A more competitive workforce: Building workers’ skills and attempting to increase employment

 

While Jordan is known throughout the region for the high quality of its education, the emigration of thousands of Jordanians to opportunities in the Gulf and further afield each year results in a drain of highly skilled workers. At the same time, the domestic supply of jobs has only just kept pace with demand, indicating unemployment would be higher without emigration. Government-led programmes are attempting to increase employment and raise the low rates of economic participation by both up-skilling workers and offering attractive incentives to businesses to employ locals.

In 2010 the workforce comprised 1.2m Jordanians and around 300,000 foreign workers, according to the Ministry of Labour. By sector, 28% of workers are in agriculture, 25% in services, 22% in industry and 9% in construction. The government employs 39% of all workers and half of all employed in the public sector are women. Small enterprises are the largest employer type in the country, accounting for around half the of workforce.

UNEMPLOYMENT RATES: Despite a decade of strong economic growth, little impact has been made on unemployment, which has remained at around the 12-14% mark. While 500,000 jobs were created over the past decade, an estimated two-thirds of the positions in the private sector went to foreign workers. Of concern too is the economic activity rate, measuring those willing and able to work whether employed or not, which remains at 39.5% – low by international standards. Between 2010 and 2011 male activity rates fell slightly from 65.5% to 63.5%, while female activity rates increased from 11.7% to 14.7%.

While the focus is usually given to the unemployment rate, particularly for youths, the true problem lies in the 2m working-age Jordanians that are economically inactive. This results in a high dependency ratio of one active worker to four dependents and is a significant barrier to macroeconomic growth and poverty reduction. Discounting around one-third who are students, the main group that are inactive are female. Part of the issue is cultural, but factors such as poor public transport and lack of day-care facilities for children also contribute to this low economic participation.

Active labour market programmes (ALMPs) facilitate the matching of labour supply to demand by enhancing workers’ skills and productivity to promote economic growth. The government runs several ALMPs through the Employment Directorate in the Ministry of Labour, which in 2011 took over activities from the National Employment Centre. The directorate provides access to employment programmes and is working to upgrade career guidance services through the directorate’s 20 centres around the kingdom.

The largest scheme within the National Training and Employment Programmes (NTEP) is a JD15.1m ($21.2m) initiative to offer incentives to investors to construct manufacturing facilities in remote areas with high unemployment and poverty, particularly where female worker mobility is low. The programme offers subsidies of five years’ free rental and thereafter 75% of the market rent for premises. A significant proportion of salaries is covered by NTEP, which is also true of programmes for male nurses and in the NTEP’s ICT initiatives.

WAGE HIKES: According to a report by management consultancy Hay Group, private sector employees will receive a 6.2% rise in wages in 2012, slightly lower than the 8% average increase in 2011, and in line with expected inflation. However, these wage hikes will occur at the mid- to high end of the scale and have less of an effect on low-income workers. According to the Department of Statistics, 50.9% of employed Jordanians earn an average wage less than JD300 ($422) per month.

Under current fiscal conditions the public sector is unlikely to be in a position to expand and the focus will be increasingly on creating jobs in the private sector. Programmes that upgrade technical and vocational education will enable Jordanians to become more competitive. Introducing mandatory health insurance to small and medium-sized enterprises may increase employer costs, but should encourage greater take up of jobs outside the public sector, particularly for women.

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The Report: Jordan 2012

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