The Lebanese Telecommunication Sector and The Impact of Privatization on The Labor Market

Joey Ghaleb ()
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Joey Ghaleb: UN-ESCWA

No 107, Working Papers from Economic Research Forum

Abstract: In the 1990's more than 90 developing countries were opening up their telecom sector to private sector participation. However, the labor implications remain one of the least addressed issues. The limited international experience shows that the impact of privatization in the case of the fast-growing telecommunication sector - has been positive and it is reflected in higher wages, job creation, and higher productivity. However, in Lebanon, the labor implications of privatizing the telecom sector are yet not fully addressed. This paper argues that new jobs will be created in the medium term following the inception of Liban Telecom and the subsequent forecasted expansion of the sector. The problem of labor surplus will thus be limited to a couple of years following privatization. The government of Lebanon may be asked to pay what is known as the 'Golden Handshake' bonus. However, the major drawback of 'over-compensating' is the possibility of driving the skilled employees to opt for early retirement. But the government will be parting with a small percentage of the privatization proceeds, and can reduce the cost further if they were to consider a number of alternative solutions to the early retirement option. Privatizing telecom is very profitable for both the seller and the buyer and more so for the seller if the latter undertakes the process in stages appreciating the value of the divested asset. The big winner should be the economy as a whole, more specifically the Lebanese consumer: the worker, the small business, the farmer, and the industrialist.

Pages: 24 pages
Date: 2001-01-03, Revised 2001-01-03
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Published by The Economic Research Forum (ERF)

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