Syrian refugees pressure Lebanon’s fragile economy

Syrian refugees pressure Lebanon’s fragile economy

Syrian refugees are spilling over into Lebanon, with over a million people having fled to the neighbouring country. A significant number anywhere, its impact is especially strong in tiny Lebanon, causing problems for the economy.

Lebanon’s economy has been in a perpetual state of crisis since Syria’s civil war began. The IMF predicted the Lebanese economy will grow by only 2 percent in 2014 and that the Lebanese national debt will reach 148 percent of its GDP by this year. Furthermore, refugees and seething sectarian tension have severely strained the country’s political divide.

Lebanese Social Affairs Minister Rashid Darbas stated that there were three dimensions of the refugee crisis in Lebanon: humanitarian, security and economic. He explained in an interview with Ash-Sharq al-Awsat Arab language newspaper that “the government will continue to organize the first two but will take measures to stop the economic burden after the Syrian labor’s competition negatively affected residents and their livelihood.”

The UN recently announced there are over a million Syrian refugees in Lebanon. Lebanon is under international pressure to set up official camps for Syrian refugees. Many of the Syrians live on land that is rented by private donors due to political sensitivity and the history of Palestinian camps that are not under the government’s authority.

The Lebanese government is planning on curbing the number of Syrians who cross the border daily. Darbas said that the international community should support the establishment of safe zones along the country’s borders and possibly inside Syria.

According to António Guterres, the United Nations High Commissioner for Refugees, “the influx of a million refugees would be massive in any country. For Lebanon, a small national beset by internal difficulties, the impact is staggering. The Lebanese people have shown striking generosity, but are struggling to cope.”

Lebanon’s economy under pressure in wake of refugee influx

The Syrian refugees have created an informal sector that has upset the local economic system. Syrians working in the Bekaa Valley are able to do labor for $10 a day compared to the $50 a day most Lebanese laborers would earn.

Labor costs are keeping some factories open. Sami Nader, an economist, said that cheap Syrian labor is helping businesses stay open. However, the negative impact on Lebanese workers is telling. A new IMF report estimates that the Syrian civil war has increased Lebanon’s unemployment rate by 20 percent.

Around 520,000 Syrian children also are living as refugees in Lebanon. Children selling flowers on Beirut’s busy Hamra Street are constantly at risk for abuse and arrest. Though the Lebanese government has agreed to international treaties that protect children from child labor, it is not able to enforce the violations occurring in the informal sector. Adult migrant workers used to earn $10 for five hours of work on farms in the Bekaa Valley. Now Syrian children will earn $2.75-$3.50 for the same amount of work.

According to Mary Kawar, a Senior Employment Specialist at the International Labor Organization Regional Office for the Arab States, “Both Syrian refugees and Lebanese residents are suffering from the effects of an unregulated labor market. The large supply of low-wage Syrian workers causes further deregulation and expands informal employment resulting in downward pressures on wages and the deterioration of working conditions. In turn, this negatively affects Lebanese host communities and refugees who are both increasingly unable to live in dignity or maintain sufficient access to livelihoods.”

As Syria’s civil war continues to unfold, the millions of displaced will remain a fluid part of the neighboring country’s economic developments. Other recent events have added new difficulties to Lebanon’s economic troubles. This past week, the Union Coordinating Body (UCB), Lebanon’s public sector union, began a wage strike. The UCB’s objective is a 120 percent wage increase for Lebanese government workers. They have so far been unable to reach an agreement with the Lebanese parliament’s subcommittee.

A high level of political risk undoubtedly lies ahead for the Lebanese economy along with political dysfunction and the steady arrival of more Syrian refugees.

About Author

Chris Solomon

Chris Solomon is a Middle East Analyst and works for a U.S. defense consultancy in the Washington DC Metro Area. He has presented at the University of Maryland’s School of Public Policy, on the U.S. strategy to combat ISIL. Chris’ writing has also appeared on NATO's Atlantic Treaty Association, Raddington Report, Small Wars Journal, and Syria Comment. He holds an MA in International Affairs from the University of Pittsburgh’s Graduate School of Public and International Affairs (GSPIA). You can follow Chris on Twitter @Solomon_Chris