Ever since the decision to increase minimum wages by 200,000 LL was announced yesterday, I haven’t read any positive feedback on it. Many think it’s a bad idea and the economic bodies urged the private sector not to abide by the government’s decision.
Economically speaking, it is always bad when the government increases minimum wages without taking into consideration the resulting inflation and increase in unemployment. However, looking at the inflation that has been ongoing for years now in Lebanon, it is hard to believe that adding 200,000 LL to the minimum wage will have that many repercussions.
Nevertheless, I had a long talk with a good friend of mine who works in the industrial sector and he told me that while intentions behind raising the wages are good, such measures will force businesses to fire people and cut down on the benefits given to employees. Added to that, the government is planning on compensating this increase by adding an extra 2% to the VAT, which along with the inflation, will result in flamboyant prices.
There were better alternatives to increasing the minimum wage, ones that do not include regulating prices such as:
– Follow the army example and grant Lebanese earning only the minimum wage discounts on food and other basic goods.
– Higher Taxes on the maritime resorts and quarries, knowing that a big portion of them is illegal.
– Higher taxes on tobacco products.
You have been featured in LAU Social http://www.lausocial.com
Featured where exactly?
Please enlighten us with your assessment of a uniform 40% increase in minimum wages and its impact on the small business owners and resulting inflation in goods…
I have an MBA in economics…So go ahead and refresh my memory lol.
I think a good idea is to adopt taxes on maritime resorts cause they are illegal, and higher taxes on tobacco and alcohol with some minimal increase on the salaries…after all they should sit and put a strategy regarding the inflation and wage hike…it is not a matter of 15 min decision to prevent a 1 day strike.
I still did not understand why they were so afraid of a 1 day strike. What could the demonstrators possibly do that has not been done before?
I can add many ideas to increase productivity which will help the global economy to go through and self correction process and will lead to increase inflation! Once again i ask, why the government don’t invest in building appropriate infrastructures in regions like Akkar, and Tyre, and Zahleh and and other regions in Bekaa Valley, and they encourage investors who aim to build and open industries or companies in these regions but lowering taxes or creating and Tax heaven for a certain amount of years as Egypt did (Mubarak Regime) in 6October region or Dubai Did in Jabal Ali region ?
I’m sure that a lot of Investor in the IT industry would love having a Silicon valley in Akkar, or Sophia Antipolis in Bekaa
It is not the end of the world if we had a strike on Wednesday. don’t know why they are so afraid, maybe because the last strike caused unintentionally the 7 may conflicts if you still remember.
There was nothing unintentional about May 7th 2008
* Current Scenario:
Employee A Salary = 1,750,000 LL
Employee B Salary = 1,850,000 LL (because he has more experience)
* With the new “rule”:
Employee A Salary will become = 2,050,000 LL
Employee B Salary will remain = 1,850,000 LL (knowing that he has more experience)
This only shows that this country is run by ignorants who don’t even know the basics of mathmatics.
about may 7th 2008, you are right there was nothing unintentional, both sides were preparing long time ago for this mini-war.