Diala Makki
The combination of new nationwide restrictions attempting to contain Covid-19 along with a worsening economic crisis adds yet another layer of hardship onto some of the most vulnerable individuals in Lebanon. As businesses are shutting down, and are either laying off or reducing the working hours of their employees, vulnerable Lebanese alongside Syrian and Palestinian refugees - both Palestinian refugees from Lebanon (PRL), and Palestine refugees from Syria (PRS) - are likely to fall below the survival threshold and are henceforth pushed into informal employment in order to be able to afford basic services such as food, rent, and electricity.
Our recent focus group discussions (FGDs) conducted in September and October of 2020, featuring 24 participants from Hamra (Beirut) and 31 from Mina (Tripoli), underlined the economic impact of the coronavirus and the financial crisis on their respective communities. 17 respondents reported that they had lost their jobs because of the economic, political, and health crises, whereas 32 had their salaries reduced, and 25 mentioned that they considered other forms of employment that they would not in normal circumstances have considered. The scope of the study covers employees, employers, self-employed Lebanese as well as non-Lebanese residents of Hamra and Mina. It adopts a harmonized approach to illuminate the divide between formal and informal employment through studying people’s access to formal and informal jobs in the context of displacement and unstable economic conditions.
Our study suggests that people do not enter the informal economy by choice but are mostly pushed into this realm due to the necessity to work and the absence of opportunities in the formal economy, in addition to the lack of employment benefits, social security, and decent working conditions. The brief reflections below stem from the first part of the study, focusing on the holistic definitions of informal employment developed by the ILO and the OECD and coupled with a series of interviews with legal experts and representative participants in 12 FGDs in the two afore-mentioned locations. The outcomes of these focus group discussions and desk review work informed both the formation of the Discrete Choice Experiment and the Agent-Based Model.
Two key indicators to informality are the contribution to social security and the declaration of taxes to the Tax Administration. This is particularly relevant to Lebanese employees as poor enforcement means many employers do not provide eligible workers with National Social Security Fund (NSSF) registration. This is the only way of informing the government of the work relationship between the employer and the employee. Without registration at the NSSF, employees become “disposable” and the employer has no legal obligations towards them. Consultants have to report their salaries themselves to the Ministry of Labour in order to pay taxes, which can be done through their finance number. They still benefit from the coverage of the NSSF if agreed with their employers, otherwise, the latter have to provide them with a private health insurance which would be similar to those provided by the National Social Security Fund. In the case where freelance employees have no finance number, employers are required to pay 7.5% to the Ministry of Labour, or they can deduct this amount from the salaries of their employees. For non-Lebanese workers, notably Palestinians and Syrians, informal employment is defined as the absence of a work permit and registration in social security through their employer. Foreign workers wishing to work in Lebanon formally must obtain prior approval from the Ministry of Labour and a work permit issued by the General Security for one renewable year on the basis of the work permit. Foreign workers registered with NSSF are eligible to benefit from its services only if their country of origin applies the principle of “reciprocity” with Lebanese workers.1 This excludes Syrian and Palestinian workers, except for Palestinians from Lebanon who are entitled to benefit from the end of service benefits.
It is important to note that while informal sectors are viewed as necessary for meeting people’s needs by creating job opportunities for individuals who are not able to access the formal sector, informality can also lead to social injustice, unfair competition and an obstruction to economic growth, in which it is characterized as the shadow economy, the hidden economy, the gray economy, or the unregulated economy due to its detrimental impact on the economy (Medina & Schneider, 2018).
Biography
Diala Makki is an urban researcher and social scientist. She holds an M.Sc. in Urban Planning and Policy from the American University of Beirut (Lebanon). She is interested in research-oriented around basic services and refugee studies. This includes power relations and their impact on decision-making processes, knowledge production and self-help mechanisms in informal settlements in the global south, water resources, social and economic integration of refugees including informal adaptive mechanisms, planning theory, and political ecology. She is currently a researcher with the RELIEF Centre and working on the following projects: ‘Prosperity in the age of mass displacement - Prosperity Index for Lebanon’ and “Supporting Macroeconomic Stability and Prosperity in an Age of Mass Displacement”.
Photo Credit: Mohamad Mkayes