Jordan aims to reduce unemployment

With the help of grants from the Gulf, the Jordanian monarchy will initiate a 10-year socioeconomic plan to focus on high productivity sectors, entrepreneurship and unemployment.

al-monitor A Jordanian laborer works at a car filter plant in the Jordan Gateway Industrial Park, a free trade zone straddling the Israel-Jordan border, south of the Sheikh Hussein Bridge, Jan. 29, 2014. Photo by REUTERS/Baz Ratner.

Topics covered

unemployment, syrian refugees, king abdullah ii, jordanian government, jordan, economy, business

Dec 16, 2014

Jordanian Planning and International Cooperation Minister Ibrahim Saif considers unemployment one of the major obstacles to Jordan’s economy.

Speaking to Al-Hayat, he said Jordan encountered significant challenges over the last years as a result of external factors, and noted that he implemented many reform programs and plans, which have achieved great success in order to meet these challenges. Yet, the Jordanian economy is still suffering from some [challenges], most prominently high poverty and unemployment rates. He explained that King Abdullah II instructed the government on the need to develop a socio-economic vision, through which the features of the path toward economic recovery for the next 10 years are determined, with a focus on value-added and high productivity sectors.

Although the unemployment rate declined from 12.9% in 2009 to 12.6% in 2013, Saif said it's still high, as a result of some factors such as the demographic shifts and lack of harmony between the outputs of the various education stages and labor market requirements, as well as the competition between migrant labor and local labor force.

When asked about the impact of Syrian refugees on the high unemployment rate, he replied: “The Syrian crisis has significantly affected all of the Jordanian fields, and placed pressure on infrastructure and services, in addition to the labor supply and demand. Most of the jobs were taken by low-skilled and low wage migrant workers in the construction, agriculture and manufacturing sectors. Migrant labor is competing with the Jordanian labor in occupations that used to be exclusive to Jordanians.”

He noted that growth rates were mainly associated with foreign direct investment in the real estate and construction sectors, which heavily employ migrant labor. Thus, unemployment rates have continued to increase from 2003 to 2008, despite good economic growth, which reached nearly 6% during the same period. He added the government sought to focus on encouraging private sector investment in the sectors that require a great deal of skills, in which Jordan has a competitive advantage in the economy and has showed a real ability in the exportation field.

He added that Jordan needs to achieve a nearly 6% annual growth rate, as a result of the growth in the sectors that require a great deal of skills, to reduce unemployment in the future. These growth rates should be accompanied with sectoral reforms designed to improve companies’ employment environment in a fair and balanced manner. He explained that 35,000 job opportunities were created for males in 2013, and 19,000 for females, and that more than three-quarters of these jobs were created by the private sector, and about 21% by the public sector.

Regarding the projects financed by the Gulf grant and job opportunities, he said the total value of the Gulf grant is 3.545 billion dinars ($4.9 billion).They are equally financed by Saudi Arabia, the UAE, Kuwait, and Qatar, and [the grant] is designed to pay for development projects in Jordan over the next five years. He emphasized that the preservation of growth rates and reduction of unemployment rates are the two main challenges to the Jordanian economy. Jordan has strong human capital, and a good numbers of skilled labor. He noted that in the next phase, the work will focus on the encouragement of small and medium enterprises and entrepreneurship, which generate employment opportunities.

In this context, economic expert Joseph Mansour said there are several reasons leading to high unemployment, most importantly the informal economy, whose objective is to evade taxes, and the desire to work in the public sector. He added that employment rates in the public sector are nearly three times the rate of population growth, which has encouraged the youth to be employed in the public sector, where the work conditions, health and social insurance, stability and low working hours are provided.

He noted that other factors, such as public transportation means, are absent in Jordan, and that the private sector is weak and doesn't rewards the employee with an income that goes in line with the effort made, and sometimes health and social insurance are not provided.

He added that the investments that are supposed to generate job opportunities go to the unorganized sectors, such as the construction sector that attracts migrant labor and brings harm to the country. He pointed out that unemployment rates in the high-growth periods in the past reached 13.7%, while this average decreased during the economic recession between 2009 and 2013 to 12.6%, which means that the period of economic growth brought damage to the Jordanian labor force and did not increase employment rates. He said that “We are in dire need for the economic growth rates to be accompanied with the employment of Jordanians, not the immigrants.”

He continued that unemployment challenges are reflected in the weak relationship between economic growth, employment, demographic factors, the trends in the demand for labor, employment policies in the public sector, inefficient programs for employment, low levels of training, and a weak public transport sector which prevents employees from remaining in their place of residence and working in another province and thus increases unemployment rates in the provinces.

The Department of Statistics released its quarterly report that showed that unemployment rates in Jordan for the third quarter of the year reached 11.4%, down from 12% in the second quarter. Qasim al-Zoubi, general director of the Department of Statistics has attributed the decline to several reasons, including employment policies in the public and private sectors, which contributed to the employment of additional Jordanians. He added that unemployment rates for males decreased and those for females increased, and was high for university graduates as it reached 17.9% compared to other educational levels.

He pointed out that 57.7% of the total unemployed are high school or [university] graduates, and 42.3% of the total unemployed do not hold high school degrees.

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