Labour Law & Salary Trends in Libya - Hay Group

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FIGURE 1 Average Salary Increases vs Inflation in Libya (2007-13) % 18 ▲ Salary increase 16 ● Inflation 15.9 ● 14 Percentage increase 12 10 8 6 9.5 ▲ 6.2 ● 10.9 ▲ ● 10.4 11.5 ▲ 10.0 ▲ 10.0 ▲ 10.0 ● 7.4 ▲ 7.8 ▲ 4 2 0 2007 2.5 ● 2.5 ● 2008 2009 2010 2011 2012 2013 (f) Year 0.9 ● Source: International Monetary Fund and Hay Group FIGURE 2 Cash allowances 15% Typical Remuneration Mix in Libya Variable pay 7% Basic salary 78% by the central budget, end-of-service indemnities and corporate income taxes. CORPORATE INCOME TAXATION Company income tax in Libya is progressive up to 40% with a Jihad tax of 4% on companies. A new tax law that is soon to be implemented will replace these tax rates of 15% to 40% on taxable profits with a new flat-rate tax of 2% while the Jihad tax remains. TABLE 3 opposite provides corporate income tax rates. NURTURING A NATIONAL WORKFORCE The capability of the local labour force is expected to improve as new education and training programmes raise the current low level of skills and technical expertise among the workforce. The advantages to these changes will, however, be partly offset by the increased cost and greater difficulty of hiring foreign labour as the policy of nationalization tightens the restrictions on the number of expatriates an organization can employ. TABLE 1 Job level Total Cash in Libya Median monthly pay range Libya’s infrastructure is likely to develop over the coming years, which will improve market access and aid economic development. The Government is trying to restore the business climate and encourage the rapid regeneration of the private sector. Clerical/Operational Supervisory/ Junior professional Middle management/ Seasoned professional LD 940 – 2,200 LD 2,800 – 7,000 LD 9,000 – 17,900 Source: ‘Hay Group 2012 Libya Compensation and Benefits Report’, Hay Group, 2012 Nevertheless, the country suffers from an unpredictable and variable business environment which has complex decision-making processes and inadequate work-ready manpower for the new private-sector demands. Along with legal and institutional frameworks, these structural constraints significantly hold back Libya’s efforts to diversify its economy. However, in spite of administrative delays and a relatively high level of corruption, Libya’s economic prospects remain very positive, due to the country’s 3
TABLE 2 Local Employees’ Personal Income Tax Rates TABLE 3 Company revenues Corporate Income Tax Rates Tax rate Monthly income LD 1,000 and below Above LD 1,000 Tax rate % 5 10 Up to LD 200,000 From LD 200,000 to LD 500,000 From LD 500,000 to LD 1,000,000 From LD 1,000,000 to LD 1,500,000 From LD 1,500,000 to LD 2,000,000 More than LD 2,000,000 % 15 20 25 30 35 40 high potential for oil and gas reserves which remain unexploited. A STRONG HR FUNCTION IS CRUCIAL Although a large majority of companies still see HR as a process-based function, the forces at work in the economy are slowly demanding that the situation change. In order to create a sustainable workforce for the business, HR plays a key role in recruitment, selection and retention. The role of HR in Libya is evolving and gradually becoming a key organizational function primarily due to the increased awareness of global practices, the high volatility in the pay market and growing challenges with recruitment and retention. In organizations where senior management has truly understood the dynamics of employee engagement and motivation, HR as a function is maturing and the demand for highly skilled HR professionals is therefore increasing. With the ongoing pressures of nationalization, I expect to see an increasing role for HR to play in leadership development and involvement in coaching programmes. A strategic approach to HR will assist the business in attracting and retaining both key expatriate and national talent. Ω Copyright © Pension Publications Limited 2013. Reproduced from Benefits & Compensation International, Volume 42, Number 8, April 2013. Published by Pension Publications Limited, London, England. Tel: + 44 20 7222 0288. Fax: + 44 20 7799 2163. Website: www.benecompintl.com Produced by The PrintZone (www.theprintzone.co.uk). Prior written permission required to reprint in bulk. 4
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Labour Law & Salary Trends in Libya - Hay Group

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