Lebanon’s civil servants will remain on strike to pressure the government to pay them recently approved wage hike amid a new crisis over how to fund the salary increases.
The Cabinet met on Tuesday for several hours to discuss new ways to fund the wages bill but failed to reach consensus on how to proceed to secure funding for an estimated $800 million in salary increases.
The Cabinet will meet again on Thursday to discuss the issue. The law of the wage increase, which had been in the works for years, was passed earlier this summer. But the Constitutional Council earlier this week revoked a tax law to finance the bill, saying it violated the constitution.
The decision left the government scrambling for ways to finance the wage hike, amid pressure from public servants who expected their new salaries this month.
Government offices were shut on Tuesday, and hundreds of civil servants protested across Lebanon before announcing that they will remain on strike until the Cabinet meets again and decides to pay the increase in wages.
Civil servants fear the government may refrain from paying the wage hike until new funding is secured.
A number of economists have noted that the Ministry of Finance currently has sufficient money to fund the wage increase for the year going forward. A large amount of this could come from the $800 million in taxes already paid by the banking sector on increased profits resulting from financial currency swap instrumented by the Central Bank.
The Constitutional Council ruled that the overturned tax law violated the “unity of the budget” principle, which states that revenues and spending should be an integral part of the budget.
The failure to ratify a budget since 2005, thus, raises concerns over the government’s ability to secure funding for the public wage hike. The ratification of a budget has been blocked by political bickering over the need to complete the auditing of extrabudgetary spending in previous years before a budget put forward by the Cabinet could be voted into law. At issue particularly is extrabudgetary spending under former Prime Minister Fouad Siniora’s Cabinet between 2005 and 2008.