On jobless growth

Several observations can be made about the economic growth rate in Jordan and the unemployment rate. Years of enviably high growth have not lead to decreasing unemployment especially among the population’s largest segment, the youth. Here is how to have a job creating economic growth.

For the past 15 years the official unemployment rate has been between 12 per cent and 15.6 per cent. About 30 per cent of Jordanians who are of working age are economically active, signalling a high degree of economic dependence. With more than 80 per cent of unemployed men being educated at the secondary level or higher, the unemployed did not benefit much from their higher training. Women, at a 14 per cent participation rate (the lowest in the region), tend to suffer the most. About 75 per cent of the unemployed women have intermediate or university level of education. Given that 70 per cent of the unemployed are youth, a person who is female and young is among the most vulnerable in Jordan. 

To maintain unemployment at its current rate of 12.6 per cent the economy has to produce 80,000 jobs per year with 50,000 going to new entrants and the rest to foreign labour. Solutions offered over the years were either forgotten or discarded and replaced by newer suggestions. The National Strategy for Employment aimed to replace foreign workers with Jordanians in a number of sectors, initially in restaurants and hotels, water and electricity, health, construction, and trade; and later in mining, industry and agriculture. The original thinking, as stated oftentimes in the 1990s, was the creation of high paying jobs, a goal which for all purposes seems to have been abandoned in current discourse. In fact, few decision makers discuss the National Strategy anymore.

But jobless growth is not a destiny for Jordan, it can be addressed. The public sector in Jordan as in the rest of MENA has to cease being the main employer. Growing an efficient, high value-adding private sector is possible. Enabling fast entry and growth allows for faster job creation. Improving the business climate and a thriving manufacturing economy will help make the growth more job creating. 

In fact, to encourage job creation Jordan has to go back to basics: expand the manufacturing base of the economy. This can be done by improving the infrastructure; providing incentives to value-added and knowledge-intensive producers; and improving the overall environment. 

Being one of the most open economies in the region also helps. Jordan needs to do very little in this regard. Where work should be focused is in the area of job creation through manufacturing. And yes this can happen even with the Chinese manufacturing giants looming over the world markets.  

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