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Talal Abu Ghazaleh : ‘Social security requires strong corporate contribution’

Talal Abu Ghazaleh regards the Jordanian private sector “a potential contender to steer the social and economic development in the Kingdom”. As chairman and founder of Talal Abu Ghazaleh Organization (TAGO), the man has launched his efforts to encourage the private sector to gearshift the development process in Jordan, in view of the rising rates of poverty and unemployment.

“The better the private sector thinks how to improve the community, the more prosperous its businesses will be,” Abu Ghazaleh told The Star. He was referring to the government’s rush in its privatization program and its pursuance of a free-market economy. “There is nothing wrong with privatization.

On the contrary, it helps in maintaining better life standards,” he said. “But such life standards can’t be achieved if the private sector remains only interested in making money rather than in developing the society.” He stated that privatization can be beneficial only when the government succeeds in smoothly liberating the economy from public to a private-run one. He assessed the process in Jordan as “good and in the right direction”, but stressed that liberating the economy must be efficient to guarantee better results. “There is nothing wrong in a slow-liberated economy, but the government should keep assessing its move every time it privatizes a major corporate business,” he added.

Over the past decade, the Jordanian government made big strides in withdrawing its control over some of the vital economic sectors in the Kingdom, mainly telecommunications, mining, water and tourism. It is today planning to include other sectors, like electricity and postal services.

Although privatization provides sizeable revenue, the private sector shows little interest in supporting social development. Some major companies have already initiated social support funds, but these are limited and benefit a restricted group of people. “The government is now relying on taxes to uphold its growing expenditure, but taxes can’t meet the government’s obligations; there should be another way to encourage the private sector to work together with the public sector on social growth,” said the 66-year-old Abu Ghazaleh. He extended his group’s support of a comprehensive and intensive awareness campaign to target big corporate businesses in the Kingdom.

The main objective of the campaign, he explained, is to encourage the concerned firms to introduce programs and plans that promote social development among Jordanians. The TAGO’s proposal is within a bigger regional strategy that the organization plans for the Arab world. It offers today a diversity of high-quality professional services for corporate businesses to help them contribute to the economic, social and cultural developments in the Arab world. “There is a famous philosophy known in developed economies that a growing society produces a growing economy. This philosophy must be applied soon in Jordan where money-making businesses failed to provide social security,” he said. He also maintained that society, represented by its civil institutions, must establish mechanisms to assess the function of the private sector. “Once you are able to measure your deeds, you can manage business well,” he stressed. “It is absurd that developing economies always focus on economic indicators for their development, but disregard social ones, which are more important in creating a healthy and prosperous community.”

Social indicators, such as rates of poverty and unemployment, are often measured in surveys and studies conducted by statistics departments and associations. There are other social indicators that should be highlighted to ensure better development process in the country, including consumers’ purchasing power and cost of living standards. “By examining social indicators, economists and corporatists would realize if the economy is in a better or worse shape,” he said. “The social indicators tell us if the financial and economic plans and policies we pursue are appropriate to enhance social security.

If unemployment and poverty rates remain high, it means these policies are inadequate.” Last month the Global Compact Summit called on the International Standards Organization (ISO) to introduce its own version of social indicators that not only abide by the economic indicators but also enforce better awareness among corporate businesses that lead to social security in their respective communities. “Corruption is rife among developing economies, we must coordinate our efforts and initiatives through regional networks to combat corruption and promote cooperation between the developed countries and their developing counterparts.” Here in Jordan, the purchasing power per capita remains stumped due to high taxes and low wages.

According to a recent study by the World Bank, the annual purchasing power parity in Jordan was $4300 in 2003. It revealed an increasing low-income rating among Jordanians, as more than half of the monthly salary is paid in taxes and other domestic commitments. Poverty, meanwhile, affects about one-fourth of the population, according to the study, with an unofficial unemployment rate at 20 percent, while the official rate is 14 percent. Even so, said Abu Ghazaleh, these rates remain high and should be tackled by the concerned parties, including the government, the private sector and the civil societies. They should all work together within a framework of principles and procedures that enhance the social and economic developments in the Kingdom on the long run.

Abu Ghazaleh took part last month in the Global Compact Summit, which was held at the United Nations’ headquarters in New York. The summit featured three categories: Capitalists, developing economies and civil societies. The Summit called for new principles to reassure the commitment of corporate sectors in the world to enhance the social security of their economies.

A new principle was launched at the summit to fight corruption in world trade and to adhere to the principles of good governance, human rights, labor and environment. “A new culture has emerged in the summit that urges the international corporate sectors, especially in the developing world, to commit themselves and be responsible towards their personnel communities and environment,” Abu Ghazaleh said. “As a developing economic country you need to make sure that all companies and corporate businesses adhere to international standards.

Capitalist countries realized lately that they have committed mistakes in always thinking of getting rich at the expense of their communities. We must learn from them and introduce a new trend of capitalism that serves social growth to a large extent.”

Amman,07 27 2004
Ghassan Joha
The Star
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