Executive Summary
The objective of this report is to review labour market and employment conditions in Lebanon in the wake of the Syrian refugee crisis. The basic premise is that major challenges in the Lebanese labour market include not only high unemployment rates but also poor working conditions, which are caused by increasing demand for a low-skilled work force. The outcome is a ‘downward spiral’ towards increasingly dire working conditions in low productivity sectors. While an absence of decent work is not new to Lebanon, the addition of hundreds of thousands of largely low-skilled Syrian workers is exacerbating an already fragile situation. Therefore, one of the reasons why the situation in Lebanon has not imploded with the unlimited supply of unskilled irregular Syrian workers is precisely because this is how the labour market is structured.
This report attempts to highlight labour market fragility and vulnerability. However, in the absence of regular statistics such as labour force surveys, it is based on existing data from national and international sources such as the World Bank, UNDESDA and UNHCR. This is in addition to ILO surveys on Syrian and Palestinian refugees and child labour to assess specific labour market exclusions. An analysis of these secondary sources aims to provide an intermediate understanding of the situation until a fuller, regular labour force survey is available in Lebanon.
Political uncertainty continues to hold back economic growth
Lebanon may be in a “slow growth trap,” with relatively low rates of real economic growth and weak competitiveness vis-à-vis the global market. Slow growth has been attributed to relatively low levels of private and public investment and insufficient business competition in the domestic market. Underlying the deceleration in growth may be political uncertainties, which have biased investment into shorter-term financial instruments and real estate. Such non-productive investment does little to enhance labour productivity. After two decades of mediocre growth, average growth in worker productivity turned negative after 2010, suggesting increasing employment in relatively low quality, low-paying jobs in informal activities. Among the anticipated spillover effects of the conflict in Syria are a US$7.5 billion reduction in output and incomes through end-2014, a loss of government revenues estimated at US$1.6 billion and increased government expenditures to cope with the influx of refugees of US$1.2 billion. Furthermore, the crisis has severely damaged the Syrian economy, a historically large and close trading partner of Lebanon, and the source of relatively low-cost food products and consumer goods for Lebanon.
Shifts in the distribution of employment and productivity in favour of demand for low skills
During the past decade, while there were some employment gains in all economic activities, growth in productive activities such as agriculture and manufacturing was very slow. Overall, trade accounted for about 47.3 per cent of all new employment, public and private services for 34.7 per cent, and construction for nearly 10 per cent. Thus, relatively low productivity activities dominated employment growth as higher productivity activities such as transport, communications and financial services have not grown proportionally.
