77 percent of employers
increased salaries in 2023

Still, wages are almost half pre-crisis levels

Salary adjustment continues but the average salary in real dollars is still 46 percent lower than pre-crisis levels, according to a survey undertaken by InfoPro Research and published in the latest issue of Lebanon Opportunities. This, however, represents an improvement compared to 2022 when the average salary was 63 percent lower than before 2019.

The number of employers stating that they have raised salaries grew to 77 percent from 63 percent in 2022 as shown by the InfoPro survey which was carried out in Greater Beirut and that involved more than 100 medium and large size businesses. As many of those who wanted to increase salaries have already done so, the percentage of firms that plan to increase salaries decreased from 52 percent in 2022 to 43 percent in 2023.

The gradual recovery in business activity and the growth in sales enable companies to adjust salaries and wages. Karim Gebara, General Manager of Omnipharma, a distributor of pharmaceutical products and medical devices, said: “We linked compensation and benefits to our turnover. They are increased in line with the growth of turnover. I expect gradual salary adjustment to continue in the country over the next 12 months and this will largely depend on the improvement in the financial situation of each company.”

The number of employers paying salaries only in fresh dollars jumped 6.5 times from six percent in 2022 to 39 percent in 2023, according to the InfoPro survey. Businesses that earn the total or part of their revenues in dollars are more capable of paying salaries in the US currency. Richard Maalouf, Chief Operating Officer at SNA Lebanon, said that insurance firms are able to adjust salaries because they were among the first businesses to dollarize their revenues. He said: “Insurers charge premiums in fresh dollars because they pay claims in fresh dollars especially medical and motor claims.”

At the time of the survey, 40 percent of employers said they plan to increase their workforce in the next three months. Despite the fact that firms continue to hire, 70 percent of them stated that their workforce is still below pre-crisis levels by an average of 39 percent. Unemployment is estimated at around 30 percent as a general average and reaches 58 percent among the youths.

Businesses that are witnessing a slump in their sales, such as pharmaceutical distributors, are not affected by the decrease in the size of their workforce. Gebara said: “We don’t hire new employees to replace those who leave if we can find a replacement among our workforce. We recruit new skilled employees in key positions such as biomedical engineers and pharmacists because we often don’t have in-house replacement.”

The shortage of skilled workers caused by the brain drain continues to afflict many sectors. Both the World Bank and the IMF have warned of the rapid erosion of human capital as a result of a massive exodus of well-educated and highly skilled labor especially among the young. Gebara said: “It is more difficult to find skilled human resources these days as well as motivated employees with drive.” A recent report about the local plastics industry released by the International Labor Organization (ILO) and the Association of Industrialists (ALI) revealed “a significant lack of skills among existing workforce, as well as difficulty in finding and retaining workers equipped with the skills needed.” However, some sectors are able to find the needed skills. “We can find high-caliber talents on the local market especially that many employees are leaving the banking sector and joining the insurance sector because of the banking crisis. One man's loss is another man's gain,” Maalouf said.

Businesses address the scarcity of talents by resorting to training in order to improve the skills of new and existing employees. According to the ILO and ALI report, around half of plastics plants provide training to their employees to cover an existing skill gap or to prepare for the introduction of new production techniques. Gebara said that Omnipharma has increased its in-house training. According to Maalouf, SNA has upgraded its training program which includes leadership training as well as supporting continuous learning and special educational programs.