Make do with “Who” we have
The Syrian conflict has had an unambiguously devastating economic and social impact on the daily life of Lebanese citizens. Impoverished Syrian refugees, whom already have limited choices for survival, should not be taunted for the problems we are facing in our country. Instead, we should focus on developing a framework to implement “the right policy at the right time.” A paramount concern at present is that we need our government to step in with policies to protect domestic labor. The interests of Lebanese citizens should be safeguarded in an attempt to protect the well-being and prosperity of Lebanon itself. This is difficult to do since we have not had a unified government until very recently. Officially, this unification came to fruition to confront “jihadist terrorism.” To what extent this newly formed government will actually deal with the economic and social issues presented by the Syrian refugees in Lebanon is still ambiguous.
The World Bank has currently issued a report titled “Economic and Social Impact Assessment (ESIA) of the Syrian Conflict” as a framework for the Lebanese government to formulate some policies that could alleviate the situation at hand. The report provides estimates of impacts of refugees on government spending in the public sector, local unemployment rates and quantifies refugee influxes into the country. It also provides predictions on how these numbers could change in the future. The report estimates that the Syrian crisis has cost Lebanon a 2.9% reduction in real GDP growth form 2012-2014. Lebanon has also lost trade routes through Syria to the GCC countries which reduced Lebanese revenue in its current account. Huge influxes of Syrian refugees into public schools and other public programs caused government expenditures to soar. The government budget deficit is widening; it accumulated to USD 2.6 billion from 2012-2014 according to the World Bank.
The Syrian refugees have reached almost one million in quantity, which is roughly 22% of the entire Lebanese population at present. Unskilled refugees’ willingness to work for lower wages has cut many Lebanese workers out of the market and has increased the domestic rate of unemployment drastically. Lebanese producers would rather hire Syrian unskilled labor for half the cost than their Lebanese counterparts at higher wages. This trend of unemployment will only worsen seeing as the number of work-seeking refugees will increase over the next year. If no appropriate policy or institution will intervene to stop the crowding out of local workers, we are headed towards a path of unsustainability. That is, poverty will increase and unemployment rates will continue to rise.
Now the real issue is: what policy or institution should be used to stop this downward spiral of unemployment? ESIA estimates that labor market programs to address these issues would cost USD 166 million - USD242 million. This cost should be compared with the fact that we could expect a 20% unemployment rate by the end of 2014 as more Syrians enter the labor market. The government has a range of options that it should consider to prevent 20% of the population to be out of work. Namely, it could subsidize producers if they chose to hire domestic labor over Syrian labor in certain markets. This would give producers some incentive to switch back to hiring locals and this would lower the unemployment rate. The government could also impose a strict wage floor in certain industries. In this case, producers could not legally hire workers at a wage below a fixed wage level set by the government. The government should also analyse economic areas in which it has labor deficiencies and benefit from the increased labor supply and allocate this labor accordingly. For example, it is evident that the electricity industry is hugely inefficient and in need of re-structuring. Perhaps increased man power could help boost the efficiency of the electricity industry across the country. Recent talks about oil and gas reserves and drilling these reserves could be done at lower costs if the increased labor supply has allowed for a lower equilibrium wages. These suggestions, and many more, should be questioned and considered.
Many consequences will come out of increased Syrian laborers in the Lebanese labor market. However, it is all about the policy that is chosen to deal with the problems in Lebanon’s labor economics. A strict evaluation of the suggestions I have given above would be quite rigorous and would need a minimum of 20 pages to discuss. However, they are policies that should be considered and the labor market should realize that perhaps refugees could be an asset in some areas and allow more freedom for Lebanese labor in other areas. More importantly, domestic labor should be protected from getting crowded out of work. It is the government’s responsibility, in this situation, to bear the burden and allocate labor efficiently across the market.
N.C
The Syrian conflict has had an unambiguously devastating economic and social impact on the daily life of Lebanese citizens. Impoverished Syrian refugees, whom already have limited choices for survival, should not be taunted for the problems we are facing in our country. Instead, we should focus on developing a framework to implement “the right policy at the right time.” A paramount concern at present is that we need our government to step in with policies to protect domestic labor. The interests of Lebanese citizens should be safeguarded in an attempt to protect the well-being and prosperity of Lebanon itself. This is difficult to do since we have not had a unified government until very recently. Officially, this unification came to fruition to confront “jihadist terrorism.” To what extent this newly formed government will actually deal with the economic and social issues presented by the Syrian refugees in Lebanon is still ambiguous.
The World Bank has currently issued a report titled “Economic and Social Impact Assessment (ESIA) of the Syrian Conflict” as a framework for the Lebanese government to formulate some policies that could alleviate the situation at hand. The report provides estimates of impacts of refugees on government spending in the public sector, local unemployment rates and quantifies refugee influxes into the country. It also provides predictions on how these numbers could change in the future. The report estimates that the Syrian crisis has cost Lebanon a 2.9% reduction in real GDP growth form 2012-2014. Lebanon has also lost trade routes through Syria to the GCC countries which reduced Lebanese revenue in its current account. Huge influxes of Syrian refugees into public schools and other public programs caused government expenditures to soar. The government budget deficit is widening; it accumulated to USD 2.6 billion from 2012-2014 according to the World Bank.
The Syrian refugees have reached almost one million in quantity, which is roughly 22% of the entire Lebanese population at present. Unskilled refugees’ willingness to work for lower wages has cut many Lebanese workers out of the market and has increased the domestic rate of unemployment drastically. Lebanese producers would rather hire Syrian unskilled labor for half the cost than their Lebanese counterparts at higher wages. This trend of unemployment will only worsen seeing as the number of work-seeking refugees will increase over the next year. If no appropriate policy or institution will intervene to stop the crowding out of local workers, we are headed towards a path of unsustainability. That is, poverty will increase and unemployment rates will continue to rise.
Now the real issue is: what policy or institution should be used to stop this downward spiral of unemployment? ESIA estimates that labor market programs to address these issues would cost USD 166 million - USD242 million. This cost should be compared with the fact that we could expect a 20% unemployment rate by the end of 2014 as more Syrians enter the labor market. The government has a range of options that it should consider to prevent 20% of the population to be out of work. Namely, it could subsidize producers if they chose to hire domestic labor over Syrian labor in certain markets. This would give producers some incentive to switch back to hiring locals and this would lower the unemployment rate. The government could also impose a strict wage floor in certain industries. In this case, producers could not legally hire workers at a wage below a fixed wage level set by the government. The government should also analyse economic areas in which it has labor deficiencies and benefit from the increased labor supply and allocate this labor accordingly. For example, it is evident that the electricity industry is hugely inefficient and in need of re-structuring. Perhaps increased man power could help boost the efficiency of the electricity industry across the country. Recent talks about oil and gas reserves and drilling these reserves could be done at lower costs if the increased labor supply has allowed for a lower equilibrium wages. These suggestions, and many more, should be questioned and considered.
Many consequences will come out of increased Syrian laborers in the Lebanese labor market. However, it is all about the policy that is chosen to deal with the problems in Lebanon’s labor economics. A strict evaluation of the suggestions I have given above would be quite rigorous and would need a minimum of 20 pages to discuss. However, they are policies that should be considered and the labor market should realize that perhaps refugees could be an asset in some areas and allow more freedom for Lebanese labor in other areas. More importantly, domestic labor should be protected from getting crowded out of work. It is the government’s responsibility, in this situation, to bear the burden and allocate labor efficiently across the market.
N.C