Unlocking the unemployment problem

Musa Shteiwi
Musa Shteiwi is former director of the Center for Strategic Studies and professor of sociology, University of Jordan. (Photo: Jordan News)
The Jordanian economy has been registering low economic growth rates for more than a decade now. This could be attributed to the global financial crisis of 2008, the impact of the regional wars, internal conflict and strife in the neighboring countries, the COVID-19 pandemic, but also to poor economic policies set by consecutive governments over the last decade or so.اضافة اعلان

One of the most important outcomes of the poor economic performance are the all-time high levels of unemployment. According to the Department of Statistics data, unemployment rate stands at around 25 percent of the labor force, which amounts to 500,000 people. Unemployment is highest among youths (50 percent), women (more than double that of men) and people with post-secondary education.

The labor force is steadily increasing, but not as a result of increase in the economic participation and expansion of the labor market, but due to population increase. 

Studies show that there is a weak relationship between economic growth rates and employment. In general, economic growth rates are translated into employment gains and the reduction of the unemployment rates, but that is not the case in Jordan. This indicates that there are different dynamics at work in the economy and labor market, at least in terms of labor demand and supply.

The relationship between education and labor force participation is rather weak in spite of the clear progress and advancement in higher education. Approximately two thirds of the labor force have a secondary degree or less, and only a little more than a fourth have bachelor’s degree or higher. This could be partially explained by the continuous brain drain, especially to the Gulf countries, but also by the demand for higher education, which is increasing because of the continuous investment in higher education and the high social demand for it.

There is a clear skill mismatch between the educational systems at all levels and the labor market needs, particularly in the private sector. More than half of all university graduates are in the fields of humanities and social sciences, with very low skills that are relevant to the private sector. Technical education is highly needed by the private sector, but is very weak and does not meet the needs of the labor market.

There is also still high preference among Jordanians for the public sector over the private sector jobs. For most, this is a rational choice because it offers good benefits and compensation, compared to the private sector at least, more stability, and fewer working hours. The public sector share of the labor market is still high, in spite of the fact that its ability to absorb more labor has shrunk in the last 10 years.

The rate of unemployment in Jordan did not stop the alarming increase in the number of non-Jordanians in the labor market. In the 1990s, foreign labor accounted for about one fifth of the labor market, but now it is estimated to be more than 40 percent, mainly due to the influx of Syrian refugees.

Two decade ago, most foreign labor used to be working in certain sectors, in jobs that required low-skills or no skills, but now they are working at all levels of jobs and in all sectors, and have started to crowd Jordanians out of the labor market.

Jordan is both an importer and an exporter of labor force, but such high presence of non-Jordanians in the labor market and the high level of unemployment among Jordanians is the problem for the labor market in Jordan that has to be addressed.

Women labor force participation remains very low in comparison to other countries in the region and in light of the great achievements made by women in the education and health sectors.

Women also suffer from a high unemployment rate, which is more than double that of men, with the highest rates registered among the highly educated. The reasons for that are complex sets of factors, ranging from the nature of the economy and labor market to the educational system, gender discrimination and social norms.

The structure of the economy is also part of the problem, as the majority of the work force is in small- and medium-size firms, traditional large companies, and the services sectors, which does not help highly skilled labor or women job seekers.

Unemployment is one of the most challenging problems facing Jordan today. Previous policies, especially labor market interventions, were ineffective. What is required is a paradigm shift in the way the problem is approached, and this should include short- and long-term strategies that focus on balanced economic policies, investment, and educational reform at all levels.

His Majesty King Abdullah said recently, in a meeting with young people, that unemployment should be the number one priority issue, but will the government heed the call?

The writer is former director of the Center for Strategic Studies and professor of sociology, University of Jordan.

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