Monday, March 27, 2023

Addressing inequalities in Jordan 26/03/2023

Countries like Jordan, which adhere to and follow the reform paradigms of the Bretton Woods Institutions  namely the International Monetary Fund (IMF), the World Bank, and the World Trade Organization — hardly ever focus on assuaging inequalities, including gender inequality, which combine to create costly deficits in their economies. The government should avoid being labeled as a creator of inequalities by simply ignoring them in the course of its avowed compliance to IMF policies.

The Jordanian economy suffered over the last 25 years from a rise in the numbers of both the extremely poor and the extremely rich. To be fair, this has also been a global phenomenon. However, in Jordan this was coupled with escalating challenges caused in part by the lack of emphasis on productivity and public innovation. Consequently, the economy currently suffers from high levels of national debt (similar to early 1990s levels), the highest unemployment rate in the past 30-some years and a 50 percent unemployment rate among youth, and fast-rising interest rates, where the Central Bank of Jordan and private banks increased interest rates eight times in the past 12 months.

Furthermore, even though the COVID-19 pandemic alerted policy makers to the plight of women and underscored the necessity to address the disparities they suffer from, it seems that, after a mere two years, the distress call has ebbed and withered, and even vanished due to neglect, yet again. In spite of an intellectually active and vibrant civil society that has appeared to gain strength and make some progress towards diminishing the gender gap, that progress has remained slow relative to the rest of the world.


Strategic shortcomings As a side note, feminist economics is not the only field where Jordan has failed to win the race. While economists around the world have been focusing on new streams of economic thinking, such as behavioral economics, integrating innovation into economic policy and the public policy debate, and modern monetary theory, Jordanian economic policy remains traditional or orthodox in almost every sense of the word.

Worse still, the economic debate in this part of the world remains focused on government budget deficits, and the rising national debt — not on how and where the money should be spent, or how to bring about equalities where there are inequalities. What is more, if inflation threatens advanced economies that pumped trillions of dollars into their economies in a bid for sustainability as a quick response to COVID-19, Jordan timidly follows the age-old response of “raise the interest rate”, even though pandemic measures in Jordan did not come close to those of such economies.

Types of inequalities On a positive note, gender inequality in education has been reversed. Jordanian women are now better-educated than men. However, wage inequality in the private sector has widened as the gap has increased from 15 percent to 17 percent. Moreover, Jordanian women still suffer from one of the lowest labor participation rates in the world.

Among the other inequalities that Jordan experiences are spatial income inequalities in urban and rural spheres as well as at the governorate level. Inequality among governorates, caused by disproportionate access to infrastructure, education, and health services, contributes even more to the Kingdom’s total inequality than urban-rural inequality. This spatial inequality contributes significantly to income inequality and economic growth imbalances, especially since Jordan lacks an adequate public transportation system, which results in a daunting lack of geographic mobility among the poor.

Another inequality is in the realm of education, tied to the wealth and education levels of parents. Children of the poor go to public schools where government spending has been stagnant, insufficient, and inefficient for more than a decade. On the other hand, the children of well-to-do parents attend private schools, some of which are on-par in terms of quality of education and fees with the top private schools of the world. Needless to say, this leads not only to income inequality but also to intergenerational immobility among the poor, and a no-exit-through-learning status quo. One must caution that such a state of affairs in education creates a dangerous schism in society that grows from one generation to the next.

What can the government do? Part of the solution to Jordanian inequalities is a set of progressive economic policies. At the education level, such policies include investing in education and ensuring equal access to services, internet, and social security; launching awareness campaigns on the benefits of education to reduce the drop-out rate; and further subsidizing school supplies, conditional on parents’ income and wealth. The government can also impose stricter measures to combat child labor, offer better-targeted full scholarships to less advantaged children, and implement a flexible program allowing university students in need to work on campus to cover some of their expenses.

In terms of progressive fiscal policies, a starting point would be a progressive income tax, avoidance of the IMF prescriptions and paradigms, income redistribution aimed at reducing wealth inequalities, and a comprehensive package of public services. The government should also take measures to combat involuntary unemployment, enhance access to social security, provide adequate and timely minimum wage laws, ensure that the country has an effective, first-rate antitrust/competition law, and emphasize spending on innovation, digital technologies, and artificial intelligence without undermining job security for the current and future labor force. Finally, to encourage local economic development and decrease spatial inequalities, there is an urgent need for a proper public transportation system.


Published in Jordan News: 

https://www.jordannews.jo/Section-36/Opinion/Addressing-inequalities-in-Jordan-27756

 

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