According to Lebanon’s Ministry of Finance (MoF), personnel costs rose by an annual 24.54% to reach $2.64B by May 2018. In fact, the eminent growth in personnel costs was driven by the parliament’s ratification of “Law #46” attached to the passing of the new salary scale for public sector employees in July 2017. As a result, “Salaries, wages and related benefits”, “End of service indemnities” and “Retirement salaries payments” all witnessed yearly increase during the first 5 months of the year.
In details, payments for the sub-account of “Salaries, wages, and related benefits” (grasping 65.52% of the total personnel costs) rose by 25.16% year-on-year (y-o-y) to reach $1.73B by May 2018. This uptick may be attributed to the y-o-y rise in the basic salaries of military personnel and their allowances by 27.08% and 36.13% to reach $821.89M and 322.39M by May 2018, respectively. Moreover, basic salaries to “Education personnel” as well as the “Civil personnel” recorded annual upticks of 27.27% and 53.15% to reach $269.32M and $145.27M, respectively.
In addition, payments for the sub-account of “Retirement salaries payments” (grasping 22.82% of the total personnel costs) rose by 16.71% year-on-year (y-o-y) to reach $602.32M by May 2018. As for “End of service indemnities” (7.14% of the total), it recorded a significant yearly increase of 76.40% to reach $188.39M. The rise can be linked to the implementation of the new salary scale, which encouraged many public employees to opt for an early retirement plan.
Overall, Personnel costs constituted 67.8% of current primary expenditures by May 2018, compared to 69.1%, r in the same period of 2017. However, Personnel costs represented 34.2% of total expenditures by April 2018, compared to 36.6% by April 2017, respectively. The share of personnel costs from total expenditures dropped due to a more pronounced rise in total expenditures. In fact, these last grew by a yearly 33.3% compared to the same period of 2017.
The Lebanese government is currently working on strict austerity measures in the 2019 state budget in order to reduce the budget deficit. Some proposed measures are attached to “benefits and end of services indemnities” to the public sector employees.
Breakdown of Salaries, Wages and Related Benefits by May 2018 (in $M)
|Government contribution to employees cooperative