According to Lebanon’s Ministry of Finance (MoF), personnel costs decreased annually by 8.9% to reach $2.97B at the official rate 1507.5.
The decrease in public salaries was driven by the large drop in the payments related to retirement compensations by 14.3% or $134.66M as well as in the salaries, wages and social benefits by 5.6% or $114.75M on annual basis. Moreover, the end of service indemnities witnessed a decline of 18.1% or $24.54M and transfers to public institutions to cover salaries also dropped by 11.4% or $17.24M.
Interesting to note that the large drop of the end of service indemnities can be explained by the fact that employees are not encouraged to get payed the end of service due to the devaluation of Lebanese lira, as they are waiting for a potential salary correction in the near future.
In details, payments for the sub-account of “salaries, wages, and related benefits” constituted 40% of the primary spending breakdown, and dropped by 5.62% to reach $1.92B by June 2021. This decline was mainly attributed to the decrease of all sub-components. “Allowances” contracted by 24% as those paid to the Army and the Internal Security Forces decreased by $57.71M and $27.86M, respectively.
Overall, personnel costs represented 71.5% of current primary expenditures and 51.4% of total expenditures by June 2021, compared to 71.1% and 47.8% by June 2020. The key reason for this change in the share of personnel cost lies in changes in the expenditure base registering y-o-y drops of 16.3% for the half year of 2021 compared to 15.3% same period last year.
Personnel cost breakdown by component in Jan-Jun 2019, Jan-Jun 2020 and Jan-Jun 2021: