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Private sector to boycott economic dialogue over wage hike

Prime Minister Najib Mikati at the Grand Serail in Beirut, Lebanon, Thursday, March 29, 2012. (The Daily Star/Mohammad Azakir)

BEIRUT: The Economic Committees said Saturday they would boycott upcoming dialogue with the Cabinet and labor unions in protest of the government’s decision to refer the public sector salary scale draft law to Parliament for final approval, in a move that was sharply denounced by the prime minister.

In a statement issued Saturday, the committees said they would “boycott the upcoming economic dialogue meetings and will remain in session to follow up on developments in order to take measures that will save the national economy.”

Prime Minister Najib Mikati, who averted a threatened public sector strike by vowing to refer the draft to Parliament, defended Saturday his government’s decision, arguing that ministers had amended the wage hike proposal in a way that would not add further burdens on the private sector.

The hike is expected to cost the treasury some $1.2 billion annually.

The private sector, represented by the Economic Committees, has warned against approving the new salary scale, particularly any plan to raise taxes on the sector under the pretext of funding the wage hike for public school teachers and civil servants.

“[The boycott is] due to the unilateral decision by the prime minister with regard to the salary scale issue and the Economic Committees and [we] regard this government as unique [among others] in dealing a blow to the national economy either deliberately or via negligence,” the statement added.

It also said that the prime minister had promised to involve the private sector in looking for ways to finance the wage hike in order to avoid further burdens on employers.

The Union Coordination Committee, which groups the private and public school teachers as well as civil servants, has warned the government that it would stage crippling strikes if it fails to finalize the draft law and refer it to Parliament.

In their statement, the Economic Committees said that the cost the private sector would incur in the event the draft law was approved far outweighed the costs of a general strike.

“The committees believe it is unfortunate that the prime minister caved into the warnings [by civil servants] to take to the streets, particularly that this is the second time such a behavior is undertaken to correct salaries,” the Economic Committees said.

The private sector has said that raising taxes under the prevailing economic conditions in the country would further exacerbate the situation and deal a final blow to all sectors.

Hours after representatives of the private sector announced they would boycott the tripartite dialogue, Mikati, in a statement, said his government had amended the draft law without imposing new taxes.

“What surprised me the most was their announcement to boycott upcoming dialogue sessions in a hasty and reactionary manner before studying the amendments we have added to the draft salary scale law,” he told his visitors at the Grand Serail.

“The amended version does not include any additional taxes on the consumer or the investor,” he added.

“Contrary to what was mentioned in the statement by the Economic Committees, the proposal actually includes wide reform measures at the administrative level and amendments to reduce the financial burden,” he said.

Central Bank Governor Riad Salameh has also cautioned the government against passing the salary scale or raising taxes under the current economic conditions.

The governor has expressed fears that inflation could soar by 2 to 3 percent and the balance of payments deficit could exceed $2 billion each year if the bill is passed.

He has suggested that the wage hike be introduced via installments; a proposal rejected by civil servants.

The prime minister also said Saturday that his government had taken its time in studying the draft law and the ways to finance it.

“Not in the history of the Lebanese republic has a single draft law been studied as has been the case with the salary scale draft law, particularly in terms of looking into ways of financing it without imposing taxes,” he said.

He reassured the private sector that the Cabinet would not take any steps that would harm the already crippled economy and said.

The International Monetary Fund has praised the government’s reluctance to make any commitment to the salary scale, warning that increasing spending would gravely affect the public debt in the short and medium terms.

 

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