Private vs public sector

The private and public sectors in the Arab world and their envisaged roles in the future were at the heart of discussion at the 16th Annual Arab Business Community Forum, organised by the Federation of Arab Businessmen on Saturday at the King Hussein Bin Talal Convention Centre.

In the first panel, the discussants were entrusted with the task of assessing the Arab economic situation. One of the issues that was raised among them all was the need to restructure and streamline the relation between the two pivots of the economy.

In the Arab world, we tend, in general, to have big government sectors that are over-employed and under-achieving. The wage bill takes up a large part of the total current expenditures, estimated at 50-65 per cent, including pension payments. The average public sector employment, both civil and military, constitutes 40-50 per cent of the total labour force.

Governments are expensive and, ironically, their main business is to resolve their own problems instead of being an apparatus for facilitating peoples’ lives and executing their duties of ensuring equity, justice, protection, supervision and security.

In the post-colonial era, governments were lean and productive. As they began to grow and become the employer, they became mean and efficient. Eventually, they turned into obese entities, mainly focused on remedying their own situations. The difference between efficient and productive is that efficient means doing things right, whether needed or not, but productive or effective means doing the right things.

For governments to become productive and effective, they must abrogate a good deal of what they do and relegate it to the private sector. Governments are no more capable of regulating and supervising with the heavy load of doing things they should not do.

Budgetary deficits and mounting public debt have reached unsustainable levels in the Arab world. They are keeping the economies captive to lenders, domestic and foreign alike, and eventually they will fail, causing huge long-term economic crises.

Most Arab governments, even oil-rich countries, are now fighting to salvage their economies from the bondage of rentiership, which is not affordable anymore. Thus, we need political reforms to redefine the relationship between the two sectors in accordance with an agreed national strategy and unity of purpose.

We need to define the roles and responsibility of each sector under the power of law that is applicable to all.

And finally, we should begin a process of change that would guarantee us more economic integrity and independence.