How Employers in Libya Can Set Fair and Sustainable Salaries

Information current to 2 November 2026

Setting salaries brings together people management and financial management. Two jobs can share the same title yet differ substantially in team size, authority, experience requirements and expected results. Assessing pay therefore begins with understanding the actual work and its conditions, followed by comparison with similar roles in the market.

For an employer, pay influences the quality of applicants, workforce stability and operating costs. For an employee, it affects the ability to meet everyday needs and remain in a job. A sound decision brings together four considerations: the value of the work, living costs, comparable pay and the company’s capacity to meet its commitments.

What employers need to know before assessing pay

Before setting a salary range, establish a clear profile of the job.

Factor	Information needed
Scope of responsibility	Responsibility for one team or several, and the scale of operations, resources and budgets
Team and authority	Number of employees, responsibility for planning and training, and decision-making authority
Working time	Actual hours, working days, rest days, breaks and overtime
Experience	Skills directly needed for the role, relevant experience and expected independence
Location	City and neighbourhood, commuting costs, and any relocation or accommodation requirements
Pay	Basic, gross or net pay, with deductions, allowances and incentives clearly identified
Employment conditions	Contract, social security arrangements, leave, insurance where provided, and payment reliability

Basic pay is the fixed component specified in the pay structure. Gross pay is earnings before deductions, while net pay is the amount the employee receives after deductions. An advertised figure should make clear whether it includes a conditional incentive that may not be earned.

Consider a hypothetical calculation in which two offers provide the same monthly salary but require different working hours. The table shows the effect on hourly pay, taking the hourly value of the 40-hour offer as 100%.

Weekly working hours	Average monthly hours	Hourly pay relative to the 40-hour offer
40	173.3	100%
48	208	83.3%

Monthly hours are calculated using 52 weeks divided by 12 months. This calculation helps compare offers; overtime entitlements must be calculated under the applicable legal and contractual rules. Paid leave and rest arrangements also need to be compared on a consistent basis.

Minimum wages and pay adequacy

These concepts answer different questions. Libya’s Law No 16 of 2023 sets a minimum wage and salary of LYD 1,000 for workers in the public and private sectors. Paying above that minimum does not, by itself, establish that a salary reflects a role’s responsibilities or covers living costs. 1 (Opens in a new tab)

Compliance also includes working conditions. Article 13 of Labour Relations Law No 12 of 2010 sets a general limit of 48 working hours a week and ten hours a day. Subsequent articles address rest, exceptions and overtime. Under the conditions in Article 16, overtime required to meet work pressure attracts an increase of at least 50% over the normal rate. Employers therefore need to specify ordinary hours, overtime and the corresponding payments clearly. 2 (Opens in a new tab)

Prime Minister’s Decision No 474 of 2026 concerns the unified salary schedule. Article 1 defines its scope as employees in public sectors and administrative units funded by the public treasury. That provision does not establish an automatic salary scale for private companies. 3 (Opens in a new tab)

A living wage, as understood by the International Labour Organization, concerns the income needed to support a decent standard of living for a worker and their family through normal working hours, taking local circumstances into account. Estimating it requires evidence about prices and household needs. A single figure cannot reasonably be treated as adequate for every city and household without an explicit methodology. 4 (Opens in a new tab)

A market wage reflects what employers pay for comparable work. A wage can be common in the market and still fall short of living costs. Employers should therefore assess legal compliance, adequacy and competitiveness separately.

What shapes salaries in Libya

Inflation and purchasing power. Bureau of Statistics and Census data published by the Central Bank of Libya show annual inflation of approximately 16.6% in September 2026 compared with September 2025. Food and beverage prices rose by approximately 21.2% over the same period. These are changes over a specific twelve-month period, rather than completed estimates for the whole of calendar year 2026. 5 (Opens in a new tab)

A hypothetical calculation illustrates the effect. If a salary rises by 10% between September 2025 and September 2026 while the price index rises by 16.6%, its purchasing power falls by approximately 5.7%. The real change is calculated by dividing the salary growth factor, 1.10, by the price growth factor, 1.166, and subtracting one. An individual household’s experience may differ according to its spending on rent, food, transport and healthcare.

Exchange rates and business costs. The IMF’s April 2026 mission statement noted two devaluations of the dinar since April 2025 and a continuing substantial gap between official and parallel exchange rates. 6 (Opens in a new tab) For businesses using imported inputs, the practical implication is to review actual procurement costs and margins alongside pay. Converting a salary into dollars alone does not measure its local adequacy, and exchange-rate movements do not necessarily pass through to every price in the same proportion.

Public employment and skills availability. The IMF’s 2025 country report described Libya’s labour market as dominated by public employment and affected by mismatches between available skills and employers’ needs. It also identified the influence of public-sector pay and benefits on private employers’ ability to attract skilled workers. 7 (Opens in a new tab) Employers consequently compete on stability, hours and benefits as well as salary. A large number of people seeking work does not establish that the skills needed for every vacancy are readily available.

Location, sector and productivity. Compare a role with similar work in the same city, sector and size of organisation. An average combining different industries is a weak reference for an individual job. Assess each role’s contribution through relevant measures, such as service quality, completion times, fewer errors or improved margins. Sales revenue can increase because prices have risen, without a corresponding improvement in business volume or efficiency.

How pay affects recruitment and business performance

International research provides evidence that pay influences employee behaviour, although results vary by role and market.

In a public-sector recruitment experiment in Mexico, researchers found that higher salary offers attracted more capable applicants and increased acceptance of job offers. This finding supports measuring applicant quality and offer acceptance alongside the number of applications received. 8 (Opens in a new tab)

A study published by the Federal Reserve Bank of New York in February 2026 examined warehouses operated by a large US company. The researchers estimated that a pay increase of approximately 5.5% roughly halved worker departures and increased productivity by around 5.7%, within that company and the study’s design. These findings do not guarantee the same return for Libyan employers. They do, however, support including absence, replacement costs and productivity in the assessment of a pay increase. 9 (Opens in a new tab)

Motivation also depends on whether differences within a team are perceived as fair. In an experiment involving manufacturing workers in India, unequal pay reduced attendance and output, while no comparable effect was detected when productivity differences were clearly observable to workers. 10 (Opens in a new tab) A practical implication is that pay differences should have understandable reasons, such as responsibilities, skills or documented performance.

Pay should therefore be assessed alongside management quality, clear objectives, access to tools and reliable payment. Employees need the authority and resources required to deliver the results expected of them.

Seven steps for building a salary range

1 Define and evaluate the work

Write a job description that identifies expected results, authority and working hours. Then evaluate the role against consistent criteria: knowledge and skills, responsibility, complexity of decisions, supervision and working conditions. Group jobs of similar value into clear grades. A grade should reflect the work required, even when the person doing it changes.

2 Gather comparable local evidence

Collect recent data from verified salaries or surveys with a published methodology, accepted offers and comparable vacancy advertisements. Treat advertisements as evidence of what employers are offering. For each observation, record the city, date, sector, organisation size, working hours, basic and gross pay, and benefits.

Put comparisons on a consistent basis, using guaranteed gross cash compensation per year or month and comparable hours. Separate variable bonuses and benefits in kind. Do not treat the top of an advertised range as a salary someone actually received, or combine current salaries with older figures without accounting for the difference in dates.

Examine the sample size and composition. Where the data are sufficient, use the median and the middle of the distribution, and report the number of observations. A small sample provides an initial indication that needs further checking and updating.

3 Assess whether income covers local needs

Build a reference household budget covering food, housing, utilities, transport, healthcare, education and other essential needs. Use local prices and recent household expenditure data. The ILO’s methodology provides a framework for this assessment. 11 (Opens in a new tab)

State the assumptions about household size, the number of earners, housing and location. Compare the assessed need with guaranteed net income earned during normal working hours, transparently accounting for benefits that meet an actual need. Essential living costs should not depend on an uncertain bonus or sustained overtime.

Use the reference budget to assess the pay policy while maintaining consistent treatment of work of equal value. Someone’s salary should not be reduced because they live with relatives or have another source of income.

4 Test the full cost and the company’s ability to pay

Calculate the full annual employment cost: salary, allowances, expected bonuses, employer contributions, benefits, recruitment, training and any additional cover needed. Avoid counting the same salary twice when allowing for paid leave.

Assess affordability against cash flow and available margins. Sales revenue alone is insufficient. Model both normal conditions and a scenario involving lower sales or higher procurement costs. Establish whether a pay increase can be funded without relying on productivity gains that have yet to materialise. Considering both workers’ needs and economic factors is consistent with the ILO’s approach to wage setting. 12 (Opens in a new tab)

If the business cannot fund the role at the required level, reconsider its scope, the organisation of work or the timing of recruitment. Limited affordability does not change the job’s requirements or the employer’s legal obligations.

5 Set the range and decide where employees fit

After choosing an appropriate market reference and assessing adequacy and affordability, define three positions within the range.

Position in the range	Basis for placement
Minimum	Meets the role’s requirements, with specific development needs
Midpoint	Performs the full role at the expected level of independence
Maximum	Experience, skills or sustained performance justify this level within the grade

No single percentage is suitable for the width of every salary range. Set the distance between the minimum and maximum according to differences in skills, the value of the work and the quality of the evidence. The minimum should itself meet legal requirements and the company’s policy on pay adequacy.

Review relationships between a manager’s pay, team members’ pay and comparable jobs. Avoid allowing differences to arise mainly from negotiating strength or a candidate’s previously low salary. Article 21 of the Labour Relations Law prohibits differences in remuneration for work of equal value on the grounds of sex, race, religion or colour. 2 (Opens in a new tab)

6 Make incentives and benefits clear

Separate guaranteed salary from variable pay. Customer-service incentives could reflect service quality and the accuracy of request handling, while sales incentives could combine margins with customer satisfaction. Exclude factors outside the employee’s control. Rewarding sales alone may encourage discounts that increase revenue while weakening profit.

Assess benefits according to their actual value to employees, and distinguish work equipment from compensation. Specify allowance amounts, eligibility, payment dates and incentive calculations in both the offer and the contract.

7 Review the range and measure results

Review salary ranges regularly. During periods of volatility, employers could examine price and market indicators every three months, with an additional review when the role or market changes substantially. This is a suggested management practice, rather than a commitment to automatic quarterly increases.

Distinguish the reasons for an adjustment: changing living costs, a market correction, promotion or performance. Monitor offer acceptance, time to fill vacancies, resignations during the first year, reasons for leaving, absence and work quality. Recruitment difficulties may reflect pay, job requirements or working conditions; diagnose the cause before changing the number.

Applying the framework to different levels of responsibility

Consider a hypothetical example. One employee supervises a small team working to established procedures. Another leads several teams and is responsible for planning, budgets and improving performance. Even if their job titles are similar, each role needs its own assessment and comparison with work involving equivalent responsibility and authority.

General economic data alone cannot establish a reliable market range for a particular job. That decision requires a clear understanding of the work and recent local comparisons. Once this evidence is available, the decision becomes easier to explain:

If pay reflects the role’s value, comparable jobs and assessed living needs, and can be funded consistently, there is a basis for approving it.
If compensation falls short of the demands of the role, review the package or the planned responsibilities and hours.
If the evidence is insufficient, document the estimate as provisional and set a date to review it when better information is available.

Before advertising a vacancy, an employer should be able to answer one practical question: What evidence supports the minimum and maximum of this range, and what would move an employee from one point to another? A clear answer makes pay decisions easier to review and gives employees an understandable path for progression.

References

The practical examples are hypothetical and are included to explain the method. Purchasing-power calculations use the cited inflation data. The framework offers management recommendations drawn from the evidence; setting numerical salary ranges for individual occupations requires a local survey that discloses its data dates, sample size and composition.