On Labour Day, a commitment towards a job-creating economic policy needed

Jordan on Tuesday celebrates Labour Day along with many world countries. The day is an opportunity to reflect on employment and broader labour issues and acknowledge the significant contribution that every worker, man or woman, citizen or migrant can make towards building a bright future of Jordan, if he or she is given the opportunity.

The commemoration of Labour Day was initially instituted in the United States soon after the massacre of striking workers by the army and police in industrial Chicago in 1894 while they were peacefully protesting against the harsh employment conditions and low wages they were facing. The massacre created an outrage even among those who had sided with the US government with the result that 1st of May was introduced as a national day to commemorate the event.And now this day is celebrated across the globe. 

The lesson from history is clear: Strikes and violence are detrimental to the economy, society and should be avoided.  And the best way to do so is through consensus building arising from a sincere social dialogue among employers, workers and their government.  

Of course, it is common sense that workers and employers have different interests.  This is also common among different groups in the population.  But the same way there are laws and mechanisms that help avoid conflict and arrive at a consensus at other parts of public life, this should also be the case in the labour market. 

There are dividends to be paid in the form of economic and social development based on amicable and peaceful solutions that apply both to labour market and more broadly society. While Jordanians have reasons to celebrate Labour Day today, there is room for improvement. One way to do so is through inclusive economic policies.  And another, is through strengthening the social dialogue, where workers’ voices are better heard and they are better represented in economic and labour policy making.  These two approaches are complementary, not one or the other. 

Still there are many Jordanians outside the labour market who want to work but are unemployed.  A focus on unemployment reduction has been the focus of consecutive governments for the past few decades. The fact is that this is not enough and can even be misleading. Unemployment is a symptom of an economy which is consistently failing to create jobs in the first instance because of policies outside the labour market and lack of social dialogue.

Thus, the solution to reducing unemployment lies on creating employment through addressing the structural deficiencies in the economy. 

These structural deficiencies include a large public sector that may not recruit on the merit and effort of applicants but is acting as an employer of last resort; fiscal policies that raise revenues in a penalising rather than an equitable way and expenditures that are not targeted to their best use or the most needy citizens; policies that restrict investment, a key prerequisite for economic growth; banking regulations or incentives that starve the private sector from funds to support activities that micro and small businesses see as worthwhile to undertake; trade restrictions that constrain Jordan from benefitting from its comparative advantages; low quality or limited infrastructures including public transport that reduce mobility of workers, and so on. 

So labour policy should be part of economic policy, not an afterthought. When economic decisions are made, they should take explicitly into account their impact on employment.  And not just any kind of employment, but employment that offers decent working conditions, adequate wages and effective social protection. 

Of course, there will always be unemployment that would also need to be addressed.   Here one has to be careful about who the unemployed are and for what reason.  For example, unemployment in Jordan cannot be attributed mainly to poor education or lack of skills, though both can be improved.  

Jordanians are overeducated for what the economy has to offer.  This is attested by the substantial brain drain:  the number of Jordanians working abroad is almost half those working in the private sector in the Kingdom.  And they are well-qualified: If not, how come then that Jordanians have the education and skills to work everywhere else but not in their country of birth?

Additional care is required in identifying who the bulk of the unemployed are.  For example, much effort and resources are spent on youth and female unemployment.  Youth unemployment has more to do with school-to-work transition and female unemployment can be driven by cultural factors and/or heavy family responsibilities.  However, the majority of the unemployed are adults and men.  This is a clear sign of structural unemployment and much more difficult to address.  It requires restructuring of the economy along the lines mentioned earlier.  

Summarising, first, unemployment is mainly a macroeconomic issue and, if economic policies do not create competitive product and services markets, employment creation will remain modest. 

Second, dealing with unemployment must acknowledge that when youth unemployment is high, so is adult unemployment, and when there is female unemployment there is also male unemployment.  

Third, and specifically for Jordan, focusing on the employability of job seekers rather than addressing structural economic constraints will fail to address unemployment as it has done in the last 30 years when the unemployment rate has been persistently high irrespective of whether the economy has been growing fast or slow. 

What Jordan needs today is paradigm shift towards more integrated economic and labour policies that would put an end to blaming job seekers for not having skills or work ethics and employers for not providing adequate wages and career opportunities. This can be a pledge to all women and men, young and adults living in Jordan to be made on this year’s Labour Day. 

Dr Mary Kawar is a retired International Labour Organisation director who currently lives in Amman. She contributed this article to The Jordan Times