October 3 2022 8:16 PM E-paper Subscribe Sign in My Account Sign out

About Jordan’s most precious asset

Yusuf Mansur
Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs. (Photo: Jordan News)
According to Oxford Languages, human capital means “the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country”.اضافة اعلان

The World Bank launched the Human Capital Index (HCI) in 2018 to measure the development of human capital around the globe. Here is what one can glean from what the HCI says about Jordan’s human capital.

The first observation is that our HCI has fallen from 0.56 to 0.55 over the last decade. A child born in Jordan today will be 55 percent as productive when she grows up as she could be had she enjoyed complete education and full health. Notably, the rank of Jordan is lower than the average for the MENA region and the group of upper middle income countries, the income category in which Jordan is classified in terms of income.

The government in Jordan, according to 2017 data, spends 4.1 percent of its GDP on health, which is higher than the regional average and Jordan’s income group. However, this figure has fallen to 2.8 percent of the GDP in 2020. Also, 2 percent of the population in 2008 spent 10 percent of household consumption on health-related products, which is extremely high and shows the preference of the upper income group for private health care facilities and services, rather than public.

Additionally, in 2018, the government spent 3.6 percent of the GDP on education, which is lower than both the MENA average (4.4 percent) and the average of its income group (4.7 percent). While the percentage has improved slightly to 3.67 percent in 2020, almost one third of students in Jordan go to private schools, which is a primary indicator of the low quality of public education.

Moreover, according to the HCI, in 2015, 52 percent of 10 year olds could not read and understand a simple text by the end of primary school, which was higher than the MENA average of 48 percent and Jordan’s income group average (38 percent). In harmonized test scores, Jordanian students scored 430 points, which was well below what is considered an advanced attainment (630 points). Note that girls scored 444 in the harmonized test scores, while boys scored 415.

Social assistance spending was 0.4 percent of the GDP in 2015, which was much lower than both the MENA average (1.4 percent) and the average for Jordan’s income group (1.5 percent). In 2021, the level of social assistance in the age of COVID-19 increased to 0.6 percent, still way below the comparators. Therefore, we need not boast about the social assistance provided in Jordan as it is well below comparator economies.

In terms of employment, the HCI, citing 2016 data, states that 29 percent of the working-age population in Jordan is employed. The rate was lower than both the average in MENA (51 percent) and the average for Jordan’s income group (57 percent).

Recent data (2021) shows that 26.4 percent of the working-age population in Jordan is employed. In other words, the employment rate has fallen dramatically over the past five years. Also, the female participation rate in the labor force was 14 percent in 2019 (currently 14.5 percent), which is lower than the MENA average (31 percent) and income group average (47 percent) — Jordan is the third lowest country worldwide in terms of women employment.

The youth (ages 15-24) unemployment rate in Jordan was 35 percent in 2019 (currently 48.5 percent for the total workforce, 44.9 percent for males and 63.5 percent for females). This was (and remains) higher than both the average for MENA (22 percent) and the average for Jordan’s income group (22 percent).

The HCI in Jordan is higher for girls than boys, which makes the unemployment rate for females even more drastic.

So, we are not doing very well in terms of nourishing or utilizing our human capital. Is this because the government does not collect enough in terms of domestic taxes and fees?

The government domestic revenues in Jordan have averaged 32 percent of the GDP over the period 2016-2020. In other words, of every JD1 generated in Jordan, 0.32 goes to the government. This is considerable and slightly above comparator countries.

One should then ask how this revenue (plus aid and loans) is spent. Is it focused on human capital?

Let us look at the data for 2021 as published by the Budget Department of the Ministry of Finance. Jordan spends 30 percent of the government budget, or 9.2 percent, of the GDP on the military and security apparatus; 11.5 percent of the budget (3.6 percent of the GDP) on education; 6.4 percent of the budget on health (2 percent of the GDP); and 2 percent of the budget on infrastructure (0.6 percent of the GDP). Consequently, spending on the military and security (30 percent) is much higher than the total spending (20 percent) on education, health and infrastructure, which are essential for human capital development.

The upshot of all this is that in order to improve human capital in Jordan, the government needs to make sure that there are adequate and efficient public investment levels to improve health and education outcomes.

Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.


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