According to Lebanon’s Ministry of Finance (MoF), personnel costs rose by an annual 22.27% to reach $5.37B by October 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 10 months of the year.
In details, payments for the sub-account of “Salaries, wages, and related benefits” (grasping 62.54% of the total personnel costs) rose by 16.25 year-on-year (y-o-y) to reach $3.36B by October 2018. This uptick may be attributed to the y-o-y rise in the basic salaries of military personnel by 16.98% to reach $2.15B by October 2018. Moreover, basic salaries to “Education personnel” as well as the “Civil personnel” recorded annual upticks of 13.89% and 32.41% to reach $674.62M and $349.59M, respectively.
In addition, payments for the sub-account of “Retirement salaries payments” (grasping 23.77% of the total personnel costs) rose by 16.60% year-on-year (y-o-y) to reach $1.28B by October 2018. As for “End of service indemnities” (8.49% of the total), it recorded a significant yearly increase to reach $456.38M compared to $181.09M in the same period last year. 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 66.1% of current primary expenditures by October 2018, compared to 67.3%, in the same period of 2017. However, Personnel costs represented 36.7% of total expenditures by October 2018, compared to 36.3% by October 2017, respectively.
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 October 2018 (in $M)