Role of human capital in acceleration of digital economic transformation in Jordan

A recent research project by the UNDP and the Economic Research Forum (ERF) on Growth, employment, poverty, inequality and digital transformation in the Arab region digital transformation Arab Region led by Mustapha Nabli examined the case of digital development in several Arab countries. It concluded that digitalisation has failed up to now to have the transformative impact on Arab economies as that it has had in other developing regions. It claimed that one of the main bottlenecks, among others, is the lack of digital skills and human capital. The impact here is twofold. On the one hand, it has increased inequality between those who are better placed to acquire the needed skills and benefit from the digital transformation dividends. On the other hand, it has held back economic growth by failing to bridge the gap between skilled demanded in the labour market and those supplied by prospective job seekers, thereby reducing productivity. 

The above-mentioned research project included Jordan as one of its country cases led by Allen Gomes and Sami Marhoum (unpublished). We do know that in Jordan skills, jobs and digital transformation has been a priority policy area and is receiving significant attention at the strategy and programme levels. Accordingly the two authors cite Jordan as a relative success story so far. They attribute this to connectivity and digital infrastructure; appropriate regulatory environment and private sector trust of government efforts in this regards; an active policy for encouraging entrepreneurship in ICT; supporting tech start-ups through the creation of special funds and the establishment of public, private, and public-private partnership incubators. 

Yet it is noted that skills and human capital development constitute a persistent challenge and that the Jordanian education system is limiting the supply of graduates capable of becoming skilled ICT professionals. Indeed, many secondary level students do not acquire the capabilities needed to work in knowledge-based activities or pursue tertiary qualifications in ICT disciplines. Recent international comparative assessments of learning outcomes in mathematics and science (TIMSS: Trends in International Mathematics and Science Study) reveal that that in 2019 Jordanian students ranked lower than the global average in both mathematics and science. The good news however is that the 2019 assessment constituted an improvement compared to 2015 assessment.

Another issue is that the English language proficiency of Jordanians is low. This is a critical constraint as English language is the basis of programming languages and computer software. Of the 100 countries surveyed on the English Language Proficiency Index, Jordan is ranked at 72. This is an area which can create inequality of opportunity between students who can afford to attend private schools and gain English language proficiency and those who do not.

At the university level, undoubtedly there has been significant investments with great gains in the number of graduates, especially among women in Jordan. However, most of the tertiary education graduates are in humanities, religious studies, and philosophy, with relatively few attend courses that would enhance their ICT qualifications. While we do see some technology related private universities which provide cutting edge and competitive education, such as Princess Sumaya University for Technology, still the overall number of ICT graduates remains low in comparison to other developing countries who are experiencing rapid digital transformation.

The pressing need to increase the flow of ICT competent graduates into the labour market can be shown with reference to the few Jordanians who possess ICT skills. Among Jordanians of working age (15-64) less than 5 per cent possess basic ICT skills. In this respect it is a welcome statistic that around half of those aged 15-24 years today possess digital skills. However, increasing their share in employment will take some time as the annual education ICT output in a year is limited compared to other specialisations. So, training and lifelong learning would need to supplement the conventional education system so that the share of ICT workers in employment starts accelerating. 

Moreover, the many initiatives Jordan has taken to expand and strengthen skills and qualifications in ICT professions, such as the National Human Resource Development Strategy 2016–2025, would need to be implemented vigorously and consistently over time. For example, despite the increase in digital skills on the labour supply side, such skills are in low demand by Jordan’s private sector that is dominated by SMEs many which are informal and tend to rely on labour intensive/low productivity activities at low wages in jobs that that are sometimes more attractive to non-Jordanians. This calls for addressing some deep rooted problems in the current structure of the private sector which is dominated by low value-added sectors. 

Finally, digitalisation can increase Jordanian women’s contribution to economic growth and their family incomes. Female labour force participation rate at around 15 per cent is one of the lowest in the world. Yet and according to 2018 data, Jordanian women accounted for a third of all employees in ICT firms. That is around a double of the national employment rate of Jordanian women.

However, while digitalisation has opened up new employment opportunities for women, the gender differences in terms of wages, access to external training and promotion persist. Specifically the issue of low wages is in great part responsible for Jordanian women’s low labour force participation rate: Wages are too low to “pull” women in the labour market. This brings back the earlier point regarding the state of labour demand by private sector firms. Other avenues leading to employment, such as those involving self-employment and entrepreneurship, are not open to women on an equal basis as men. 

The main takeaway here is that any development pathway requires a sound policy mix of different coordinated measures to succeed. While Jordan is focussing on accelerating its digital transformation parallel efforts are required in other policy areas such as education, skills, lifelong learning, private sector growth and working conditions and equal pay. Consistent implementation of these policies over a long period of time, collaboration between different sectors and dialogue among all stakeholders is also another key area for success. 

Former minister of Planning and International Cooperation and former director at the International Labour Organisatin