The Fate of the Middle Class

By Fahed Khitan

تم نشره في Sun 17 September / Sep 2017. 12:00 AM - آخر تعديل في Sun 17 September / Sep 2017. 10:22 PM
  • Fahed Khitan

The current debate on economic and tax policy reforms centres around one main question: how to protect the Middle Class from the repercussions of the upcoming amendments.

Inarguably, the middle class is the spine of society and the catalyst of any country’s economy.

The vitality of the middle class comes not from its size, per se, nor the fact that it comprises the vaster majority of a country’s socio-economic segments, in terms of income. While there may be a correlation, statistically speaking, the more direct factor is the fact that the middle class comprises the bulk of a market’s purchasing power.

It has been some time since the government last stopped to check on how the middle class in Jordan is fairing the economic slowdown and policies.

The Social-Economic Council’s obsolete research is the latest record we have on any such thorough investigation into the economic affairs of the middle class.

A lot has changed since the Council’s research, presided by Minister Abdul Elah Khatib and supervised by former Minister Ibrahim Saif.

Since then, the very composition and status of the middle class has changed.

Naturally, components of the middle class rise on the income scale to the upper-income segments, while others sip into poverty.

In the first case, most of those who make it out of the middle segment to the upper belong to the private sector, while most of those who sip into poverty are public servants and employees.

Not to trivialise this issue, the more catastrophic problem is the income-cost gap.

Most probably —and this is just a hypothesis— the middle class faces the challenge of meeting the needs of their lifestyles.

From quality education to residence, not to mention at least some luxury, these expenses are far higher now than they were just a few years ago!

The middle class faces exponential erosion in the face of skyrocketing expenses and costs of life, to their standards, while their salaries remain the same, for the most of course.

Meanwhile, healthcare may not be a problem for the middle class, as they are mostly covered by private sector insurance, which does not incur a lot of costs for them.

There is an abundance of examples on successful economic reforms from around the world.

Many countries were able to mitigate the implications of economic reforms on the poor and lower-income segments of their societies, by enacting subsidy and aide programmes.

However, very few of them have managed to carry the middle class through to safety.

This is why popular discontent is rising in many European and Asian countries among social components which fall within the category of the middle class.

Rightly so, because the middle class are the most politically and economically active components of the society, but are still the ones who take most of the damage!

Hence, economic reforms in general need to safeguard the incomes of this particular segment in society; from social welfare to pension in the public sector.

In the public sector too, many companies are letting go of their employees or are downscaling their salaries.

As for the middle class in Jordan, it may be a little different as to how it immerged.

Over the decades, our middle class immerged from the heart of the public sector, and then developed with the growth of the private sector as economic activities expanded and varied.

In all the years leading up to the last decade or so, the middle class endured all the economic challenges it faced.

However, the wave of “neoliberal” reforms in the last ten years seems to have overwhelmed the Jordanian middle class.

The worn out segments of society, once the cornerstone of economic progress, now faces peril that is above its actual financial and economic weight.

This is especially try in the light of the deteriorating economic slowdown and the growing regional instability, which has suffocated our sectors.

Jordan is among the countries most affected by the situation surrounding it.

If the government intends to really protect the middle class and maintain whatever capacities left for it to survive, then far more thorough research is in order.

The government needs to fully understand the class’s decaying abilities before pushing forward any tax amendments.

In fact, the government has to direct any and all economic propositions and endeavours towards sustaining and growing the middle class.

Once again, this segment of society is the pillar of economic progress and the pace-keeper of society; it is the core component of social national security.

This article is an edited translation of the Arabic version, published by AlGhad.