|25 September, 2017

Lebanese cabinet vows road map to resolve salary scale crisis

Meeting against the backdrop of threats by labor unions, civil servants and schoolteachers to stage fresh street protests and strikes, the Cabinet promised Sunday to take “important decisions” this week to resolve the thorny issue of the salary scale law.

Image used for illustrative purpose. Traders are seen busy working in BEMO Bank's dealing room before the end of Beirut's stock exchange trading session in Beirut, Lebanon in this April 3, 2006 file photo.

Image used for illustrative purpose. Traders are seen busy working in BEMO Bank's dealing room before the end of Beirut's stock exchange trading session in Beirut, Lebanon in this April 3, 2006 file photo.

REUTERS/Jamal Saidi

BEIRUT: Meeting against the backdrop of threats by labor unions, civil servants and schoolteachers to stage fresh street protests and strikes, the Cabinet promised Sunday to take “important decisions” this week to resolve the thorny issue of the salary scale law.

The promise follows the Constitutional Council’s move to annul the tax hike law that was key to funding the wage increases.

“Following consultations, the prime minister adjourned the session so that another extraordinary session can be held at 11:30 a.m. Tuesday to follow up on discussions and come out with important decisions in this respect [on the salary scale law],” Information Minister Melhem Riachi told reporters following the two-hour emergency Cabinet session chaired by Prime Minister Saad Hariri at the Grand Serail to weigh options and the impact of the Constitutional Council’s decision.

Sunday’s emergency session was held to agree on a plan for funding the recently passed salary scale law in the absence of new taxes after the Constitutional Council’s decision Friday to revoke the tax law in its entirety, putting the fate of long-awaited wage increases in jeopardy.

Riachi denied that the ministers were split over ways to find revenues to cover the salary scale bill, estimated to cost over $800 million annually, after the council’s decision.

“All ministers are going in the same direction. There is a ministerial solidarity that emerged clearly in order to reach a solution to the problem of financing the salary scale [law] and there is insistence on it,” he said, adding, “Wait for important decisions Tuesday, God willing.”

Asked if the solution would be suspending the implementation of the salary scale law for one month until revenues are found to cover it, Riachi said: “The solution will be announced Tuesday at the end of the Cabinet session.”

However, political sources told The Daily Star that during the meeting Hariri proposed a road map that calls for putting the implementation of the salary scale law on hold for one month while Parliament holds intensive meetings to ratify the 2017 state draft budget, which will include a string of taxes to fund the salary increases.

In two sessions in July, Parliament endorsed the salary scale and tax hike bills before the ratification of the state budget, contrary to demands by some blocs and President Michel Aoun, who said at the time that the salary scale bill should have been integrated into the state budget.Speaking during the Cabinet meeting, Hariri sought to reassure civil servants and public schoolteachers that the government would implement the salary scale law despite the Constitutional Council’s decision.

“The government is determined to implement the salary scale [law] and it is entrusted with the implementation of laws and legislations endorsed by Parliament,” Hariri said, according to a statement released by his media office. “The government is also entrusted with the Constitution and institutions and, therefore, it respects the Constitutional Council’s decision to annul the [tax hike] law that finances the salary scale.”

Hariri stressed that the government was also entrusted with protecting the interests of each and every Lebanese, “most importantly the monetary and financial stability that guarantees the value of the income and savings of the Lebanese.”

“As part of this equation, we meet today in an extraordinary Cabinet session to lay down a road map that would solve the [salary scale] issue as soon as possible in cooperation with Parliament,” Hariri said.

Aoun defended the Constitutional Council’s decision. In a tweet, he described the council as a fundamental building block of the state, saying its ruling to rescind the tax hike law was the body doing its duty.

Ahead of the Cabinet session, Hariri met with Central Bank Gov. Riad Salameh and officials from the private sector and labor unions to consult on ways to stave off the repercussions of the Constitutional Council’s repeal of the tax law.

“There should be taxes to finance the salary scale,” Salameh said after meeting Hariri.

Hariri also met Mohamed Choucair, the chairman of the Federation of the Chambers of Commerce, Industry and Agriculture in Lebanon, who called on labor unions and civil servants to avoid street protests.

“This salary scale is a right and the economic committees supported the scale from day one and were against the taxes. Today, the economic committees say that some taxes should be approved and we will present to the prime minister a list of the taxes we accept,” Choucair said. “We should all find a solution that comes through dialogue. But the solution cannot be by resorting to the street because this would lead to the deterioration of the economy and the closure of more institutions.”

However, Beshara al-Asmar, the president of the General Confederation of Lebanese Workers, confirmed after meeting Hariri the confederation’s plan to stage a strike Monday to pressure the government into paying the new salary scale starting at the end of this month.

“We confirmed the stance of the General Confederation regarding the need to pay the salaries of this month according to the new scale. Law 46 is effective and should be immediately implemented without any delay,” Asmar said after meeting Hariri. “The strike is still on and we will escalate if our position isn’t taken into consideration, knowing that the prime minister was positive in his proposal.”

Earlier in the day, the Union Coordination Committee, the umbrella group of civil servants and public schoolteachers, called for a general strike Monday in all public administrations, ministries, schools and municipalities to demand public employees be paid in line with the new salary scale.

“Cutting salaries for employees, teachers and military is a clear and unequivocal declaration of the failure of the state, not just the failure of the government or the ruling class,” the UCC said in a statement

The statement added that the government needs to respect the new salary scale law and pay its civil servants on time, even if it means negotiating the rescheduling of bank-owned debt servicing with the country’s banks and reducing the interest on the debt servicing, which currently costs LL8 trillion ($5.3 billion) annually.

The Constitutional Council’s decision to annul the tax hike was taken because the law was passed in the absence of a state budget, violating Article 83 of the Constitution. Lebanon has not had a state budget since 2005, leading to extrabudgetary spending in the millions of dollars.

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