National revival requires deep economic reform

Among the many pressing dilemmas we live with, the growing levels of unemployment stand out as a byproduct of, among other things, weak economic growth. In order to address it properly and yet partially, we must have the capacity to grow the economy at a 6-8 percent rate per year. This magnitude of desperately required economic growth necessitates serious structural economic reforms that go beyond sporadic, inconsistent, and cosmetic interventions. These reforms are: significant reduction of energy costs, cheaper access to land, less stringent and more flexible regulatory environment.اضافة اعلان

At a 25 percent national unemployment rate and nearly 50 percent of youth unemployment, business as usual in an unusual time is not an option for “all” state organs. When 207,000 adults sit in on the final school exam in 2021, it means we have a new wave of entrants to the labor market. Nearly 70 percent of the successful candidates of the exam, about 113,000 students, were accepted at universities, public and private. This means that nearly 130,000 individuals, who either failed or passed the secondary school exam, joined the labor force. Add to them nearly 60,000 graduate and postgraduate who joined the labor force, it comes to nearly 180,000. If these numbers remain similar in the next 6 years, we will have over 1 million fresh entrants to the labor market. Between 2010 and 2019, the economy generated, on average, nearly 48,000 jobs per year, 33,000 by the private sector and 15,000 by the public sector.

Although, on average, the private sector constitutes 86 percent of gross domestic product (GDP) and the public sector accounts for 14 percent of it (according to data from the Department of Statistics and Jordan Strategy Forum), job generation is disproportionate, as the public sector generated 31 percent of the total new jobs between 2010 and 2019 despite the fact that it makes 14 percent of the GDP, again on average between 2010 and 2019.

Therefore, the public sector is saturated and is the wrong avenue through which to address the unemployment problem. In fact, the sector needs a major overhaul that is based on clarity of roles and responsibilities, job descriptions, competition, and performance-driven upskilling and reskilling programs that lead to a fire and hire approach to reenergize the public sector.

To grow the economy, we must reduce the cost of energy. The state must relax the asphyxiating grip of National Electric Power Company (NEPCO) on the economy and the country. It is absolutely perplexing to watch the abundance of renewable energy not being utilized because of the classical and unacceptable pretext “no capacity on the grid”. The country must not be held hostage to NEPCO’s inadequate management of the electricity sector.

The “single buyer” model is not working for our economy and it must be reformed. Why should NEPCO buy fuel for the electricity generation? Aren’t we operating a private sector-led capitalist competitive economy? Why is there a monopoly in this sector? Let businesses generate their own energy, let them grow, expand, export, and employ the youth, who will not sit idle for long.

Additionally, both local and international investors are being driven out of the Jordanian market because of the prohibitively expensive access to land especially for projects that require large plots of land, particularly in underdeveloped areas. We are competing over our own Jordanian investors with Egypt, Saudi Arabia, the UAE, and Turkey.

Moreover, the frequently cited problem by investors of “legislative instability” must be addressed with a biding legislation that guarantees stability for at least 20 years so businesspeople can plan their finances and operations properly without fearing unexpected regulatory shocks.

These problems are compounded by high interest rates that render private business uncompetitive and consequently unprofitable. Because of these policies, capital accumulation by the private sector decreased from 22.5 percent in 2010 to 14 percent in 2019, whereas in the public sector it decreased from 4.4 percent to 3.1 percent over the same period. Moreover, the consumer of these policies, the tax payer, who pays 74 percent of domestic revenue in 2021 budget, is not happy. A recent poll of 3,010 adult Jordanians conducted by NAMA Strategic Intelligence Solutions, to be published soon, found that 70 percent of respondents believe the government works for the benefit of “the few” and only 28 percent believe “it works for all Jordanians”.

Dr. Fares Braizat, a former minister of youth, is currently the chairman of the Amman-based NAMA Strategic Intelligence Solutions and Cluster, where he directs public policy-related projects. He was appointed by His Majesty as a member of the Royal Committee to Modernize the Political System where he served on the Election Law subcommittee.

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