Tough Love Economic News Requires Array of Strategies

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Jordanians are chattering about how the interim government is facing a number of difficult choices, none of which are of its own making. There is painful medicine for Jordanians in the prescription agreed with the IMF this past week, and people felt it immediately in prices paid for energy and power. No one argues that Jordan needs to take immediate steps to stop its slide into even lower growth, and there is little disagreement among leading Jordanian economists about how to move forward. However, medium and long term reforms will not do much to alleviate the pressure felt by consumers.

This is the dilemma facing oil producers and non-oil producers alike: How to bring about long-needed reforms that will ameliorate inadequate planning and decision-making by past leadership. One approach is HRH Mohammed bin Salman – high visibility, high energy, let’s take on entrenched interests approach while continuing to coddle citizens, which Saudi Arabia can afford to do.

On the other, there are Jordan and Morocco, balancing competing economic interests among potentially volatile political constituencies. Their way forward is constrained by internal and external factors that are not easily controlled. Morocco is in a more favorable neighborhood that encourages FDI and a more stable domestic political structure. Jordan faces both short and long-term challenges that are intertwined with all of their neighbors.

An article in The Jordan Times on the reaction to the IMF  tough love agreement noted, “This means there are more hard times ahead for Jordanians…the targets set by the government seem too difficult to achieve within the framework and the time schedule agreed on with the IMF.” The government is in a quandary inherited from the previous administration. With a public debt equal to 93% of the country’s gross domestic product, “and the stubborn problems of poverty and unemployment,” former finance minister Mohammad Abu Hammour blamed the fact that “There have been no real economic reforms over the past years in Jordan. Reforms should have been incremental, because they cannot be done overnight.”

The former minister said that the situation is already gloomy as exports dropped by 10% in 2015, foreign direct investments declined by 35%, and “unemployment rose to the unprecedented 14.2% mark.”

While Arab countries face similar dilemmas – a demographic bulge, inadequate education resulting in a mismatch between education and employment, and stagnant to slowing growth, the political dynamics of each country require avoiding a single remedy formula.

In Saudi Arabia the focus is on economic restructuring to promote jobs for men and women and soak up all those Saudis who are being educated abroad since there are few excellent universities in the Kingdom. This, of course, does not resolve the issue of those young people who are not university bound but still want jobs.

Jordan is different. It has no sovereign funds to bridge its economy to a brighter tomorrow. It hosts hundreds of thousands of refugees that have absorbed any spare capacity to deliver services. And it has to rely on infusions of foreign funds and loans to maintain its operations.

jordan flagSo what should Jordan’s government do? Given the obstacles of growing an economy burdened by providing services to citizens and refugees, here are three paths to follow, each with its own consequences. First, Jordan needs to cut government spending – always tough when there are so many vested interests in the current system. Secondly, Jordan needs to move more proactively to create a more business-friendly environment, promoting transparency, reducing corruption, and building public-private partnerships focused on short to medium term results.

One area that needs more emphasis is on convincing wealthy Jordanians at home and abroad to make significant job-creating investments in their country. Real estate aside, there must be more productive sectors for Jordanian, and Moroccan investors. Jordan and Morocco have wealthy citizens that could contribute to the country’s growth if they were incentivized properly. Investment capital is notoriously risk averse so this will take the most persuasive power of both monarchs.

Local investment funds, properly incentivized, can be quite powerful in the near term for targeting job growth for unemployed university graduates as well as those in the vocational/technical skills groups. When under- and unemployed youth believe that they can get jobs with wages for more than basic necessities, they will take advantage of many programs available to equip them for jobs in commerce and industry…but they must see a way forward.

Jordanian economist Hosam Ayesh summed it up best when he said “Increasing prices of water and electricity as of next year will push up the prices of many commodities. Citizens are always asked to tighten the belt, but shortly, there will be no belt to tighten.” Long days ahead.

A Taste of Ramadan

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Being in Jordan gives me the opportunity to focus on lessons that come from everyday experiences sometimes overlooked in the frenetic pace of living in the US. For example, during Ramadan, we are all encouraged to slow down, reflect, and renew our spiritual as well as human relationships in deeper and richer ways. This is true no matter what faith you are…Ramadan is pervasive in its impact on our daily lives.

I was struck the other night, during iftar at a friend’s house, how the fruit, in particular, seemed to be so much sweeter than in Washington, DC. I remarked on this to my friend and he replied that everything tastes better in Ramadan because of the physical and spiritual anticipation of enjoyment that comes from fasting and prayer.

This made me think about why we eat, what we eat, and how much we miss when eating becomes so routine that we lose some of our sense of taste because we are always in a hurry, on to the next activity. Ramadan enables us to slow down, appreciate everything that we have, acknowledge God’s generosity and wisdom, and the simple pleasure of sharing food together.

No less a source than the UK National Health Service commented on the relationship between fasting and enjoyment. “After a few days of the fast, higher levels of endorphins appear in the blood, making you more alert and giving an overall feeling of general mental wellbeing.”

Well, some may argue that, at least on the surface, fasting does nothing for the level of patience or driving acumen of those who are fasting. Many cab drivers charge more for being on patrol during Ramadan despite having meters, making Uber much more popular! So where do I see the link between Ramadan practices and greater appreciation of one’s life? It’s in the the iftar meal that the richness of the experience of just being together, engaging in discussions ranging from the present insanity of world politics to preferred vacation destinations, and sharing foods that demand slow and thorough appreciation.

Whether one is in someone’s home or indulging in a copious buffet at a restaurant, the enjoyment of the meal, particularly after a day of fasting, signals a contentment and respite from the demands and challenges of daily lives.

That said, you’re probably wondering why I picked this theme and what this teaches me about work and enjoying the “fruits” of our labor, something that is a central goal of workforce development, which is why I’m in Jordan.

If we have a taste for achieving something, in the short term it could be as simple as a new shirt, or in the longer term a vacation or a car down payment, it all begins with working. Whether we are attracted to the work at first or not, there is a clear link between our labor and our reward, much as there is between fasting and the enjoyment of food.

More importantly, when we break the fast, or when we buy the shirt, we have a sense of satisfaction that is beyond the physical act of acquiring or consuming something. There is a spiritual and moral dimension to our satisfaction that derives from knowing that we have “earned” our reward.

Vocational training starts with learning by doing

Vocational training starts with learning by doing

So it is with work. What appears to be a mundane, routine, unexciting job may be exactly that, but what we are learning through that experience may enable us to see more opportunities ahead that we might not yet be able to appreciate. The human experience is one of trial and error; we learn by doing, not by sitting by and waiting for life to come to us.

This is the challenge of promoting a “culture of work” in Jordan and elsewhere in the Arab world. Low entry salaries, poor working conditions, routine tasks with little apparent future prospects, and all of the other challenges inherent in many jobs put an emphasis on “labor” rather than learning. Many young people here and throughout the world do not see the benefit of working as learning.

To make this point, there is a growing emphasis on soft skills training, career guidance, and subsidies to bridge the entry of new workers. The effectiveness of these programs are limited without attending to the larger issues of adequate wages, sufficient benefits, safe and healthy workplaces that promote retention and increase profitability, and serious government attention to enforcing policies to protect women and vulnerable communities.

If the lessons of Ramadan could be carried into the workplace, perhaps more job seekers would take the risk of entering the workforce under less than ideal conditions with the anticipation that the life lessons may just yield the sweet fruit of a successful life.

Thinking Aloud About Islam and Work

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Several years ago, I was part of a project in Saudi Arabia for the Ministry of Labor on restructuring curricula for the Technical Vocational Education and Training (TVET) sector. It was a very sophisticated effort including outreach to families and communities, revising the Qur’anic content in the syllabus to focus on work themes, and introducing widespread usage of English, innovation, soft skills, and problem-solving teaching methods in both the male and female programs.

It was, and still is an innovative effort to remake perceptions of the value of skills-based work as a career and contribution to the larger society. Recently announced plans to restructure the Saudi economy include a strong determination to have more Saudi men and women engaged in the workforce. This has been a theme since the 80s offset programs, Saudization (nationalization of the workforce) in the 90s, the nitaqat version unveiled in early 2011, and the new and improved nitaqat tied to the Vision 2030 reforms.

As explained by the Minister of Labor, Mufrej Al-Haqbani, “The government planned a new form of Nitaqat that would not focus merely on the numbers of Saudi nationals hired but also on factors such as women’s employment, the average pay of Saudi nationals, the ratio of the wages of Saudis to non-Saudis, and the sustainability of jobs occupied by local citizens.”

These same challenges exist throughout Arab countries, from Morocco to the Gulf, where many university graduates sit unemployed and underutilized due to a lack of market-ready skills, while hundreds of thousands of vocational and technical jobs are either filled by foreign labor or go vacant. Rates of unemployment among women are usually twice or more as those for men, and little or nothing is done to accommodate handicapped workers.

Women in a medical glove factory in Malaysia @hardrainproject.com

Women in a medical glove factory in Malaysia @hardrainproject.com

Muslim majority countries, especially in the Arab world, find it difficult to recruit labor willing to work in jobs unappealing for a variety of reasons: poor pay, lack of benefits, low social status, and poor working conditions are most frequently mentioned. Using Jordan as another example, a dichotomy is apparent. Jordanians waiting for the “right” job while Muslims from other countries show no hesitation to take manual technical and vocational jobs requiring very hard work without protections or future guarantees.

One could argue that for Jordanians, in their own society, there are constraints in the environment, such as social status or Islam that influences the choice of jobs. Yet that is not consistent with other Muslim countries whether one is looking at men working in the dye pits of Marrakesh or the women in Malaysia working in textile and industrial production lines.

One’s willingness to work may be affected more by local attitudes rather than other cultural considerations. In this regard, what Islam has to say about work is very instructive for both employer and employee in defining cultural values around labor.

My favorite passage on work from the Qur’an is “The Messenger of Allah (PBUH) shook the hands of a man on whom he found the effects of a rough manual labor, then said: ‘This is the hand that God’s love and His Messenger.’” And when asked what type of earning was best, “Prophet Muhammad (PBUH) replied, “A man’s work with his hands and every (lawful) business transaction.” (Al-Tirmidhi, Hadith 846) These passages remind me of my parents who immigrated to the US, ran their small businesses, always had vegetable gardens to tend, and believed that one learned important life lessons through honest labor.

Speaking about manual labor, the Prophet said “If any Muslim plants any plant, and a human being or an animal eats of it, he will be rewarded as if he had given that much in charity.” It is also written “Allah loves, when one of you is doing something, that he [or she] does it in the most excellent manner.”

The Prophet Muhammad (PBUH) also spoke directly to employers, “You should pay the laborer his wages before his sweat dries.” (Sunan Ibn Mâjah (2443) This addresses the central message of ethics in business, non-exploitation of labor, and justice – qualities both Islamic and universal. It is not surprising to find strong support for business and work in the Qur’an and hadith, given the revelations and the Prophet’s own honoring of labor and business as a community responsibility and benefit.

As governments throughout the MENA region look for effective means to motivate young people to acquire life skills built around technical and vocational capabilities, drawing on cultural and Islamic norms can be a persuasive entry point. Remembering too the responsibilities of employers to provide sufficient wages, respectful behaviors, and beneficial working environments should be promoted as both an obligation and good business sense.

 

[image from Slideshare.net]

From Here to Where and Mostly not There Yet

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From time to time, pundits in and outside the Arab world take on momentous themes and begin the process of analyzing, synthesizing, and opining so thoroughly that readers may begin to believe that these issues resonate with Arab masses. Such is the recent imbroglio about the legacy of the Sykes-Picot agreement.

I’m in Jordan, having just passed through National Independence Day, the 100th Anniversary of the Great Arab Revolt, the anniversary of King Abdullah’s coronation, the dissolution of the Lower House of Parliament and upcoming elections, and several notable birthdays. There is little or no public interest in discussing Sykes-Picot even though it is in many ways directly linked to Sherif Hussein bin Ali’s move to overthrow Ottoman rule. What is on their minds is the same agenda since the Arab Uprisings emerged in late 2010 – economic opportunity, personal dignity enshrined in human and civil rights protections, government and private sector accountability, and derivatives from these core issues.

As my friend Rami Khouri has argued, there is plenty of blame to go around as to why the Arab world, which once had once of the highest education rates in the developing world, has gone astray in terms of its human, social, and economic development. He writes, “So by all means let us recall Sykes-Picot and its consequent tumultuous century, but let us also summon honesty and integrity in analyzing all the regional and global factors that have led to today’s horror shows of stunted, staggered and shattered Arab statehood. We did this to ourselves, to be sure, but not only by ourselves; we had considerable assistance from many others in the region and the world. This was one of the world’s first global joint ventures in deviant political behavior.”

I have talked to dozens of people here about “who to blame” for the current state of disarray. Beyond half-hearted references to the Israel-Palestine conflict, respondents mentioned economic issues, transparency in public and private sector transactions, and political accountability as the common obstacles that eroding Arab countries today…themes consistent with the Arab Uprisings. Regardless of their positions on Syrian refugees, a very complex topic in Jordan, the bottom line is that Arabs I spoke with from Egypt, Morocco, Lebanon, and Jordan look at the governance in their countries and the region as sources of the most significant obstacles to development.

Their responses varied from a country’s inability to stand up to external pressures, inability to agree on internal priorities in a consistent program, weak institutions, meddling by neighboring troublemakers that siphons off needed domestic investments, weak and corrupt government institutions that should protect citizens, to the deeply held feelings that nothing can be done anyway.

jordan flagJordan is a test case worth assessing. With its access to its Syrian and Iraqi markets greatly diminished by road closures caused by Daesh, Jordan is suffering mightily. Saudi Arabia has negotiated a new investment agreement and there are ongoing negotiations with the EU that could boost exports. But months are passing, refugee numbers are increasing, personal savings are dwindling, and costs are building across the board. Citizens are troubled by the opaqueness of their futures as the economic situation continues to decline and political solutions seem like more words on paper. International donors are pouring hundreds of millions of dollars into Jordan but the lower and middle socio-economic classes do not have a sense that prosperity is any nearer. Much of the funding is directed toward increasing employment for Jordanians and Syrian refugees but any significant change in the next year is elusive.

Without open borders and greater market access, significant direct foreign and national investments in Jordan will not find opportunities for projects to generate the hundreds of thousands of jobs needed in the coming years. Looking across the region, a similar profile emerges – lack of stability in Lebanon, reduced growth expectations in the GCC and Algeria, continuing security pressures on Tunisia and Morocco, and Egypt’s reluctance to open public space to competition in business and ideas, not to mention chaos in Syria, Iraq, and Yemen, make the glimmer of a silver lining even more remote.

None of these conditions can be attributed either directly or indirectly to the false legacy of Sykes-Picot. Without a new social contract among a country’s citizens and with their governments, one based on mutual respect and shared commitments to resolve common challenges, prospects will remain difficult to divine, even as the pundits continue to blame others for the Arab present.

 

[Photo property of  Irregularwars.blogspot.com]