Lebanese bank workers let go as currency crash bites

Special Lebanese bank workers let go as currency crash bites
A man walks past the Central Bank of Lebanon, Kantari Street, Beirut, Lebanon, Nov. 12, 2020. (Reuters)
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Updated 09 November 2021

Lebanese bank workers let go as currency crash bites

Lebanese bank workers let go as currency crash bites
  • Union president: ‘2021 very hard for employees in Lebanon’
  • Almost 5,000 quietly dismissed, firms offering incentives to quit

BEIRUT: Lebanese banks are quietly letting employees go as they seek to close branches and reduce operational costs amid the collapse of the local currency, the Lebanese pound.

The moves come after the country’s central bank tightened the exchange rate used to withdraw cash in Lebanese pounds from US dollar accounts from domestic banks in the absence of a comprehensive plan to boost the economy, which has been in crisis since 2019.

Since autumn 2019, the central bank has imposed currency restrictions, which currently mean that savers with dollar accounts have only been able to make withdrawals in Lebanese pounds at an exchange rate of 3,900 pounds to the dollar.

However, the dollar is trading at around four times that on the black market.

The Lebanese pound has been pegged to the dollar since 1997.

While some banks are downsizing domestically, others are opting to sell assets abroad.

The number of branches estimated to have closed ranges between 300 and 400 out of a total of 1,100 in the country. Employees and contractors have been the first to feel the effects of the decisions.

George Al-Hajj, president of the Federation of Syndicates of Bank Employees, said that 2021 has been “very hard” for bank employees in Lebanon, adding: “Although no statistics have been conducted to show the exact number of laid-off employees, their number does not exceed 4,500.”

But more bank workers are expected to be dismissed shortly.

“We are in the middle of the storm, and the crisis will persist until Lebanon reaches an agreement with the International Monetary Fund on the restructuring process of the banking sector,” said Al-Hajj.

The number of employees of the banking sector in 2018 was estimated to be about 26,000, working for 61 banks. Since 2019, the sector has lost more than 17 percent of its workforce.

Dr Jassem Ajaka, an economic and strategic expert, warned that “up to 50 percent of bank employees will be laid off.”

He told Arab News: “After the deterioration of the economic situation and the suspension of banking activities due to the decision to block financial transfers, the banking sector is no longer making profits.

“Banks are not charities, and the reality is hard for everyone.”

“The banking sector’s employees constitute a very important share of the middle class in Lebanon and eradicating this group from the economy will further harm Lebanese society.”

Al-Hajj said: “In 2019, the federation saw this crisis coming and urged banks seeking to fire employees to inform the Ministry of Labor of their intentions. Some banks did, but others did not, and thus we do not know the exact number of laid-off employees.”

He added: “The banks’ excuses for mass lay-offs were many. Sometimes it was because the bank was applying an early retirement system, sometimes it was a resignation at a request from the administration, and other times it was the termination of contracts due to economic reasons.”

Many domestic banks are also offering a set of incentives for employees to voluntarily quit.

The average salary of a regular bank employee ranges between 2,000,000 and 2,500,000 Lebanese pounds — equivalent to $100 today but $1,500 before the economic crisis and collapse of the currency.

This year, the Lebanese Federation of Syndicates of Bank Employees issued new protocols on the financial rights of laid-off employees, but Al-Hajj warned that “banks have not been very receptive so far.”

The new rules state that “laid-off employees shall receive 18 monthly salaries as well as a bonus of two months’ salary for every year of employment up until six years; a one-and-a-half-month salary for every year of employment for those who served between six and 12 years; and a one-month salary for every year of employment for those who served more than 12 years and up until 44 years of employment.”

The previous dismissal protocol meant that laid-off employees only received 16 months’ salary in compensation for arbitrary dismissal.

However, some banks have chosen to compensate their employees with 24 months of salary in addition to other incentives, to avoid clashes with laid-off staff.

Al-Hajj said: “In addition to the mass layoffs, another problem that is as serious as the first one has emerged: The devaluation of employee salaries and its tragic repercussions on the living conditions of the Lebanese.

“This problem is only getting worse as the crisis continues and thus, the number of voluntary resignations by highly qualified employees is increasing.

“This will affect the future of the banking sector. Unfortunately, the migration of these people cannot be prevented unless by reconsidering their salaries, which have become worthless.”

Bechara Al-Asmar, head of the General Labor Union, estimated that the number of laid-off employees in Lebanon “since the economic crisis and the beginning of the coronavirus pandemic numbers more than 500,000 people.”

The Lebanese Observatory for Workers and Employees Rights has also said that between 500,000 and 800,000 workers have lost their jobs, forcing the country’s unemployment rate to surge above 50 percent.

It said that of the public sector, military and security employees who have kept their jobs, most have lost about 90 percent of the value of their salaries.

The observatory said that “325 institutions submitted requests to the Ministry of Labor to dismiss employees at the start of 2020.”

It noted the first wave of mass layoffs mainly targeted workers in the tourism sector.

The crisis then extended to small enterprises and the country’s sizable black market.

“The second wave hit the education sector, where more than 2,000 teachers were laid off in 2020, according to the Teachers Syndicate in Private Schools, and their salaries were cut by 40 percent as many students left private education and were enrolled in public schools.”

The observatory said that the mass layoffs also affected “major businesses and institutions that were supposedly solid enough to bear the effects of the crisis, such as the American University of Beirut, which fired more than 1,200 workers, The Coca-Cola Company, which fired 350, and Adidas, which fired 250.”

The multinational retail franchise operator Al-Shaya Group also shut most of its companies in Lebanon and fired employees, the observatory said.

The layoffs also affected “domestic workers and non-Lebanese workers from Asia and Africa, as employers were no longer able to pay them in US dollars.

Vulnerable groups were also affected, such as day laborers and Palestinian refugees, whose numbers are hard to estimate as they are not registered within the social security fund or at the Ministry of Labor,” the observatory added.


Ethiopia starts power generation from second turbine at mega-dam

Ethiopia starts power generation from second turbine at mega-dam
Updated 14 sec ago

Ethiopia starts power generation from second turbine at mega-dam

Ethiopia starts power generation from second turbine at mega-dam

RIYADH: Ethiopian Prime Minister Abiy Ahmed kickstarted electricity production from the second turbine at its controversial mega-dam on the Blue Nile on Thursday, despite continuing objections by Egypt and Sudan over the project, according to AFP.

Abiy also confirmed that a third filling of the multi-billion dollar Grand Ethiopian Renaissance Dam was under way, a development that led Egypt last month to protest to the UN Security Council.

Thursday’s move came even though there is still no agreement between Ethiopia and its downstream neighbors Egypt and Sudan about the GERD’s operations.

Abiy insisted that the third filling of the $4.2 billion dam — set to be the largest hydroelectric scheme in Africa — was not causing any water shortages for the two countries.

“We have repeatedly told downstream countries, especially Egypt and Sudan, that by generating power we’re developing our economy, as well as (our desire) to see our citizens who live in the dark see light,” he said.

There was “no aim to sideline and harm” those countries, he added.

Ethiopia first began generating electricity at the dam in February. Currently, the two turbines, out of a total of 13 at the dam, are generating 750 megawatts of electricity.

We are ready to face all scenarios after Ethiopia completes the third filling phase of the Renaissance Dam, and we expect an unprecedented rise in the Nile waters after the gates of the dam are opened, the Sudanese Minister of Irrigation Yasser Abbas told Asharq.  

 


Macro Snapshot — Romania inflation exceeds expectations; Singapore downgrades GDP in Q2

Macro Snapshot — Romania inflation exceeds expectations; Singapore downgrades GDP in Q2
Updated 13 min 41 sec ago

Macro Snapshot — Romania inflation exceeds expectations; Singapore downgrades GDP in Q2

Macro Snapshot — Romania inflation exceeds expectations; Singapore downgrades GDP in Q2

CAIRO: Romania's headline inflation exceeded expectations in July yet smaller rate hikes are still expected, while China’s July vehicle sales surged by 30 percent from a year earlier. Singapore downgraded its gross domestic product in the second quarter of this year as risks grew further, whereas the Federal Reserve officials stated the need for additional rate hikes despite the slowing inflation rates. 

Romania inflation overshoots expectations in July

Romania’s headline inflation rate rose above expectations in July but is showing signs of flattening out and analysts expect the central bank to continue to slow the pace of monetary tightening.

The year-on-year inflation rate in Romania hit 14.96 percent in July, just off a 19-year high and above a forecast of 14.4 percent in a Reuters poll.

It came down from 15.05 percent in June but analysts say there is still a chance it could creep slightly higher in the next two months.

Singapore downgrades gross domestic product in Q2

Singapore’s economy expanded less than initially estimated in the second quarter and the government revised its growth projections for 2022 lower, flagging risks to the global outlook from the Ukraine war and inflation.

The gross domestic product grew 4.4 percent year-on-year in the second quarter, the Ministry of Trade and Industry said, slower than the 4.8 percent growth seen in the government’s advance estimate.

“Downside risks in the global economy remain significant...further escalations in the Russia-Ukraine conflict could worsen global supply disruptions and exacerbate inflationary pressures through higher food and energy prices,” said Gabriel Lim, permanent secretary of MTI at a media briefing.

Fed officials say more rate hikes needed, despite slowing inflation

Slowing US inflation may have opened the door for the Federal Reserve to temper the pace of coming interest rate hikes, but policymakers left no doubt they will continue to tighten monetary policy until price pressures are fully broken.

A US Labor Department report Wednesday showing consumer prices didn’t rise at all in July compared with June was just one step in what policymakers said would be a long process, with a red-hot job market and suddenly buoyant equity prices suggesting the economy needs more of the cooling that would come from higher borrowing costs.

The Fed is “far, far away from declaring victory” on inflation, Minneapolis Federal Reserve Bank President Neel Kashkari said at the Aspen Ideas Conference, despite the “welcome” news in the CPI report.


NRG Matters — ACWA Power mulls Kazakhstan wind farm; Germany’s RWE to spend over $5.2bn on green tech

NRG Matters — ACWA Power mulls Kazakhstan wind farm; Germany’s RWE to spend over $5.2bn on green tech
Updated 15 min 47 sec ago

NRG Matters — ACWA Power mulls Kazakhstan wind farm; Germany’s RWE to spend over $5.2bn on green tech

NRG Matters — ACWA Power mulls Kazakhstan wind farm; Germany’s RWE to spend over $5.2bn on green tech

RIYADH: Saudi Arabia’s ACWA Power is planning to build a wind farm in Kazakhstan, according to the firm’s chief investment officer.

Clive Turton highlighted the country’s vast green power opportunities, during the meeting with the Kazakh Invest top management, Astana Times reported.

Renewables 

Indian power producer JSW will buy Mytrah Energy’s renewable portfolio in a 105.3 billion rupees ($1.3 billion) deal, according to Bloomberg. 

The Mumbai-based firm will acquire around 1.8 gigawatts of renewable power assets, including 1.3 gigawatts of wind and 422 megawatts of solar. 

Also, Germany’s power producer RWE plans to spend over €5 billion ($5.2 billion) on green technologies including wind, solar and batteries this fiscal year, 30 percent more than it originally planned, as well as ramping up hydrogen.

This comes in an effort to make Europe more energy independent as a worsening crisis threatens the bloc’s economy, Bloomberg reported. 

Vehicles 

Ford Motor Co. said every vehicle it manufactures in Michigan would be assembled using solar and other renewable energy sources by 2025, as the automaker aims to lower its emissions, Reuters reported.


Saudi-listed IT provider Arab Sea back to losses 

Saudi-listed IT provider Arab Sea back to losses 
Updated 37 min 13 sec ago

Saudi-listed IT provider Arab Sea back to losses 

Saudi-listed IT provider Arab Sea back to losses 

RIYADH: Saudi-listed Arab Sea Information Systems Co. has turned in losses of SR5.5 million ($1.33 million) in the first half of 2022.

The company erased SR4.4 million in profit from the same period last year, dragged down by higher costs, according to a bourse filing.

The Riyadh-based firm attributed the results to a year-on-year revenue drop of 22 percent to SR17 million.

It added that a rise in selling and administrative expenses by almost 50 percent due to establishing its unit, Arab Sea Financial Co., also weighed on its performance.


Saudi Cement, Tabuk report lower H1 profits, extending downward trend

Saudi Cement, Tabuk report lower H1 profits, extending downward trend
Updated 48 min 8 sec ago

Saudi Cement, Tabuk report lower H1 profits, extending downward trend

Saudi Cement, Tabuk report lower H1 profits, extending downward trend

RIYADH: Tabuk Cement Co. and Saudi Cement Co. experienced weak profitability in the first half of 2022, in line with declining profits in the Kingdom’s cement sector.

Tabuk Cement revealed that it turned in losses of SR4.43 million ($1.2 million) during the first half of 2022 as a result of an increase in sales costs, according to a bourse filing.

Despite lower profit, the cement producer Tabuk’s first-half revenues increased by 8 percent to SR136 million.

Meanwhile, profits of Saudi Cement Co. were down 20 percent to SR164 million during the first half of 2022, coupled with a 14.6 percent decline in sales and revenues for the six-month period.

The rise in general and administrative expenses as well as an increase in financial charges contributed to Saudi Cement’s profit, it said.