AMMAN — The increase in the number of companies resorting to the
insolvency law has raised concerns among economic experts
and labor rights specialists, who are calling for urgent measures to protect
the national economy and preserve thousands of threatened jobs. These worries
have emerged amid the challenging economic conditions currently faced by the
Kingdom.
اضافة اعلان
The
Companies Department recently announced that 14 local companies, operating in various
economic sectors, have sought refuge in the insolvency law, Amman Net reported.
Their aim is to restructure and rehabilitate these companies, enabling them to
get back on the right track and resume their operations. The latest addition to
this list is a company that owns a group of
commercial centers in the retail
sector.
2018 Law No. 21
The 2018
Law No. 21 was enacted to assist companies encountering financial difficulties or
those on the brink of
insolvency. It aims to help them navigate through crises
and ensure their continuity by providing the necessary rehabilitation and
support.
Insolvency is defined as the debtor's inability to regularly settle
their outstanding debts or when the total obligations exceed the total assets.
Due to economic growth rates
Economic
analyst and academic, Dr. Qasem Hamouri, attributes this trend to the overall
weak economic performance in Jordan over the past years, with economic growth
rates hovering around 2 percent. This rate is deemed insufficient to generate
alternative
employment opportunities, resulting in the deterioration of
economic conditions for many institutions and investments.
Rising unemployment rates, poverty rates, and other company
difficulties
The impact
of this weak growth is evident in rising unemployment rates, poverty rates, and
companies facing difficulties and being liquidated due to incurring losses
instead of profits.
Unemployment rate around 24 percent
According
to recent statistics, the unemployment rate is around 24 percent, and it is
even higher among youth, reaching more than 50 percent. Moreover, the debt
recently reached 39.046 billion dinars, the highest figure in Jordan's history.
The danger
lies in these companies contributing to the
Gross Domestic Product (GDP),
making their operational disruption a significant threat to the economy.
Additionally, investors fear the repercussions and might flee to neighboring
countries, according to Hamouri.
To address
this problem, he believes that a study should be conducted to understand the
reasons behind these companies' difficulties. It should identify the actual
causes, whether they are related to income tax laws or the abundance of
oversight in economic activities and the private sector, which has pushed them
to this stage.
Meanwhile,
Lawyer Salah Daoud explains that bankruptcy the insolvency law poses a danger to workers, as the agent might
terminate or amend their contracts. In case of contract termination, the
compensation the worker is entitled to receive is a minimum of three months,
regardless of their years of service in the company.
The law
grants the authority to form a specialized committee to assess the company's
financial and economic situations. Based on its findings, appropriate measures
are taken to restructure and rehabilitate the company.
Losing jobs could lead to social problems
Regarding
the workers, Hamouri points out that the number of workers in these struggling
companies is significant, and many of them have families they support. Losing
their jobs could lead to social problems, such as increased crime rates and psychological
depression.
Despite
the deepening economic problems in Jordan, the government has not taken
substantial action to address them. Hamouri holds the government entirely
responsible for this and emphasizes the importance of citizens developing and
enhancing their
skills and education to increase the available job
opportunities.
‘Voice of Workers’ campaign
The
"Voice of Workers" campaign recently issued a statement holding
successive governments and the current government accountable for the flight of
investments and the
bankruptcy of many institutions due to policies based on
borrowing, tax hikes, and favoring capital without considering support for the
national industry, which provides employment opportunities for hundreds of
thousands of workers.
For example, the Jordanian Cement Factories Company "Lafarge"
is one of the companies that resorted to the insolvency law, and a judicial decision approved the declaration of
its insolvency, making it the first company to
be subject to this law since its enactment.
In 2001,
the company terminated the services of around 2,400 employees, despite the
management's commitment not to do so according to the purchase agreement
between the government and the company. However, after three years, their
services were terminated, according to the employees of the company.
The
decision to resort to this law was due to the deterioration of the company's
financial situation, exacerbated by the COVID-19 pandemic, affecting its
ability to fulfill its commitments to employees and retirees.
The
company laid off several employees and stopped providing healthcare services to
retirees before resorting to bankruptcy. Using the insolvency law is seen as an option that allows terminating the
services of more employees at lower costs, according to previous statements
from the member of the Construction Workers Union and a retiree from the
company, Ahmad Zaid.
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