A series of severe economic shocks over the last four years have triggered major disruptions in Lebanese markets and capital flows. The consequences extend beyond immediate economic concerns, leaving an indelible mark on human capital that is reshaping the socioeconomic landscape into a more precarious one. This transformation is particularly evident in the labor market, in which conventional distinctions between employment statuses are increasingly blurred. A significant number of public servants now resort to working secondary jobs—including in the informal market—and highly skilled labor is gravitating towards remote freelance employment.

This article examines the evolving labor structure in Lebanon and aims to contribute to a more nuanced dialogue concerning the nation's future of work landscape. In the pre-crisis era, Lebanon’s labor structure followed a well-defined division, classifying the working-age population into distinct groups. These groups included the labor force, encompassing those employed and seeking employment, and those outside the labor force, i.e., neither employed nor unemployed. Within the labor force, individuals could be unemployed (a person without a job but seeking one) or employed in the formal or informal sectors. The formal sector comprised the formal private sector and the public sector, whereas the informal sector included laborers employed by unregistered entities. Workers in both the formal and informal sectors could have been high-skilled or low-skilled.

This segmentation of the labor structure was a reliable indicator of socioeconomic standing and a main determinant of access to social security benefits and upper wage brackets. The hierarchy of social security benefits privileged civil servants and military personnel, followed by formal private sector employees, while informal workers had no (official) access to such benefits. Regarding wages, high-skilled formal private sector employees earned the most, followed by civil servants—most of whom were in the middle class—while informal low-skilled workers earned the least. However, the crisis has rendered these hierarchies obsolete, leaving a complex and shifting landscape in its wake.

Lebanon’s labor force is shrinking and becoming increasingly informal and low-skilled

The profound economic slowdown led to a decline in labor force participation from 49% in 2018 to 43% in 2022.¹ Moreover, the unemployment rate almost tripled, covering 30% of those in the labor force. The protracted crisis and loss of trust in the state is thrusting people into informality, as the informal sector employed 62% of the workforce in 2022, up from 55% in 2018. Those engaged in the informal economy lack legal protection and social security benefits.

In terms of skill distribution, low-skilled jobs continue to dominate the informal sector (83% in 2022) and are becoming more common in the formal sector, growing from 50% in 2018 to 62% in 2022. This shift is driven by a lack of capacity to generate high-skilled formal employment, the lack of appetite from employers to provide competitive wages, and the emigration of much of the country’s high-skilled labor force in pursuit of better prospects abroad.

The crisis eroded the value of wages and social insurance

In this transformed labor landscape, wages have sharply plummeted. In 2022, less than 3% of the labor force earned more than $1000 per month—compared to 42% in 2018—and more than half of the labor force subsisted on less than $200 per month.

Meanwhile, Lebanon’s social insurance structures, including the National Social Security Fund, civil and military servant cooperatives, as well as the funds of professional syndicates placed in the banking sector, have all become illiquid faced with the detrimental currency shock. Against this backdrop, there has not been a significant increase in private healthcare insurance coverage, which stands at a measly 9% of the labor force. Pensions and end-of-service indemnities offered by public insurance funds are also obsolete, leaving many of the country’s retirees or those nearing retirement with inadequate protection in old age.

Vulnerabilities are on the rise

The pre-crisis hierarchies are now distorted, and employment classification can no longer be used as a basis for socioeconomic wellbeing. The only meaningful social insurance awarded to workers is the privatized healthcare option offered to a privileged few. Despite the severity of the crisis and the growing volume of informal workers, the country’s social protection system remains fragmented and inadequate, with the state opting for inefficient and unconventional interventions that disproportionately benefit a selected few.²

The wages of civil servants and military personnel are hardest hit amid the ongoing crisis, with fixed wages in a currency that has lost more than 95% of its value. Additional assistance they receive are considered social top-ups and not an indexation of wages that will be reflected in their pension benefits.

Moreover, despite the near full dollarization of the economy, many active members of the workforce continue to be paid in LBP, or in USD at suppressed levels. The practice of wage suppression is enabled and reproduced by the concentrated nature of Lebanese markets and a severely lopsided power balance between an overwhelmingly informal workforce that has limited access to the country’s collapsing legal structures and employers that enjoy political backing.³

The perfect ingredient for severing the state

As Lebanon enters its fifth year of the crisis, the labor market has become increasingly precarious. Irregular jobs are the new norm, functioning as an informal safety net among the country’s remaining labor force who are seeking income opportunities. With a high unemployment rate, widespread dollarization and inflation, and low demand for high-skilled labor, workers are forced to resort to negative coping strategies. One manifestation of this is the rise in predatory digital labor platforms that exploit the supply of vulnerable labor and opaque regulatory frameworks for hiring low-wage workers and avoid granting them their rights.⁴ For precarious workers seeking livelihood opportunities, access to social insurance and labor rights might not seem like an immediate priority in a crisis setting, but the spillover effects of this can sever the role of the state in the social contract. This is particularly dangerous because Lebanon’s labor statistics institutions do not count freelance and platform workers among in the composition of private sector employment, rendering this growing segment of the workforce invisible to the state.