World Bank criticizes public salary increase

New salary scale
would weaken the economy

The World Bank has openly criticized the government’s decision to increase salaries in the public sector in its ‘Lebanon Economic Monitor’ report in spring 2013.

“Amid uncertain growth prospects and shrinking fiscal space, the government's initial decision to significantly increase public sector employees' salaries is raising significant challenges,” the report said. It said the new salary scale is not accompanied by a similar structural revision of tasks and efficiency for public sector employees.

At the macro-economic level, the overall increase in wages would weaken the Lebanese economy through the return of unsustainable debt dynamics, pressures on the peg, lower economic growth, and increased unemployment. The report said that although new revenue sources would reduce negative impacts, they would lower resilience to shocks. It said reforming the pension system would further dampen the negative impact, but should be accompanied by strengthening social safety nets.