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Economic & Sector Work :: Policy Note

Republic of Lebanon : Economic and Labor Force Impact of the Change in the Wage Structure of the Public Sector

ACCOUNTING AGGREGATE DEMAND ASSET VALUE BALANCE OF PAYMENTS BENEFICIARIES BENEFICIARY BUDGET DEFICIT CAPITAL FORMATION CAPITAL GAIN CAPITAL GAINS CAPITAL GOODS CAPITAL INCOME CASH PAYMENT COMMERCIAL TRANSACTIONS COMPETITIVENESS COMPLIANCE COSTS CREDIBILITY CURRENT ACCOUNT DEFICIT DEBT DEBT SERVICE DEBT SERVICE RATIO DECLINE IN INVESTMENT DEFICIT FINANCING DEFICITS DEPENDENTS DISBURSEMENTS DOMESTIC ECONOMY ECONOMIC GROWTH ECONOMIC SECTORS ELASTICITY ELECTRICITY EXPENDITURE EXPORTERS EXPORTS EXTERNAL FINANCING FACTORS OF PRODUCTION FISCAL CONSOLIDATION FISCAL DEFICIT FISCAL DEFICITS FISCAL POLICIES FIXED ASSETS FIXED CAPITAL FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FRAUD GDP GOVERNANCE ISSUES GOVERNMENT DEFICIT GROSS FIXED CAPITAL FORMATION HOME OWNERSHIP IMMOVABLE ASSET INCOME INFLATION INSTRUMENT INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL RESERVES INVESTMENT CLIMATE INVESTMENT DECISION JUDGES LABOR FORCE LABOR MARKET LABOR MARKETS LOCAL GOVERNMENTS LOTTERY MACROECONOMIC STABILITY MACROECONOMIC VULNERABILITIES MARKET PRICE MIDDLE-INCOME COUNTRIES MONEY CREATION MONEY GROWTH MONEY SUPPLY MUNICIPALITIES NOMINAL INTEREST RATES NOTARY OUTPUT PENALTIES PENSION PENSION CONTRIBUTION PENSION CONTRIBUTIONS PENSION REFORM PENSION REFORMS PENSION SYSTEM PENSION SYSTEMS PENSIONS POLITICAL ECONOMY PRIVATE INVESTMENT PRIVATE INVESTMENTS PRIVATE PENSION PRIVATE SECTOR PROPERTY TAX PUBLIC PUBLIC DEBT PUBLIC EMPLOYMENT PUBLIC FINANCES PUBLIC PENSION PUBLIC PENSIONS PUBLIC SECTOR PUBLIC SECTOR WAGES PURCHASING POWER REAL ESTATE REAL EXCHANGE RATE REAL GDP RESERVE RESERVES RETURN SAFETY NET SAFETY NETS SALARIES SALARY SAVINGS SOCIAL PROTECTION SOCIAL SAFETY NET SOCIAL SAFETY NETS TAX TAX ON CAPITAL GAIN TAX ON CAPITAL GAINS TAX POLICY TAX RATE TAX REGIME TAXATION TRADE DEFICIT TRANSACTION UNDERLYING ASSET UNEMPLOYMENT UNEMPLOYMENT RATE
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Washington, DC
Middle East and North Africa | Lebanon
2013-10-02T18:37:56Z | 2013-10-02T18:37:56Z | 2013-06

Amid uncertain growth prospects and shrinking fiscal space, the government's initial decision to significantly increase public sector employees' salaries is raising significant challenges. While the cost of living increase aims to offset the erosion of real wages over time, the change in the structure of salary scales is not accompanied by a similar structural revision of tasks and efficiency of public sector employees. At the macro-economic level, the overall increase in wages would weaken the Lebanese economy through the return of unsustainable debt dynamics, pressures on the peg, lower economic growth, and increased unemployment. Introducing revenue measures will reduce these negative impacts but would lower resilience to shocks and impede the use of counter-cyclical fiscal policies. Reforming the pension system will further reduce the negative impact, but such reform cannot be separated from the need for strengthening social safety nets.

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