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Which Is More Important, Debt Service or Facing the Social Crisis?

Updated on March 22, 2020
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I like to read and write in the English language on topics such as society, politics, business, education, sports, and worldly issues.

The financial crisis combined with the spread of Corona, to cause the Lebanese economy to die. To date, the scale of the disaster has not been clarified, but all indications threaten to reach a serious social crisis due to the dismissal of employees and the bankruptcy of companies. However, all the solutions offered do not rise to the level of calamity. Radical measures are required that put an end to constant attrition

All indications are that life will not return to normal for months. The optimists are talking about August, while others are calling for the spring of 2021 to be taken to eliminate Corona. Public mobilization and previous decisions to close public places, restaurants and shops are all measures that should have mitigated the disaster in Lebanon. However, the numbers of casualties are constantly increasing, and therefore the procedures are likely to get tougher in the coming days.

In practice, this leads to the transformation of the home stone, as time progresses, into a lifestyle. This is necessary to counter the spread of Corona, but its impact, in turn, will be disastrous for all joints of the economy, especially the two main parties, that is companies and families. Disastrous, but inevitable, and therefore there is no alternative to state intervention to save the parties. Companies, especially small and medium-sized companies, are threatened with bankruptcy, and families are threatened by unemployment and hunger. So far, government measures do not amount to calamity. Satisfying with the decision to distribute "social and food aid to citizens whose businesses have been disrupted and who have lost their means of livelihood" does not express an estimate of the scale of the tragedy. Every day that passes, he carries news about the dismissal of employees or the reduction of their salaries. These measures did not exclude even the banks that had accumulated wealth for thirty years. Once the crisis hit it, staff dismissal was its first measure, even before the outbreak of the Coronavirus. A careful evaluation of the state of companies is required in order to prepare for a distinction between those who possess the liquidity and seek to take advantage of the current circumstance to dismiss their employees or reduce their salaries, and those that really need support, to allow controlling the numbers of those enrolled in the army of the unemployed. Here, it cannot be said that the state is powerless. The Bank of Lebanon used to print the currency to pay the debt service. Perhaps the first today is to transfer this money to citizens who are threatened with their jobs and their livelihood.

The Ministry of Labor denies it is seeking to legislate a salary cut

Career stability has been disrupted since 2019, and Corona has come to make any talk of near recovery a fantasy. No estimates of new unemployment. The latest statistics are prior to the spread of Corona and the announcement of general mobilization. Infopro Research had estimated 220,000 as of mid-February.

Many institutions have already closed their doors, before the spread of the Coruna virus, and others are awaiting their role. But instead of the government assuming responsibility in this regard, colleague Mohamed Zbib revealed a proposal being discussed in the Ministry of Labor that encourages companies to reduce the salaries of their employees, through the codification of this procedure, which Article 59 of the Labor Law stipulates is not permissible even if it is approved by the employee. Although the Ministry sources denied that it took any such step, noting that work is underway to protect workers and employees from the repercussions of successive crises, deliberation is made with a written proposal, attributed to the Ministry. He calls for "the necessity of the participation of the employer and the employee" in bearing the responsibility, as long as the closure decision has nothing to do with it. The proposal does not forget to recall that the ministry's role is to "nurture labor relations and protect workers' rights", but nevertheless does not hesitate to suggest amending Article 59, so that the agreements concluded between employers and workers in terms of amending the terms of the contract related to working hours, wages and their attachments become effective. In order to "protect" workers, it intervenes to assume that the reduction does not exceed, in all cases, 50 percent of the wage value, and without affecting the minimum wage!

As the proposal specifies that the maximum period for the enforcement of these procedures be three months, with the possibility of shortening this period, it stipulates that the employer is obligated to pay the deducted amounts after the end of the exceptional circumstance, provided that the monthly payment is not less than 15 percent of the due value.

Domestic stone does not allow to accurately estimate economic damages

These are measures that, if correct, will increase the crisis rather than reduce it. Also, the current downward path, fueled by the intertwining of the financial meltdown and the spread of the epidemic, will have a disastrous effect on the workforce and companies, as well as on tax collection and the public sector. Nevertheless, the head of the Beirut Merchants Association, Nicola Shammas, explains that the current house does not allow to accurately estimate the damages, and it is expected that the bleak picture will appear with the entitlement of salaries at the end of this month. However, as Shamas confirms the merchants ’adherence to employees, the statement issued by the association the day before yesterday, which includes the procedures that “the government and the concerned authorities are requested to take into consideration with utmost consideration”, including banking, financial and tax procedures, raises concern. In the statement, a request to allow institutions to suspend work contracts for a temporary period, to review the annual leave within the framework of each company and taking into account its operating system, and to cancel some official closing days for the remainder of this year!

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Hafiz Muhammad Adnan


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