Labour market challenges

The Jordanian labour market has always been strained so that the repeated inflow of large numbers of refugees throughout the past 70 years is only one factor. Crucially there has been high natural population growth, attempts to curtail the over-bloated public sector, labour market segmentation, qualification mismatches, and low productivity growth.

Lack of employment remains a major, if not the main problem of Jordan.

Since 2000, the official unemployment rate has remained at around 14 per

11 In the Jordanian context, Betts et al. (2017) found that tribal affiliation was the most important explanation for sub-national variation in the way refugees were received.

cent for the total population while youth unemployment even stands at more than 30 per cent. However, the unemployment rate itself is only of secondary importance: Jordan has no unemployment benefits, so only those who have sufficient financial reserves or secure financial support from friends or relatives can allow themselves to be completely unemployed. Of much more significance is the fact that another 37 per cent are only in part-time work but could work more hours (quantitative underemployment) while 19 per cent are at work full-time but could do much more during working hours (qualitative underemployment) (World Bank, 2019b).

The problem persists despite comparatively low offers on the labour market.

The population of Jordan has increased by almost 50 per cent over the last six years, and its working age population has even grown by 60 per cent (World Bank, 2019b). Half of the increase has been due to immigration, the other half to natural demographics. However, only a relatively small share of the population is actually active on the labour market: Jordan has one of the lowest LFPRs in the world for both men and women (Krafft et al., 2018). It has been fluctuating at around 40 per cent since 1993, meaning that almost two-thirds of the working age population do not participate in the labour market (World Bank, 2016a). This is mainly due to the fact that the LFPR among women even decreased to 17 per cent in 2016, while the LFPR of men remained almost stable at slightly above 67 per cent (World Bank, 2019b).

The main cause of underemployment is on the demand side: Jordan’s private sector is not creating enough jobs. Many entrepreneurs argue that they face too many problems in terms of bureaucratic hurdles, corruption, access to land and credit as well as taxes (Al-Nashif & Tzannatos, 2013).

Others accuse the education systems. They tend to claim that they would invest more and thereby create employment if only they could find the kind of workers that they needed (see, for instance, Loewe et al., 2007, p. 46). Especially trendsetting industries, such as the information and communication technologies (ICT) sector, lack adequately trained staff.

This is due to weaknesses in vocational training and higher education, but also to the lack of interest of many Jordanians in the respective occupations and the unwillingness of many employers to invest in the training of their own workforce. Furthermore, small business owners in particular are often unable or unwilling to check the qualifications of job applicants but instead rely on the recommendations of friends (Assaad, Krafft, & Salehi-Isfahani, 2014), keeping productivity low and precluding further investments.

At the same time, numerous jobs have been created recently but have not been filled with Jordanians. Instead, company owners employed migrant workers from Egypt, China or the Philippines or refugees from Syria, Iraq and Yemen claiming that many Jordanians requested higher wages and refused certain kinds of work (for example, in construction, agriculture or in private households), a phenomenon which is often referred to as “shame culture”. Many foreigners, in contrast, are even prepared to work without working contracts, social insurance, and workplace protection (World Bank, 2016a). Some authors (for instance, Abbott & Teti, 2017; and even Jordan’s National Employment Strategy 2011-2020, MoPIC [Ministry of Planning and International Cooperation, Jordan], 2011) suggest that many Jordanians are in fact gambling: they accept unemployment for a while because they still hope to get a well-paid job in the public administration or in the Gulf, in Europe or North America one day.

As a result, the Jordanian labour market is still segmented in several ways, and it is difficult to move from one segment to another:

Internal versus external: The most important segmentation is that between Jordanians working at home and those who have found a job abroad. The latter account for as much as 15 per cent of the total working population of Jordanian citizenship: around 8 per cent work in the Gulf, 4 per cent in North America, and 2 per cent in Europe. On average, their incomes exceed by far the incomes of those Jordanians who work in their own country.

Public versus private sector: In addition, well over 21 per cent of Jordan’s total working population enjoy an employment in the public sector (army, security services, administration, judiciary, higher education, state-owned enterprises). This large number of jobs constitutes an important part of the social contract in Jordan. The total number of public sector jobs has declined in recent years, but the state still uses the allocation of employment to reward certain groups of the population for their loyalty. As a result, most public officials are from originally Jordanian rather than Palestinian families, and the army employs almost exclusively members of the most reliable tribes.

Salaries in the public sector tend to be lower than in the private sector but, for many Jordanians, this is more than compensated by job security, pension entitlements, health insurance, and regular working hours (World Bank, 2016a).

Migrants versus Jordanians: As a result of the huge number of refugees and migrant workers, the Jordanian labour market is roughly comprised of three different groups – Jordanians, refugees, and migrant workers (Razzaz, 2017).

Around 28.8 per cent of the labour force are non-Jordanians according to the Jordan Labour Market Panel Survey (JLMPS) 2016. Egyptian and other Arab migrants constitute the big majority of non-Jordanian workers, followed by Syrians. Further, the majority of male workers is Arab, while most of the female foreign workers are Asians who come as migrant domestic workers.

Many of the foreign workers are either low-skilled or have higher education profiles and compete with their Jordanian peers for jobs that require higher education (World Bank, 2016a).

Formal versus informal sector: Within the private sector, there is additional segregation between formal and informal jobs. Two-thirds of all workers in the private sector are informally employed (self-employed or employed without an employment contract) (World Bank, 2016a). However, while half of all Jordanian nationals have a formal job in the public or private sector, the huge majority of the Syrians and other nationalities are in the informal sector (see Figure 2). This shows that Syrians are likely to compete over jobs with other migrants rather than with Jordanians (Krafft, Fallah, & Wahba, 2018).

Figure 2: Employment status of workers aged 15-54 by nationality, 2016

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Formal private sector employee Informal private sector employee

Self-employed Day labourer

Source: Authors, based on Krafft et al., 2018

3.5.3 Syrians in the Jordanian labour market and the Jordan