Downside of upping wages: more inflation

Increase in wages must exclude raising social benefits’ fees: traders say

The Beirut Traders’ Association (BTA) published on Wednesday (September 14) an assessment of the demand by labor unions to increase the minimum wage.

The BTA said that the local rise in prices has been triggered by the drop of the dollar against other currencies. It also identified other factors that contributed to the inflation, including the global hike in prices of raw materials, basically that of oil, and an increase in taxes due to the rising public deficit. The BTA blamed the lack of government intervention for the rise in prices of commodities and services.

If the minimum wage correction is inevitable, the BTA said, it must be within a comprehensive socio-economic strategy. The BTA cited five elements which it said must be thoroughly considered in any wage increase plan: consumption, productivity, inflation, fiscal situation of businesses, and job opportunities.

The BTA said that the bulk of wages must not exceed the average GDP attained during the last ten years. It also said that any abrupt raise in wages would urge businesses to refrain from hiring new workers, or even to dismiss a number of their employees.

The BTA said that any increase in wages should be disconnected from social benefits granted to employees, like social security, end-of-service payments, transportation, and education.