Feeding the Beast – Time to Separate Politics from Economic Reforms?

Image property of SyrianFreePress@wordpress.com

Jordanians have been waiting months for a new national employment plan that is supposed to revamp the education and training systems to bridge the gap between education and employment; and provide guidance for the integration of Syrian refugees into the country’s workforce. It may appear after the Eid.

There is an interim government in place, tasked with preparations for elections in September, running the country, and implementing an agreed IMF reform agenda. According to the IMF, “These reforms will be focused on the business environment, the energy and water sectors, the financial sector, and the labor market. The reforms will also focus on protecting the most vulnerable segments of the population and in supporting Jordan’s efforts in hosting the Syrian refugees.”

he reforms include strengthening the tax base, controlling public spending, dealing with tax incentives and income tax in general, and ensuring the national safety net for the most vulnerable constituencies. The goal is to improve employment opportunities; encourage transitions from the informal to formal economy and support SME growth; promote cost recovery in the energy and water sectors; and improve the country’s financial system though greater transparency.

King Abdullah then announced an Economic Policies Council “to discuss economic policies, programs and development plans, supporting the government’s efforts aimed at overcoming economic difficulties, investing in opportunities, achieving higher growth rates and enhancing the competitiveness of the national economy.” Few women were in evidence on the Council’s roster.

The announcement of higher prices for water and energy were greeted with some small protest demonstrations and, according to the media, young people involved were demanding jobs. They initially turned down offers of private sector employment, preferring government jobs. Whatever the actual outcome, it was reported that they eventually agreed to work in the private sector…no further details.

Popular resentment towards tougher economic policies is not surprising…the US itself is unable to fund badly needed infrastructure repairs due to political sensitivities. Here in Jordan, the announcement of more economic reforms elicited three responses from local friends I consulted: the government hasn’t been doing its job properly; more meetings are a way to delay implementation of needed changes; and the government must do more to incentivize the private sector.

Women are underutilized in Jordan’s development

Speaking about unemployment, one said that if Jordanians really wanted to work, there are plenty of opportunities to replace the half-million foreign workers in the country. He believes that until the government undertakes effective economic strategies that investors will not take Jordan seriously. He also spoke about the need to more proactively engage the informal sector through certification programs that enable those working outside the system to be licensed and trained to run their own businesses.

Another friend spoke about replacing the many job subsidies offered by the government with a higher minimum wage, better working conditions, and better use of government resources to eliminate waste and inefficient procurement processes. This would enable the government to pay more attention to fighting corruption and promoting effective governance, not to mention put in place more attractive job conditions.

A third source noted challenges to the economy from the impact of regional conflicts which is stifling commerce and scaring investors. He believes that business friendly reforms are the key to attracting more investments and so supports the start-up on the Economic Policies Council and the progress of the Jordan Investment Fund.

What these various perspectives underscore is that Jordan, at least for these sources, has a long way to go to rebuild the ties between decision-makers and the people. There seems to be a shrug when hearing about sacrifices needed when GID officers steal arms meant for anti-Assad fighters and sell them on the black market – their only punishment being kicked out of the service keeping their pensions and ill-gotten gains.

King Abdullah seems to sense that time is against the country. At the first meeting of the Economic Policies Council, he tasked them to “put solutions in place without any [hidden] agendas except serving people and combating poverty and unemployment. These are the interests of the people who are concerned with issues that matter to the country.”

For its part, members of the Council “underlined the indispensability of a participatory approach in the economic decision making and integrity between financial, monetary, investment and labour policies.” Time will tell is this is a call for effective action or another opportunity to avoid proactive and sometimes painful policies.