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Reforming the Wage Policy is a Step Towards Strengthening the Economy and Reducing Unemployment- Ahmad Awad

In recognition of International Labor Day, which falls on May 1st each year, it is pertinent – and topical- to discuss the labor market and the challenges it faces, in addition to the continuous erosion of basic workers’ rights that both male and female workers are confronted with across many sectors in Jordan.

The inequalities present in the Jordanian labor market are no longer only a matter of labor violations and the failure to meet international work standards. They have become a significant obstacle in strengthening the national economy as it revolves around a never-ending circle of wishes, dreams, and policies, which impede its progress.

We in Jordan suffer from an extraordinarily high unemployment rate of 23%, with youth unemployment estimated at 47%, and 31% for women. With these numbers in mind, the seriousness of the economic situation is obvious to any objective observer without further statistics: unemployment indicators serve as a means of measuring the level of effectiveness and success of economic policies. Around the world, unemployment indicators are used to measure the success of governments in implementing effective and efficient economic policies, and to evaluate government performance.

Our unemployment rates consistently remain at record highs, not only for Jordan, but also when compared to regional and global numbers. Jordan is ranked as the country with the 16th highest unemployment rate globally, 14th highest youth unemployment rate, and 8th highest unemployment rate amongst women.

These comparisons are important as they are reflective of the country’s economic, social, and political stability. The status quo cannot continue as it is. Instead, it is necessary to declare a state of emergency and to urge decision-makers to push for tangible reductions in unemployment levels.

We must learn from our previous experiences. It is illogical and unreasonable to expect reduced unemployment rates while implementing the same economic and labor policies that have been in place for decades.

This requires turning away from the philosophy that poor working conditions, low wages, and minimal social protections will strengthen the economy and boost employment. Setting a low minimum wage has failed to encourage economic development or an expansion of the national economy, nor did it lead to an increase in economic growth, which is one of the essential keys to creating new business opportunities.

Instead, these policies weakened domestic demand, one of the most important drivers of inclusive economic growth. Low wages weaken the purchasing power of the vast majority of citizens, thus weakening various economic sectors, and contributing to the inability of business enterprises of all types and sizes to remain resilient and pursue expansion.

Low wages have created intense job competition, hundreds of thousands of existing workers in the public and private sectors filling open positions and working second jobs, making it challenging to impossible for early career professionals to enter the job market. This is to be expected, given the fact that workers’ low wages were not enough to meet their basic needs and the needs of their growing families, especially considering the continuous rise of inflation.

We should not underestimate the influence of other factors such as employment policies, unfair tax policies that stifled the economy and prevented its natural growth, and education and training policies that disrupted the map of the workforce in Jordan. Additionally, poor working conditions throughout most of the private sector has led to an undesirable work environment with many jobs and institutions remaining economically unfeasible.

In conclusion, in addition to reforming those wage policies, reforming the labor market and reducing unemployment rates requires adopting a concerted approach addressing many of the most pressing challenges. Potential reforms include investing in education and training, ensuring a women-friendly work environment to encourage female economic participation, enforcing labor and social security legislation and developing new low-cost insurance tools that enable all categories of workers to be protected within the social security system. Only then will we have a more dynamic and inclusive labor market that benefits all Jordanians.

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