Economists, organisations laud third economic package's action on salaries, pensions

AMMAN — Experts in economy and employers' rights on Saturday commended the government's announcement, made on Thursday, concerning salary hikes for public servants and military personnel and pension increases for civil and military retirees.

"For the government to change its direction, even if temporarily, by turning from imposing taxes to giving incentives to public sector and military personnel and retirees, is certainly a positive step," Economist Husam Ayesh told The Jordan Times over the phone.

Although the government promised not to increase taxes in 2020, Ayesh said that there “still needs to be a science-based analysis” of the sales tax in order to reconstruct it in a certain way.

"Sales tax can be reduced on commodities that are most in demand by the low-income segment, and increased on commodities that are most in demand by those with high incomes," he explained.

The economist said that, although the third bundle is a “positive step forward”, the four-package programme as a whole needs to be a "continuous march forward" to produce positive results. However, he said, this requires an extra package that frames the government's plans to address the Kingdom's budget deficit and debt.

"The deficit after grants reached JD1.25 billion, which is 100 per cent more than what the government forecast for the deficit in the budget of 2019, which leads to extra costs that the economy and the people will shoulder," Ayesh said, adding that any miscalculation in the budget will bring about "dangerous and negative results".

According to Ayesh, the estimations and predictions for the 2020 budget have to be precise. He expressed hopes that the economic reform process as a whole will not be consumed by paying off debts and interests, which is why, he said, a fifth part of the programme is necessary to manage debt.

The Phenix Centre for Economic and Informatics Studies also shared its analysis in a statement with The Jordan Times, in which it said that the government's decision impacts workers' salaries and retirees' pensions positively, especially as their livelihoods have regressed in the past few years.

However, the centre also called for significantly increasing the minimum wage, which it considers a pressing need, noting that the most recent minimum wage increase occurred around three years ago, according to the statement. 

The latest increase brought the minimum wage to JD220, which is “disproportionate to the high cost of living in the Kingdom”, made even higher by price increases of around 10 per cent since the last amendment, the statement said. 

"Minimum wage is a social indicator, the responsibility for determining which is handled by the government to ensure the lowest income provides a respectable life for workers and their families," the statement read, adding that the majority of workers and retirees in Jordan are from the private sector. 

The statement also noted that minimum wage levels in the Kingdom have not followed the pattern existing in most countries around the world, where minimum wage is tied to the absolute poverty line, dependency rates and the increase of living costs.

Addressing the popular belief that the private sector will be pressured if wages are increased, the statement suggests that, in truth, most pressure comes from operational, energy and production costs, which have nothing to do with workers.

Moreover, the statement said, increasing the minimum wage means, for the medium and long term, that demand on commodities and services provided by private sector companies will increase, which will, in turn, boost profits.