Multidimensional poverty has increased from 42% in 2019 to 82% of the total population in 2021 in Lebanon, as per the United Nations Economic and Social Commission for Western Asia (ESCWA). Lebanon’s financial collapse has left the working class to face major challenges. To illustrate, the devaluation of the Lebanese pound (LBP), by 30 times, has significantly reduced consumer purchasing power, causing many to fall below the poverty line. Wages have not been adjusted to reflect the currency’s devaluation, thus exacerbating the situation.

LIMS said that poverty in Lebanon is due to LBP’s collapse that contributed to consumer purchasing power taking a plummet. With the economic recession, businesses laid off workers or shut down, impacting poverty levels too. Since the crisis started, Lebanon’s GDP has decreased by 60%, hence the same percentage reflects residents’ loss of income.
Facing this unprecedented crisis, the public sector did not make any adjustments, compared to the private sector. For example, the government’s tripled public sector salaries, thus amplifying the problem. This increase is not based on productivity and will be possible only by printing more LBPs, which will further deepen the economic crisis and significantly reduce the residents’ purchasing power.

LIMS suggested that the government needs to restructure the public sector. By all means, the Lebanese government should avoid raising the minimum wage, as it may deepen the recession. Voluntary wage correction processes have occurred in the private sector, particularly with businesses that laid off surplus workers and paid some wages in dollars to preserve competencies. The government should learn from this lesson.

To help reboot the economy, LIMS proposed the following (1) stopping the collapse of the LBP through a currency board or adopting comprehensive dollarization, (2) launching economic growth through reforms such as dismantling monopolies, like electricity and telecom, and (3) allowing foreign banks to enter Lebanon without imposing conditions to enable financial intermediation.

LIMS Media Interviews:

• Wages In Lebanon…Will The “Correction” Fix What Was Spoiled By The LBP’s Collapse? January 11, 2023: Independent Arabia, Article AR
• Average Salary In Private Sector…It Is Up To Corporate Discretion Without A Minimum Binding, January 7, 2023: Annahar, Article AR
• Spread Of Poverty In Lebanon: Rapid Descent Into Deprivation And “Stopgap” Solutions, January 1, 2023: Annahar, Article AR