Lebanon’s Private Sector Reels from Conflict, ILO Warns of Deep Labour Crisis

A new labour market assessment by the International Labour Organization (ILO) has revealed the devastating impact of the recent conflict between Lebanon and Israel on Lebanon’s already fragile private-sector economy. The conflict, which flared up in October 2023 and intensified sharply between September and November 2024, has triggered widespread job losses, income reductions, and business closures—placing millions of workers and enterprises under severe stress, particularly in regions directly affected by hostilities.

The findings, drawn from a nationwide survey of over 2,200 workers and 700 businesses conducted in December 2024, underscore the urgent need for inclusive recovery measures and long-term structural reform to rebuild livelihoods, strengthen resilience, and safeguard decent work conditions in Lebanon.

Conflict Compounds Pre-Existing Economic Vulnerabilities

“Lebanon’s economy has been under severe strain in recent years. The latest conflict has further disrupted livelihoods and business operations, creating new challenges for recovery,” said Ruba Jaradat, ILO Regional Director for Arab States.

Even before the conflict, Lebanon was grappling with a protracted economic and financial crisis, one of the worst in its modern history. Currency devaluation, soaring inflation, and a decimated public sector had already undermined employment stability and eroded social protections. The latest round of violence has now compounded these vulnerabilities, particularly in agriculture, construction, and tourism—the sectors that bore the brunt of physical damage and disruption.

Alarming Labour Market Impacts

According to the ILO’s assessment:

• At the height of the conflict, nearly 25% of workers lost their jobs, with unemployment and economic inactivity especially high in areas exposed to bombing and displacement.

• Even post-ceasefire, job losses remained significant, affecting 14% of surveyed workers, indicating a slow and uneven recovery.

• Women, youth, informal workers, and migrant populations faced the harshest outcomes, with limited access to social protection and formal employment pathways.

• Workers who retained their jobs reported a 15% drop in monthly income, accompanied by reduced working hours and days.

The report further highlighted Lebanon’s high informality rate, with 65% of workers employed without social protection. These workers are often left without contracts, insurance, or legal protections, making them highly vulnerable to shocks and exploitation.

Enterprises in Crisis

The survey also revealed a bleak picture for the private sector:

• At the height of the conflict, 37% of businesses were closed, and 22% were operating at reduced capacity.

• By late December 2024, 14% remained closed, while 17% were still only partially operational.

• Small and medium-sized enterprises (SMEs)—which dominate Lebanon’s business landscape—faced cash flow shortages, supply chain breakdowns, and rising costs, particularly in conflict-adjacent regions.

Enterprises in agriculture, construction, and tourism reported the highest levels of closure and disruption, jeopardizing local economies and rural livelihoods.

Urgent Needs Identified by Workers and Employers

The assessment sheds light on the most pressing needs for both workers and enterprises:

• Workers identified the need for:

  • Higher and more stable income

  • Access to formal, secure jobs

  • Support for self-employment and small business development

• Enterprises highlighted:

  • Access to finance to resume operations

  • Affordable and reliable energy supply

  • Improved access to markets and distribution channels

These priorities are particularly relevant given Lebanon’s ongoing energy crisis and limited liquidity in the banking system.

ILO Recommendations for Recovery and Reform

The ILO’s report calls for an integrated recovery strategy that combines short-term relief with long-term structural change, including:

1. Targeted financial support for the most-affected sectors and vulnerable populations.

2. Public works programs to rehabilitate critical infrastructure while generating decent employment opportunities.

3. Expanded skills development programs, particularly for women and youth, to prepare the workforce for evolving labour market needs.

4. Strengthened social protection mechanisms, including unemployment benefits and workplace insurance, to cushion future shocks.

5. Institutional capacity-building and social dialogue platforms to ensure policies reflect the voices of workers and employers.

6. Incentives for formalization of informal work to ensure broader access to legal protections and services.

A Collaborative Effort for Inclusive Recovery

The assessment was conducted in close partnership with Lebanese stakeholders, including the General Confederation of Lebanese Workers (CGTL), the National Federation of Workers’ and Employees’ Trade Unions (FENASOL), and the Association of Lebanese Industrialists (ALI). This inclusive approach ensured that the assessment captures on-the-ground realities and offers practical policy insights.

The ILO’s intervention aligns with its global Decent Work Agenda and is part of its broader support to countries affected by crisis and conflict. It aims to support Lebanon in building an inclusive, equitable and job-rich recovery.

Looking Ahead: From Emergency Response to Sustainable Resilience

While the ceasefire in November 2024 brought a welcome respite from violence, the economic and human toll of the conflict is far from over. For Lebanon to chart a course toward sustainable recovery, international support, government commitment, and social dialogue will be essential in rebuilding its labour market and restoring confidence in the future.

“This report provides a basis for designing informed, inclusive and coordinated responses,” Jaradat concluded. “Recovery must be built on a foundation of decent work, dignity, and economic opportunity for all.”