Economist slams policies

Kamal Hamdan believes that immigration has kept unemployment crisis at bay in Lebanon

BEIRUT - Kamal Sanjakdar

Economist Kamal Hamdan blame post war governments for the nation’s 24 percent  of unemployment saying the number could have risen to 35 percent had it not been for immigration.

“Immigration is the safety valve that has been keeping unemployment figures at bay,” Hamdan told Alternative in an interview.

Hamdan, who heads the Beirut-based Consultation and Research Institute, said that economic reform could never be effective unless it was coupled with political will.

“The claim that security and adequate infrastructure are the ingredients of growth is unfounded. The nostalgia to the pre-war era and the role of Lebanon as an intermediary are not realistic anymore. Dubai, Bahrain, Qatar and the rest of Arab countries are way past their economic reliance on Lebanon especially in the services sector,” according to Hamdan.

The veteran economist argued that Lebanon’s economic structure was another drawback.

“It is the networking of the various economic sectors in Lebanon that would create new job opportunities,” he said.

“The educational system in Lebanon is more or less diversified and can provide for new types of work springing from the different sectors’ interaction,” he added.

According to Hamdan, “graduates of various majors seeking their first job would find a constantly developing variety of specializations.”

The recent slowdown in the Lebanese economy and the lack of new entrepreneurial opportunities, Hamdan said, were other drawbacks. “High interest rates on treasury bills makes it that investors would look for treasury bonds instead of business plans.”

The unemployment problem in Lebanon could be illustrated by the gap between supply and demand of work. On one hand, “supply of labor” consists of university graduates, expatriots returning from abroad, school dropouts and graduates of technical institutions. Those sum up to about 50, 000 new job seekers every year.

On the other hand, “demand of labor” comes from the public and private sectors. At the level of the public sector, it has become known that the Lebanese state has “closed the doors of employment” as part of its fiscal austerity measures, according to Hamdan.

By the same token, post-war governmental projects were exclusively focused on reconstruction only.  Such projects are short-lived and once they reach their completion, “the  employed would go back home.”

Concerning the private sector, several studies suggested that existing establishments and companies were not expanding but rather downscaling their businesses.

New companies opening in Lebanon remain few and complicated process of acquiring licenses and permits is rarely followed by actual investors.

In this respect, the total demand on labor in the Lebanese market is around 35, 000 new job vacancies a year.

In order to tackle such a problem, Hamdan proposed the creation of a fund that would “indemnify the unemployed,” just like in most European countries, “where such a fund would -- under strict conditions -- support those who were not able to secure a job.”

Modifying the structure of the economy by making it less dependent on transit services, assembly of imported semi-finished products and bank transfers should be a strategic plan to be followed in Lebanon, according to Hamdan.

The reform of the the current structure of the Lebanese economy should start with the decision of stopping support of the national currency. Interest rates should be also reviewed downwards since they are “ sort of an inhibitor for investments and hence for job creation.”

Hamdan highlighted the important measures that should be implemented to support the process of creating jobs in Lebanon. These include increasing the prerogatives of the National Employment Institution (NEI).  “A political decision must be taken to ensure the independence of the NEI,” he said.

According to Hamdan, the state should also tackle the problem of non-Lebanese workers.  “Only 70, 000 (out of around one million) non-Lebanese workers have work permits in Lebanon, the rest work are illicitly working.”

Hamdan said that there was a need for a comprehensive change in the nation’s policies in order to put the economy back on track. “The youth should organize themselves into forces of change. Their employment crisis is mainly a political one. Let them get involved in public affairs, form a cross-sectarian lobby and take things into their hands,” said Hamdan.