In the midst of the COVID-19 pandemic that continues to threaten many lives and bring our country to its knees, the financial and economic crisis exploded –leaving Lebanon in extreme chaos.
Despite pledging to cap the exchange rate at LL 3,200 to the dollar, the Lebanese government failed the people once again. The Lebanese Lira depreciation persists, reaching approximately LL 7,000 to the dollar on the black market last week.
The Lebanese workforce is taking the hit of the collapsing economy, as the incomes of employees are losing value along with the currency depreciation.
“The global pandemic had a negative impact on the economic growth in Lebanon for two main reasons. First, most businesses had to temporarily shut down which resulted in huge losses. Second, COVID-19 was an unexpected variable and external factor that we were not ready to deal with,” Dr. Layal Mansour, economist and lecturer at the Lebanese American University, told Beirut Today.
The harsh situation is also affecting the lives and careers of Lebanon’s freelancers and self-employed workers.
Economic crisis consequences on small businesses and the self-employed
Some Lebanese small-business owners are taking their fair share of the economic and financial brunt.
Trying to maintain high quality standards and dealing with the huge losses in profit, Lebanese restaurants are struggling to cope with the current economic crisis. In light of the Lebanese lira depreciation and the increase in the cost of supplies, dealers who own small businesses are no longer able to absorb the high costs. As a result, small-time business owners are increasing the prices of their goods and services.
“The restaurant used to work 15 days a month, now we are working 4 to 5 days, which is resulting in significant losses in the profit,” Haitham Safa, owner of Safa Chicken restaurant in the Chouf area.
When asked about the measures taken to make up for the profit losses, Safa said that they are trying to save electricity and reduce the work time of employees, as well as slightly raising their prices, without affecting the quality of the food served to maintain high health and safety standards.
The challenges the restaurant sector in Lebanon is facing are not exclusive, as supermarket owners are also struggling to get through these difficult times with the least possible harm to their businesses.
“It is remarkable that people are abandoning luxury purchases hoping they could at least satisfy their main needs,” said Safa.
In spite of the bleak economic situation, some businesses are still managing to survive.
“Some businesses are expected to boom after these harsh conditions are over. Let us take the example of machine and automobile repair shops. As most people will not be able to replace their old and damaged machines with new ones, they will have to go to repair shops,” explained Mansour.
“To reduce the cost of tools and materials, mechanics will buy used materials. And although the prices of these materials might increase because of the shortage in quantities, they will still be more affordable for people than the exported ones,” she added.
Economic crisis opens the door to more freelancing opportunities
Trying to push through and overcome the financial problems they are experiencing, companies are making some changes to their system of operation that are expected to have a positive impact on Lebanese freelancers.
“As a result of the spread of COVID-19 and the economic crisis that followed, companies are becoming more likely to hire freelancers than full-time employees in the aim of reducing their costs,” highlighted Mansour. “In this case, freelancers will be able to work in several companies locally and internationally.”
Despite the cruelty of the situation, some economists are promising remarkable change on many levels in the near future.
“Lebanon is going through a transitional phase, and most important economic operations are interrupted. Once an economic reform plan is announced, and the situation is more stable, we will be able to notice all these consequences,” said Mansour.