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.


NEOM awards London-based Keller major piling contract for ‘The Line’

NEOM awards London-based Keller major piling contract for ‘The Line’
Updated 27 June 2022

NEOM awards London-based Keller major piling contract for ‘The Line’

NEOM awards London-based Keller major piling contract for ‘The Line’

RIYADH: Saudi Arabia’s $500-billion project NEOM has awarded UK’s Keller a major piling contract for “The Line,” a 170-km megacity being developed within the Kingdom’s flagship project. 

Starting in the west at the Gulf of Aqaba and terminating at the NEOM International Airport within the upper valley region, The Line is subdivided into around 135 modules, according to a statement. 

Each module contains eight buildings founded on large diameter bored piles. 

Keller had signed an umbrella framework agreement with respect to the project, and is mobilizing for an anticipated first works order on a portion of Module 40 which has an expected value to Keller of around £50 million ($61.5 million), with the work anticipated to be completed within the next 12 months.

Listed on the London Stock Exchange, Keller is an independent geotechnical solutions specialist.


NEOM, McLaren Racing partner to drive innovation in electric motorsport

NEOM, McLaren Racing partner to drive innovation in electric motorsport
Updated 27 June 2022

NEOM, McLaren Racing partner to drive innovation in electric motorsport

NEOM, McLaren Racing partner to drive innovation in electric motorsport

RIYADH: NEOM, one of Saudi Arabia’s flagship projects, has partnered with McLaren Racing to drive innovation and talent development in electric motorsport, according to a statement. 

With the partnership, NEOM becomes the title partner of the McLaren Formula E and Extreme E racing teams, which brings the two electric race series together under the banner of NEOM McLaren Electric Racing.

“Our partnership with McLaren Racing complements NEOM’s commitment to driving sustainable solutions and tackling some of society's most pressing challenges,” CEO Nadhmi Al-Nasr said. 

“The partnership will allow us to share our collective resources and experience to yield exciting results, not only for our own organizations, but also for the broader automotive and sports industries,” he added. 

McLaren will be located within OXAGON’s Research and Innovation Campus, which will provide cutting edge facilities and collaboration spaces. 

During 2023, McLaren and NEOM will create a bespoke program to nurture engineers and students, in line with the mega project’s commitment to develop Saudi talent. 


Thailand to seek fertilizer supply from Saudi producers

Thailand to seek fertilizer supply from Saudi producers
Updated 27 June 2022

Thailand to seek fertilizer supply from Saudi producers

Thailand to seek fertilizer supply from Saudi producers

RIYADH: Thailand is planning to negotiate with Saudi Arabia for the supply of fertilizers as the country is currently facing a shortage, especially due to the high cost of imports.

The Thai Chamber of Commerce will coordinate with Saudi suppliers and a business event is to be held between three major Saudi-based fertilizer suppliers and Thai importers on June 29, Thai local media reported citing Commerce Minister Jurin Laksanawisit.

Laksanawisit added that two Saudi suppliers were recently provided permission to sell fertilizers to Thailand.

Thailand heavily relies on imports for its fertilizers, with only 8 percent coming from domestic sources and a usage of about 5 million tons of fertilizer a year, according to the minister.

The country’s overall demand for fertilizer from Saudi Arabia is about 808,000 tons, the media report noted citing industry statistics.


US stocks — Wall Street sheds opening gains on losses in high-growth stocks

US stocks — Wall Street sheds opening gains on losses in high-growth stocks
Updated 27 June 2022

US stocks — Wall Street sheds opening gains on losses in high-growth stocks

US stocks — Wall Street sheds opening gains on losses in high-growth stocks
  • S&P 500 energy stocks among few gainers
  • Robinhood rises on Goldman Sachs upgrade
  • Indexes down: Dow 0.24 percent, S&P 0.36 percent, Nasdaq 0.68 percent

REUTERS: Wall Street’s main indexes fell after opening higher on Monday, as a rally last week on easing concerns over inflation lost steam, with high-growth stocks leading declines.

“We had a nice rally last week, so I think we’re seeing a little bit of profit taking this morning,” said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.

“The stocks that were up the most last week are the ones getting hit the hardest here today.”

The tech-heavy Nasdaq Composite index, which gained 7.5 percent last week, fell 0.7 percent to lead declines among the three major indexes.

Investors were betting on the retreat in oil prices from the three-month highs hit in June to potentially ease inflationary pressures and likely push the Federal Reserve to moderate its aggressive policy tightening.

However, data on Monday showed new orders for US-made capital goods and shipments increased solidly in May, pointing to sustained strength in business spending on equipment in the second quarter.

Oil prices also moved back into positive territory, pushing up the S&P 500 energy index by 2.2 percent, reining in expectations for inflation falling on the back of lower energy prices.

The US central bank has rapidly raised interest rates to tame 40-year-high inflation, stoking fears its actions could tip the world’s largest economy into a recession.

After the benchmark S&P 500 index earlier this month recorded a 20 percent drop from its January closing peak to confirm a bear market, investors have been trying to gauge when the market might hit its bottom.

At 10:11 a.m. ET the Dow Jones Industrial Average was down 76.62 points, or 0.24 percent, at 31,424.06, the S&P 500 was down 13.94 points, or 0.36 percent, at 3,897.80 and the Nasdaq Composite was down 78.44 points, or 0.68 percent, at 11,529.19.

Shares of Robinhood Markets rose 0.6 percent after media reports said Goldman Sachs upgraded the retail broker’s stock to “neutral” from “sell.”

Goldman Sachs, however, cut rating on Coinbase Global Inc. to “sell” from “buy,” according to media reports, sending shares of the cryptocurrency exchange lower by 9.4 percent.

Declining issues outnumbered advancers for a 1.03-to-1 ratio on the NYSE and a 1.31-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 16 new highs and 41 new lows.


OPEC+ trims 2022 market surplus projection to 1m bpd -report

OPEC+ trims 2022 market surplus projection to 1m bpd -report
Updated 27 June 2022

OPEC+ trims 2022 market surplus projection to 1m bpd -report

OPEC+ trims 2022 market surplus projection to 1m bpd -report

LONDON: The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, trimmed its projected 2022 oil market surplus to 1 million barrels per day, down from 1.4 million bpd previously, a report seen by Reuters showed.

The report was prepared ahead of a meeting of the OPEC+ Joint Technical Committee scheduled to take place on Tuesday.