BEIRUT: Wages will increase by an average of 6.5 percent across Lebanese industries throughout 2012 to be partially offset by a 5.8 rise in inflation, a study published Wednesday by Hay Group, an international human resources consultancy, forecast.However, the study, which analyzes data gathered from 13,000 employees across 100 Lebanese businesses, anticipates a long period of uncertainty as many businesses remain reluctant to implement a recent government decision to increase wages.
“Pay is an emotive topic in Lebanon following the changes put forward by the Cabinet. Organizations who took part in our study forecast a modest increase in overall compensations of 6.5 percent given that it will be months before any changes can be implemented within organizations,” Wendell D’Cunha, a manager at Hay Group said in a briefing in Beirut.
The Cabinet had decided in mid-January to increase salaries for private sector employees setting the minimum wage at LL675,000, up by some LL175,000. Other salaries would increase by a maximum of LL299,000.
The study reveals that wage increases in 2011 were reported by surveyed businesses at a solid 6.9 percent, only to be offset by a 5 percent rise in inflation.
“The increase in 2011 matched Hay Group’s forecast based on company data, levels of economic growth and inflation in Lebanon. Real salary growth was modest at 1.9 percent after accounting for inflation at 5 percent. This gives a more accurate reflection on employee’s true increase in purchasing power,” D’Cunha said.
The report expected that the overly inflated wages reported in 2009 could be seen again in late 2012 after the wage hikes are implemented.
“We will see significant rises in pay in the near to mid-term future. This will have a wider impact on the Lebanese economy, as was the case in 2009 when the last amendments to the labor law were passed,” D’Cunha added.
Lebanon’s unique human capital, the report argued, is both a challenge and an opportunity for employers as the job market remains influenced by other regional markets, where Lebanese are active participants.
“Lebanon has a highly educated and skilled workforce including a sizeable diaspora working in Gulf countries. When these global nomads return home, they have heightened expectations of employee packages. In tandem with this, Lebanon has a relatively high unemployment rate especially among the younger generation and this allows employers to have the pick of the talent,” said the report.
According to the report, the highest paying industry sectors in Lebanon are construction and construction material related industries. Employees in these sectors command a premium and are paid 6 percent above the general market. The consumer goods sector also pays 4 percent above the market average across other sectors.
The report suggests companies’ recruitment remains focused on hiring in the sales, marketing and administration job functions this year. Jobs in engineering, finance and accounting, as well as research and development, are also high in demand, according to the report.
Companies report 75 percent sales as the key job function they require for achieving growth, the report said.
However, not all companies are upbeat about hiring prospects, despite significant improvement recorded in comparison with past years.
The study said: “14 percent of businesses surveyed have expressed difficulty in retention of their staff compared to a higher 19 percent and 29 percent in 2009.”
The report said employee turnover ranged from 3 percent to 18 percent while the median is 8 percent. New joiners on the other hand ranged from 7 percent to 24 percent, while the median is 16 percent.
Employee turnover is a statistical figure showing how long employees tend to stay at a given workplace. The higher the rate the more likely employees are to change their jobs in any given year.
“Lebanon has a talented and internationally mobile workforce and employers will face challenges over the coming months in motivating and engaging these employees during a period of uncertainty,” the study concludes.