The mismatch paradox

Yusuf Mansur
Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs. (Photo: Jordan News)
When analyzing Jordan’s unemployment problem, some tend to place the blame on the labor force itself, especially university graduates. The pundits claim that academic training (understood by most to mean type of degrees or academic specializations) acquired by Jordan’s youth does not match the market demand, which may be true, but not for the typically claimed reasons. اضافة اعلان

To illustrate, one often hears the statement that there are too many engineering graduates every year, yet the market for engineers has a glut and, consequently, unemployment among engineers continues to grow; thus, unemployment is caused by a mismatch between degrees and market demand.

Few, however, address the quality of the training or schooling received as a reason for not hiring recent graduates, regardless of the field of study. It is widely recognized that the three most important skills (critical thinking, communication, and team work) are not taught at most universities and public schools in Jordan. In actual fact, it is the quality of education, not the type of education, which makes employing these graduates less attractive to employers.

Nevertheless, the mismatch argument has gained popularity in recent years. The mismatch argument brings to mind the culture of shame argument (CSA), which was launched in the mid-1990s and went on to dominate the unemployment discourse for over two decades — some still use it, even though it has eventually died down.

CSA claimed that Jordanians refused to work in several professions because of excess of pride. Others could do these jobs, but Jordanians would be ashamed to do them. Hence, they were voluntarily unemployed, and consequently, unemployment rates were high. Of course, a policy maker could do nothing to employ such a proud workforce.

Unquestionably, there was no researched proof or empirical evidence that justified such an argument. Nonetheless, it was popular among government officials and their pundits because it shifted the responsibility for the rising unemployment from the government to the governed.

Some employers saw in it a suitable rationalization for their hiring preferences: cheaper, informal foreign labor. Even the labor force, especially the youths anticipating a government desk job, saw in it an apt validation for their refusal to work. Such a win-win-win unsubstantiated claim became everybody’s darling.

Note that both arguments place the burden of unemployment on the labor force. Disregarded are the roles of the public and private sectors. Never mind that the public sector could have reduced its appetite for labor over the past few decades and thus would have helped nudge and shift the demand for jobs more toward the private sector. Moreover, so many negatively impacting policies could have changed to improve the situation, such as the removal of market segmentation and ad hoc ordinances, among others.

As for the private sector, there is ample room for improvement. It is dominated by small firms which make up over 96 percent of enterprises. They employ 60 percent of the labor force, and contribute 24 percent of GDP — compared to 70-80 percent in a developed economy.
For the labor situation to change, the private sector must grow and thrive to attract Jordanians away from government employment opportunities…
Also, Jordan suffers from the “missing middle” — lack of semi-skilled workers. There are few medium-size firms and small firms do not grow into medium sized due to, among other things, lack of access to formal financing, which in turn encourages the growth of informality.

Furthermore, not only does the private sector not create enough jobs, it does not create enough high-quality jobs, and even when the odd firm seeks highly skilled workers, it may have a hard time finding them as the best and brightest have moved to the Gulf countries.

Promising sectors such as ICT, pharmaceuticals, and health tourism, having challenges in terms of upscaling, tend to move to places like Dubai, and recently Saudi Arabia, where hindrances are fewer and markets are larger.

 Startups create very few informal jobs and face many obstacles. The majority are established not out of rushes of ingenuity but out of the necessity of securing a livelihood.

Jordan is a small open economy that is heavily dependent in the public sector in terms of job creation. For the labor situation to change, the private sector must grow and thrive to attract Jordanians away from government employment opportunities, as a solitary or most viable option, to a higher pay, greater learning, skill and personal growth in the private sector.

Slogans and excuses only numb the drive to come up with solutions.

The writer is CEO of the Envision Consulting Group and former minister of state for economic affairs.

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