Arabic original title: البُعد الاقتصادي لموظفي القطاع الخاص
Original publication: Al Joumhouria Newspaper
Publication date: September 4, 2024
Original Arabic article: https://www.aljoumhouria.com/ar/news/731580/
This article examines the economic condition of Lebanon’s private-sector employees after the collapse that followed October 17, 2019. It argues that wage erosion, inflation, currency collapse, profit concentration, migration, falling purchasing power, and declining domestic demand have turned private-sector workers into a central but weakened pillar of the Lebanese economy, while many firms continued to preserve or expand profits without fairly redistributing gains to employees.
English translation / adapted English version:
The Economic Dimension of Private-Sector Employees
On October 17, 2019, Lebanon experienced one of the most severe economic crises in its modern history. The crisis led to a comprehensive collapse that adversely affected every vital sector, including the private sector. The challenges faced by private-sector employees were the direct result of a deep structural crisis within the Lebanese economy, which had already been fragile before the crisis erupted.
Among the most significant factors affecting private-sector employees were inflation and the collapse of the national currency. As prices rose to unprecedented levels, salaries remained unchanged or declined in real value. This sharp fall in wages eroded the purchasing power of Lebanese households, leaving salaries insufficient to cover essential needs such as food, education, and healthcare.
Some private companies benefited from the crisis by increasing their profits despite the dramatic collapse in wages. While many companies maintained or raised the prices of their products, they continued to generate profits by exporting to international markets in US dollars. Nevertheless, these profits did not translate into improved conditions for workers. Instead, companies continued to make gains at their expense.
One of the most striking manifestations of the crisis is what may be called the “restaurant syndrome.” Despite the collapse in salaries, restaurant prices have continued to rise, competing with those found in global cities such as Tokyo, New York, and Milan. In some cases, the bill of a single customer may equal a waiter’s entire monthly salary. This considerable disparity reflects the imbalance between workers’ wages and corporate profits. Although the restaurant sector continues to generate profits, its workers find themselves facing increasingly difficult and deteriorating professional conditions.
The economic crisis has also driven large numbers of Lebanese people to emigrate in search of better employment opportunities in the Gulf countries or the West. This mass migration constitutes a brain drain, further complicating the crisis and obstructing any attempts to achieve long-term economic recovery. The loss of skilled human capital weakens the country’s productive capacity and places additional pressure on the national economy.
Private-sector employees are not merely breadwinners for their families. They also represent a fundamental pillar of economic activity. The economy depends on household consumption to stimulate domestic demand, which, in turn, drives production. As wages declined, purchasing power weakened, leading to a contraction in demand for goods and services. This decline in demand adversely affects the macroeconomy, slowing growth and increasing unemployment while aggravating financial pressures and reducing the tax revenues upon which the state relies to provide public services.
The broader repercussions of the crisis include a decline in both domestic and foreign investment. As employment conditions deteriorate and domestic demand weakens, the economic environment becomes less attractive to investors, making recovery increasingly difficult. Companies that focus on generating short-term profits, whether by raising prices in the domestic market or exporting in US dollars, weaken the Lebanese economy over the long term.
The shift towards renewable energy was among the solutions adopted by companies to reduce their operating costs. Nevertheless, despite the substantial savings achieved in energy expenditure, these savings were not reflected in employees’ salaries. Instead of improving workers’ conditions, companies used these savings solely to maximise their profits.
Ultimately, the private sector remains a central element of Lebanon’s economic stability. Disregarding employees’ rights and failing to distribute profits fairly threaten the economy over the long term. Companies currently generating profits at the expense of their workers may find themselves facing a greater crisis in the future, as workforce depletion and declining productivity further deteriorate the overall economic situation and complicate Lebanon’s prospects for recovery.
Publication reference:
This article appears within the wider Publications section, under Lebanon, Economy & Public Sector Reform, where wage collapse, private-sector resilience, purchasing power, labor migration, business behavior, domestic demand, and economic recovery are examined through economic and governance analysis.
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