Influx of Syrian Refugees Continues to Impact Lebanese Economy

In March 2016, the Syrian crisis entered its sixth year and Syrian refugees continue to stream across the border into Lebanon. The most recent figures on the impact of this influx do not differ significantly from those from 2015.

Yet the already fragile economic situation has been exacerbated by the leadership vacuum created when President Michel Suleiman stepped down without a successor in May 2014. This has paralysed official institutions and led to political infighting and growing public discontent.

Professor Jasim Ajaqah, advisor to the minister of economy and commerce for economic affairs since 2014, noted in his economic briefs that Lebanon experienced a 11.4% decline in revenues in 2015, compared to 2014. Imports also dropped by 6% during the first few months of the same year on the back of the austerity measures applied by the Ministry of Finance. These figures indicate that the drop in revenues and imports will probably worsen the budget deficit by 13.2% to approximately $3,500 million dollars at the end 2015, according to Professor Ajaqah.

The International Monetary Fund (IMF), in its second report on Lebanon issued in October 2015, lowered its expectations for the economic growth rate to 2%, down from 2.5% in its first report in April 2015. In other words, the growth rate was the same as 2014 even though the IMF predicted that the actual growth rate would rise to 2.5% in 2016 and continue to rise to 4% by 2020.

Economists consider these numbers to be unrealistic as long as the Syrian war continues and the estimated 1.6 million refugees remain in Lebanon. This contrasts sharply with previous growth rates, which reached 8% between 2009 and early 2010, only a few months before the outbreak of the war.

The World Bank, in a summary entitled the Economic Effects of War and Peace published on 4 February 2015, stated that Lebanon, Jordan and Turkey are shouldering the international responsibility of hosting Syrian refugees. The report stressed that the sectors most affected in Lebanon are mainly those that promote growth such as tourism, real estate and construction. The report predicted that these factors would keep the growth rate between 2.5% and 3.5% in 2016 and 2017 for Lebanon and Jordan, which is far less than the economic potentials of the two countries.

One early manifestation of the impact of the Syrian crisis on the Lebanese economy was evident in the labour sector. Minister of Labour Sajan Qazzi confirmed early in the summer of 2015 that the unemployment rate in Lebanon had reached 25%, 36% of which were youths, marking a significant increase compared to 2014, when unemployment was approximately 20% according to the World Bank. The influx of Syrian refugees also played a major role in wage cuts because many Lebanese workers were replaced by Syrians who were willing to accept lower pay. The national crisis prompted Minister Qazzi to issue an order in January 2015 making it compulsory for Syrian workers to obtain work permits.

The minister’s decision has somewhat reduced the number of Lebanese workers being replaced by Syrians. However, some refugees consider the move unfair as the work permits have to be renewed every six months at a cost of $200 each. For its part, the International Labour Organisation (ILO) stated that the wages of Syrian workers in Lebanon are 40% lower than the minimum monthly average of $448.

The refugee crisis has not only affected the labour sector, it has also had a major impact on the education sector. According to Ministry of Education statistics for the academic year 2014-2015, the number of registered Syrians in Lebanon’s public schools, which offer free schooling, reached 32,000. This was in addition to 18,000 refugees who are staying with their parents in Lebanon.

As for the current academic year, at a press conference held on 15 October 2015 to announce a German government grant worth around $45 million to support Syrian refugees in Lebanon, Education Minister Elias Bou Saab said that the number of students enrolled in Lebanese schools had risen to approximately 200,000. The Lebanese state is committed to providing education to refugees registered in public schools and during regular school hours, with Syrian students being mainstreamed with Lebanese students. However, each Syrian student is requested to pay an annual registration fee of $100 and another $60 for the parents’ council fund, but in most cases international donor organisations pay these fees. Regarding Syrian students enrolled in the afternoon schooling system, introduced to cope with the number of refugees, each student costs $600 payable by donors, according to the Ministry of Education. Meanwhile, the UN High Commissioner for Refugees (UNHCR) has allocated just over $73.3 million to support the education of Syrian refugees living in Lebanon.

In addition, the refugee crisis has directly affected the health-care sector, especially in the winter when infectious diseases such as cold and influenza spread quickly among refugees and hospitals are unable to cope with the number of patients. The Rafiq al-Hariri University Hospital, for example, is a government hospital in Beirut that can accommodate about 400 hospital beds, yet is equipped with only 221. Before the start of the Syrian crisis, 75% of the patients were Lebanese and 25% were of various nationalities. Now, almost half of the patients are Syrians.

Some economists, however, believe that the influx of Syrian refugees has had a positive impact, arguing that although the low wages of Syrian workers harm the Lebanese, they benefit employers. A survey conducted by the ILO showed that some 92% of the Syrian refugees in Lebanon do not have employment contracts, and that more than half of them work on a daily, weekly or seasonal basis for low wages.

Similarly, rich Syrian families have helped tourism to flourish, particularly since Gulf Cooperation Council (GCC) countries advised their nationals against travelling to Lebanon. These families have also bolstered the real estate market in Beirut by creating demand for apartments. Similarly, the flow of aid to Lebanon also raised the liquidity levels of Lebanese banks.

Moreover, international donor organisations have signed contracts with food centres in Lebanon, committing Syrian refugees to buy goods exclusively from these centres and thereby increasing their revenues.

Despite these positive gains, middle- and lower-class refugees appear to have benefitted little. On 24 December 2015, the UNHCR published the results of the third annual Vulnerability Assessment of Syrian Refugees in Lebanon, conducted in collaboration with the World Food Program (WFP) and the United Nations Children’s Fund (UNICEF). The assessment showed that approximately 70% of Syrian refugees live below the Lebanese poverty line of less than $4 per day.

The accompanying statement added: ‘Year after year, month after month, week after week, and day after day, the crisis of the Syrian refugees living in Lebanon is becoming worse and has more repercussions on Lebanon’s security, economic and living conditions, education, health, society and demography. This is especially because Lebanon has perhaps shouldered the biggest burden of the Syrian crisis in light of the accelerating drop in the volume of international aid and the decrease of humanitarian aid from Arab countries by 50% compared to the beginning of the Syrian crisis. Consequently, this has made the Lebanese local communities unable to deal with this big burden given the already deteriorating political, economic and security situation in Lebanon.’

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