be subject to exploitative working conditions.
In addition, the steady increase of Syrian refugees in 2011 contributed to the deterioration of the already-dire conditions of the informal labor market, where the surplus labor provided by Syrians was a source of competition among those in the informal low-skilled sectors. As a result, non-Lebanese workers, such as Palestinians, faced tremendous competition and skyrocketing unemployment rates in their access to work in an already strenuous low-skilled labor market. This is reflected by the unemployment rate of Palestinians in Lebanon, which rose from 8 percent to 23 percent between 2010 and 2015. Moreover, legal restrictions on the access of Syrians to agriculture, construction, and waste-management has also served to reduce the likelihood of competing with Lebanese in better and more decent jobs.
The 2019 economic crisis has increased the rate of labor informality, from 55 percent in 2019 to 63 percent in 2022. Moreover, the crisis caused a significant downturn in investment and the closure of numerous businesses, contributing to the decline in both the quantity and quality of jobs. As a result, unemployment increased significantly from 11 percent in 2019 to 29 percent in 2022.
Women were disproportionately impacted by the large-scale layoffs that occurred between 2019 and 2022, emphasizing gender disparity, where women face more challenges in accessing the labor market and are far less likely to be participating in the labor force. While the labor participation rate of men stood at 71 percent in 2018-2019, women had a labor participation rate of only 29 percent, which also decreased to 22 percent in 2022.
Compounded crises effect
The economic collapse and the hyper-inflation of the Lebanese pound also significantly eroded the purchasing power of workers, as almost one third of the employees are low-pay workers, earning LBP 1,066,000 per month at the beginning of 2022. Adjusted to the then average exchange rate of the month of January 2022, this amounted to just $40 a month.
The ILO’s 2022 survey found that only 3 percent of the working population were being paid in “fresh dollars,” or hard US dollar currency in bank notes or funds received through international transfers that are exempt from transfer and wire restrictions. There was also a significantly widening gap in wages between those who had a university degree versus those that had a secondary degree, as those with a university degree were far more likely to earn their salaries in dollars. At the same time, however, youth with a university degree had the highest likelihood of being unemployed, with their unemployment rates sitting at 36 percent. This has led to the manifestation of a brain drain of the country’s educated labor force, with increasing numbers of youth leaving Lebanon in search of better opportunities abroad, especially in the Gulf.
The crisis has also pushed youth to drop out of schools and universities to support their families financially. However, the scarcity of jobs and the youth’s relative lack of networks and training have posed significant challenges in their access to job security.
Sub-par reforms or collective action
Despite the worsening economic crisis, Lebanon still does not have a national employment strategy or action plan for employment, nor has it developed one to address the additional shortcomings of the labor market resulting from these compounded developments. The lack of any strategy makes the prospects for improving the quality of jobs available and increasing employment opportunities bleak.
For this reason, a strategy is essential: it would function through a local and national economic plan that would ensure the creation of sustainable livelihoods and the access of the working-age population to quality jobs, with social protection and coverage. Ensuring the creation of decent jobs and access to social protection is an essential component of sustainable economic development. Unfortunately, this is an effort that has long been neglected and that has left a gap in the country’s socioeconomic fabric.
Numerous organizations, including the World Bank, the ILO, and the World Food Programme have worked with Lebanon to develop and implement strategies to advance the creation of decent jobs offered in the labor market. These strategies aim to activate under-developed sectors and improve the skill set of the labor force through technical and vocational education and training to match the available jobs. However, without a political will to change Lebanon’s economic structure to one that prioritizes the well-being of all, efforts will remain futile.
It is more important than ever for communities to organize and mobilize collectively to advance workers’ rights, especially in solidarity with those that have been marginalized, including informal and non-Lebanese workers who are at a higher risk of exploitative work. Labor rights activism should focus on leveraging economic recovery and development to build a people-centered economy, as well as progressing toward an inclusive labor market that offers the working-age population and labor force decent jobs and social protection benefits.
Cynthia Saghir is a socioeconomic researcher and consultant and has worked on topics such as the labor market, refugee protection-based assessments, agricultural development, and remittances.