Lebanon's cabinet has increased the minimum wage by 40 percent to 700,000 pounds (467 dollars, 345 euros) a month in a last-minute bid to avert a nationwide strike that was planned for Wednesday.
After more than seven hours of talks that ended shortly after midnight, Information Minister Walid Daouk announced a hike of 200,000 pounds for monthly wages under one million pounds. The measure raised the minimum wage from 500,000 pounds to 700,000 pounds.
The government also ordered a wage increase of 300,000 pounds on all salaries between one and 1.8 million pounds.
General Labour Confederation chief Ghassan Ghosn said on Wednesday that while the strike had been suspended, the wage increase remained unsatisfactory.
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Private sector employers rejected the government decision outright, however, warning it could lead to "inflation, unemployment and lay-offs."
"This spells the final blow to the private sector in Lebanon," said Adnan Kassar, head of Lebanon's assembly of economic organisations, told reporters.
He called on private employers "not to implement the measures until they are reassessed."
Meanwhile, private schools went on strike independently on Wednesday and have called for another one-day strike on October 19.
The minimum wage in Lebanon has twice been increased since the end of the 1975-1990 civil war, most recently in 2008.
The country witnessed record growth rates in recent years, but projections for 2011 have dropped following a protracted government crisis earlier this year and amid political unrest in neighbouring Syria.