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Zafiris Tzannatos , former chairman of the Economics Department at AUB and a fellow at LCPS


January 2017
Providing a Social Safety Net and Education: Prerequisites to Building a Modern State

As part of a series highlighting key challenges facing Lebanon, the Lebanese Center for Policy Studies has sought input from leading experts on what the new government’s priorities should be. This article offers three suggestions that have no fiscal implications but can create an inclusive economy by addressing long-standing issues in the areas of social insurance, education, and employment through evidence-based policy-making.
 
 
Formations of new governments are often associated with elevated hopes. However, new governments are haunted by promising too much. No wonder then that even after a long period in office and numerous opportunities, many governments have little positive to show, a blessed outcome compared to those cases when countries move backward by leaps and bounds (think of the aftermath of the Arab Spring, as well as in Venezuela and Greece). It is not uncommon for business to get back to normal quickly, optimism to die, and cynicism to return.
 
This begs the question of what the legacy of Lebanese governments has been. I personally find it hard to mention—if I were asked—even a few noteworthy achievements by a government since I came to Beirut in the early 2000s. Except one, that is, not reverting to internal conflict, a more refined term than civil war. Little has been done in terms of garbage collection, the intermittent water supply, electricity outages, faltering public education, limited health coverage, or improving governance. There is still a lack of public transport, good roads, infrastructure, and urban planning. This has nothing to do with the country’s numerous sects or political factionalization. Every Lebanese citizen, irrespective of beliefs, would appreciate receiving what states in other upper middle income countries provide. Let us not forget that per-capita incomes in Lebanon are the highest among Arab states, except those in the Gulf. 
 
Still, the new political configuration in Lebanon cannot but provide a spell of hope. This is yet another opportunity not to be missed if, for once, history does not repeat itself. It goes without saying that the process for setting in motion plans to address the provision and quality of public goods mentioned earlier should not be postponed any further. But what can be achieved in a country where more and better needs to be done for everything?
 
There are a few things that are almost as easily done as said, if the political will exists. The following three all could have a systemic impact at little or no fiscal cost. Even limited fiscal space can achieve a lot if waste and nepotism are reduced, and expenditures are directed to areas where social benefits are extensive.
 
First, Lebanon should ensure it is not counted among those middle income countries that have yet to provide pensions to workers outside the public sector. In 2010, the ILO and the World Bank were asked by then Minister of Labor Boutros Harb to provide a framework for introducing pensions for workers in the private sector. Having worked for both organizations and being part of the effort then, I know the two organizations swiftly obliged and a draft law was prepared. It is still a draft law, much like the draft labor law that has been on the books since the 1990s. Lebanon still uses an archaic labor law from the 1940s.
 
Second, Lebanon must address the divide between public and private education. I have been in more than seventy countries and cannot think of one where more children are enrolled in primary schools run by the NGO sector and the private sector than in public schools. Moreover, the provision of education by NGOs is supported by public money—something that parents tend to be unaware of, resulting in many offering more loyalty to NGOs than to their government. In terms of quality, the much praised output of the Lebanese education system is the average of two worlds: A high performing private sector and a laggard public sector. Many Lebanese children terminate their studies ill-equipped at the brevet level and, being unable to emigrate, are thrown into the lowest segments of the informal sector that has always been dominated, and more so recently, by non-Lebanese.
 
Third, Lebanon must adopt evidence-based policies. Even destitute African countries keep better statistics than Lebanon. Admittedly, this is partly explained by the fact that Africa receives international aid and donors want to know where their money is spent. Unfortunately, donors seem to be more relaxed over how the multibillion dollar aid they have regularly provided to Lebanon is spent. The lack of a population census hampers the design of representative samples for surveys that can then be used with confidence for designing effective and timely policies. There is no point in speculating which religious group is larger than the other. We know which is the largest group, and the one below it and the one below it … but failing to have information on population size, its regional distribution, and socio-economic characteristics as well as other relevant aspects of public and private life is a recipe for policy failure.
 
Imagine what Lebanon would be like if these three areas were addressed and the government’s economic, employment, and social policies were evidence-based; workers were more educated; and citizens had the security of a sound social insurance system. If this were to happen, it would likely come with a bonus: Lower emigration rates of the best and brightest Lebanese, higher productivity, more wealth creation, and less exclusion and sectarian rivalry. It may even assist in formulating and adopting a national identity, something that seems to have largely evaded the Lebanese throughout the history of the modern republic. Nation building is a low-hanging fruit, assuming politicians accept leaving their comfort zone and give up making a living precisely because the country is divided. This would give the new government a big legacy point, one which past governments have failed to either strive for or accomplish. 
 
The new government can start by considering two simple facts. First, strategy entails deciding what to exclude. Second, if you do not get the facts, the facts will get you—most likely to the detriment of the country. Lebanon cannot go on without pensions and social protection. The Lebanese cannot keep feeling vulnerable and continuously emigrate. The government has to consider to what extent the grants it gives to the private sector to provide social services and public goods divide citizens and perpetuate exclusion and inequality, thus fueling sectarian attitudes. Let us therefore focus on these low-hanging fruits. Anything else will be a bonus.  






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