BEIRUT: The Cabinet approved Thursday a draft law for public sector salary increases without the amendments that had been demanded by some ministers, bringing an end to the months-long dispute that led to strikes by civil servants.
Also approved were a series of taxes that would be used to finance the public sector’s pay increase, which is estimated to cost the government more than $1.6 billion annually.
“The salary scale was approved as it was proposed by a ministerial committee, retroactive from July 1, 2012,” Prime Minister Najib Mikati told reporters after stepping out of the Cabinet meeting.
He said the salary adjustments would be paid in installments over five years.
The seven-hour Cabinet session was the second meeting held at Baabda Palace in the past two days.
Lengthy discussions took place as ministers sought to overcome disagreement over the ways revenue should be generated to cover the raise.
Amid a split within the Cabinet over how best to finance the pay rise, ministers resorted to a vote in order to pass the draft law.
Only three ministers loyal to President Michel Sleiman opted out of the vote, with Interior Minister Marwan Charbel, Deputy Prime Minister Samir Mouqbel and Environment Minister Nazim Khoury instead voicing their reservations over the methods proposed to cover the raise.
Acting Information Minister Wael Abu Faour told reporters the Cabinet had approved a series of financial measures to secure funding for the raise. The measures included imposing fines on coastal properties, a tax on interest rates for bank deposits, a tax on real estate renovation, and fees in exchange for construction permits, he said, without providing further details.
Ministers still need to determine a mechanism to levy the taxes, fines and fees.
Abu Faour said a proposal to reduce the salary scale by 15 percent failed to win approval from the majority of ministers.
He added that Cabinet would continue to discuss other financial measures and proposals aimed at “ensuring funds for the salary scale and the 2013 state budget in order to maintain monetary and financial stability.”
Nearly 200,000 civil servants, Army and security personnel as well as retired government employees are entitled to the salary increases. Private sector employees received a salary hike back in February of this year.
Abu Faour said the new salary scale plan would not be sent to Parliament before the Cabinet agrees on other sources of revenues.
He added that the proposed taxes and fines are estimated to generate LL1,295 billion to cover the raise. “The Cabinet can say that it has taken measures that do not touch the [economically disadvantaged],” he said.
As the ministers embarked on a further round of salary scale discussions, civil servants launched Thursday a one-day strike across the country, warning the government against failing to approve the raise.
The start of the session at Baabda Palace was postponed for an hour, granting ministers further time to consult one another and reach an agreement.
Sleiman and Mikati met privately before the arrival of the ministers for the Cabinet session, which had originally been scheduled for 10 a.m.
The Cabinet failed to approve Wednesday the proposal made by Finance Minister Mohammad Safadi allowing teachers and state employees to benefit from the salary raise the government gave to the private sector in January.
Ministers disagreed on the percentage of the increase, the means to finance the raise, and its payment methods. The increase was initially passed by a ministerial committee following consultations with teachers and public sector employees.
In response to the call by the Union Coordination Committee, a coalition of private and public school teachers and public sector employees, civil servants staged a one-day strike.
They demonstrated in front of several ministries, including the Education Ministry in Beirut, the Zahle Serail in east Lebanon and several southern cities, to protest the delay in approving the salary raise.
Hanna Gharib, head of the UCC, said public sector employees reject any amendments to the figures they have been promised as well as the proposal to pay the raise in installments.
“Whoever thinks that they can overrule the agreements is delusional and mistaken because the union is stronger than you think,” Gharib said as he stood with teachers outside the Education Ministry.
He also warned of further escalatory action if the salary scale was not approved Thursday.
Before the Cabinet convened, Abu Faour said that the Progressive Socialist Party favored decreasing the proposed raise by 15 percent.
“Talks will center on four options: The first is to pay via installments; the second is paying the raise in three parts; the third is what President Michel Sleiman proposed, which is reducing the raise by 15 percent; and the fourth is to wait until the [funds] are secured,” Abu Faour told reporters.
For his part, Safadi insisted on the need to pay the raise via installments.
During Wednesday’s session, Safadi and Economy Minister Nicholas Nahhas opposed the level of salary increase initially agreed upon among teachers, public sector employees and a ministerial committee, saying the move would have grave repercussions on the economy.
Such objections angered ministers of Hezbollah and the Amal Movement. Amal’s Health Minister Ali Hasan Khalil said it was unacceptable to renege on the agreement with the ministerial committee, which represented all Cabinet parties. Khalil was backed by Hezbollah’s Minister of State for Administrative Development Mohammad Fneish.