Davos and social inequality in MENA and beyond

12/02/20 - Ahmad Awad, Director, Jordan Labor Watch

Ahmad Awad, Director at Jordan Labor Watch, gives his take on the role of economic and labour policy in maintaining social inequality

Social inequality refers to the significant differences in income and wealth among individuals, and the concentration of wealth in the hands of a limited number of people at the expense of the increasing number of the poor and persons with low incomes. At the macro-level, social inequality is the result of the prevailing economic system across the globe. But at the micro-level, the various components of governments, organizations and corporations can perpetuate social inequality.

Social inequality earned a prominent place on the World Economic Forum (also known as the Davos Forum). The Davos Forum has been held for over fifty years in the same-named Swiss city and concluded its sessions a few days ago. The discussion platform has become one of the instruments to increase the discourse on fostering the continued global capitalist system based on the freedom of markets and finding solutions to the stalemates in the system. Nonetheless, as a growing global issue reaches unprecedented levels, social inequality becomes a hot topic among the invited participates from relevant sector of politics, economy and society. However, the discussed issues in the forum cover not only global economic issues and relations but also strategic and environmental issues and other contemporary challenges.

To recognize the recent severity of social inequality, it suffices to know that 1% of the world population owns nearly 60% of world wealth and the richest 1% of the global population bagged 92% of the world wealth generated in 2018, according to Oxfam report, an organization focusing on the alleviation of global poverty. Experts and global economic institutions agree that social inequality is not a matter of fate. Similarly, wealth concentration is not the natural consequence of hard work, rather the result of certain economic policies that enabled the accumulation of such wealth in the hands of a few at the expense of the majority population. These policies prevent the fair redistribution of wealth across the various sectors of society. Perhaps the most important economic policies that contributed to worsening social inequality in a significant way are the tax policies that largely rely on indirect taxes and giving corporations and individuals with high incomes tax reliefs, in addition to the lack of strict enforcement of wealth taxes.

Furthermore, there are labor policies that promote the application of flexible work standards as an alternative to decent employment standards, and policies that reply on putting pressure on labor wages for the various labor sectors with the aim of promoting economic growth and investment. In addition, spending on the various stages of education (primary, middle, secondary and college education) is weak, thus limiting access of the poor and people of low incomes to opportunities of good education and depriving their children of possibly getting jobs with fair incomes, thus leaving them with the most vulnerable types of jobs.

Because of its alarming increase, social inequality prompted economists and sociologists alike to warn against its risks on societies, and international economic institutions, such as the International Monetary Fund and World Bank, and a number of billionaires across the globe to sound the alarm about the persistence of the current affairs. They have further demanded the modification of economic and social policies to alleviate the increasing social inequality.

We, in the Arab region, are not totally exempted from the escalating issue of social inequality. The Arab region is one of the regions where the issue is increasing according to relevant global reports. Similarly, here in Jordan, the consequences of growing inequality are visible and can be felt. Some recent government policies aggravated the social inequality, which shows clearly in the extent of poor people, and the majority of wages lower than the absolute poverty line for households. On this matter, the government made retrogressive amendments to the labor and social security laws last year and took a reluctant position on the issue of raising the minimum wage which increased the poverty in the country.

Ahmad Awad is the Director at Jordan Labor Watch