Economic Research | Lebanon This Week | Lebanon This Week 642 | Compensation of public-sector personnel absorbs 70% of public revenues in first four months of 2020 | Lebanon | Byblos Bank

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Byblos Bank

Lebanon This Week 642

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Compensation of public-sector personnel absorbs 70% of public revenues in first four months of 2020

Figures issued by the Ministry of Finance show that the compensation of public-sector personnel totaled $2.2bn in the first four months of 2020, constituting an increase of 0.8% from $2.18bn in the same period of 2019. Salaries, wages and related benefits accounted for 62.3% of the total in the covered period, followed by retirement benefits (28.4%), end-of-service indemnities (4.8%), and transfers to public institutions to cover salaries (4.5%). 

The marginal increase in the compensation of public-sector personnel is due to a 4.1% rise in salaries, wages and related benefits, a 9.3% growth in retirement benefits and a 34.2% expansion in transfers to public institutions to cover salaries, which were nearly offset by an annual decline of 52% in end-of-service indemnities. The compensation of public-sector personnel represented the largest component of current primary spending and accounted for 67.7% of such expenditures in the first four months of 2020 compared to 73.3% in the same period of 2019. It accounted for 45% of fiscal spending in the covered period, unchanged from the same period of 2019; while it absorbed 70% of public revenues in the first four months of 2020 relative to 63.1% of government receipts in the same period of 2019. 

In parallel, salaries, wages and related benefits paid to public-sector workers amounted to $1.37bn in the first four months of 2020, up by 4.1% from $1.32bn in the same period of 2019. This category includes basic salaries, employment benefits, allowances, contributions to civil servants' cooperatives, as well as contributions to other mutual funds providing health insurance for specific categories of civil servants, mainly civil and religious judges, and employees at the Parliament. Salaries and benefits of military personnel reached $921.4m and accounted for 67.2% of salaries, wages and related benefits paid to the public sector in the first four months of 2020. The salaries and benefits of personnel in public education followed with $234.2m (17.1% of the total), then civil staff with $135.3m (9.9%), the government's contribution to the employees' cooperative with $63.7m (4.6%), and the salaries and benefits of customs employees with $16m (1.2%).

Also, the Lebanese Army's salaries totaled $592.4m in the first four months of 2020 and represented 64.3% of the salaries and benefits of military personnel. The salaries of the Internal Security Forces followed with $254.7m (27.6%), those of the General Security Forces with $55.1m (6%), and the salaries of State Security Forces with $19.2m (2.1%).

In addition, the breakdown of salaries, wages and related benefits paid to public-sector employees shows that allowances increased by $67.7m annually, and benefits and other payments given to non-military bodies rose by $30m; while basic salaries regressed by $43.1m year-on-year. Benefits include payments for transportation, overtime and family-related benefits, while other payments to non-military bodies include bonuses, and the State's contribution to the Mutual Funds and to the National Social Security Fund, among others. Basic salaries declined by 4.2% annually to $981.8m in the first four months of 2020, allowances rose by 40% to $236.8m, and benefits and other payments grew by 27.8% year-on-year to $137.3m in the first four months of 2020.
 
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