Labor Force

Labor Force

In the late 1980s, Jordan both exported and imported labor. The total domestic active labor force in 1987 was about 659,000 workers. Of this number, approximately 150,000 (23 percent) were foreign guest workers, and approximately 509,000 were Jordanian citizens. Concurrently, an estimated 350,000 Jordanians worked abroad. In 1988 the number of Jordanians living abroad, including dependents, was estimated at up to 1 million.

Labor Emigration

The oil price increases of 1973 and 1974 stimulated tremendous labor demand in the Arab petroleum-exporting nations, which tended to have small populations. Jordan, suffering from unemployment and having an educated and skilled work force, was prepared to fill this vacuum; over the following decade, several hundred thousand Jordanians left their country to work in neighboring Arab nations. About 60 percent of Jordanian emigrants worked in Saudi Arabia, about 30 percent worked in Kuwait, and most of the remainder found employment in other Persian Gulf states.

Remittance Income

Remittances to Jordan traditionally have been the largest source of foreign currency earnings and a pillar of economic prosperity. In 1980 remittance income was US$666 million, but by 1986, according to official statistics published by the Central Bank, remittance income had increased to an estimated US$1.5 billion at the then-prevailing exchange rate. According to a UN estimate, however, Jordan's 1986 remittance income was about US$1.25 billion and subsequently declined slightly. Actual remittance income was probably higher because much of the money was funneled back to Jordan through unofficial channels. Economist Ian J. Seccombe, who has produced authoritative studies of the Jordanian economy, estimated that real remittance inflows were perhaps 60 percent higher than the official receipts. Another expert, Philip Robins, estimated that real remittances could be twice the official receipts. Official figures did not include remittances in kind, such as automobiles brought back to Jordan and then sold by returning expatriates, nor remittance income exchanged at money changers rather than at banks.

Throughout the late 1970s and early 1980s, official statistics reported that remittance income exceeded export income, in some years by over 200 percent. Remittance income accounted for between 25 percent and 33 percent of the liquid money supply, about 20 percent of the GNP, and exceeded the figures for total government development spending, or total foreign aid receipts.

As early as the mid-1970s, however, remittance income and labor export created economic and demographic distortions. The problems were so pronounced that in the 1970s Crown Prince Hasan called for the creation of an international fund to compensate Jordan and other labor-exporting nations for the negative effects of emigration.

The billions of dollars that Jordanian emigrants pumped back into their home economy fueled prolonged double-digit inflation, especially of housing prices. To rein in inflation and to attract and capture remittances, the government tried to tighten the money supply by maintaining high interest rates for bank deposits. As a consequence, loan costs rose, hampering the investment activity of businesses and farms that needed finance. Also, and because remittances tended to be spent on imported luxury goods, the merchandise trade deficit expanded.

Jordanian labor export also had an unanticipated impact on the domestic labor force. Over time, foreign demand grew disproportionately for Jordan's most highly educated and skilled technocrats and professionals, such as engineers. This "brain drain" caused a serious domestic scarcity of certain skills. At the same time, wages for unskilled labor were bid up as Jordanian employers competed for manual workers. Progress on major infrastructure development projects was hampered. For example, according to a United States government study, the labor shortage idled heavy equipment on the East Ghor (also seen as Ghawr) Canal project for up to 70 percent of the work day. Ironically, Jordan was obliged eventually to import "replacement labor"--usually lowskilled workers from Egypt and South Asia--who transferred their wages out of Jordan. The number of foreign guest workers in Jordan grew compared to the number of Jordanians working abroad. The foreign guest workers also sent home a greater proportion of their wages than did the Jordanians working abroad. In the 1970s, such wage outflows constituted less than 10 percent of Jordan's remittance inflows, but by the late 1980s they offset nearly 25 percent of inflows, neutralizing much of the benefit of labor export.

Labor Force and Unemployment

In the late 1980s, after years of internal labor shortages, Jordan faced a looming unemployment problem. Throughout the 1970s and 1980s, Jordan sustained a high average annual population growth rate of between 3.6 and 4 percent. This growth rate was augmented by about 0.5 percent per year because of immigration into Jordan from the Israeli-occupied West Bank. In 1985 the government calculated that the work force would grow 50 percent to 750,000 by 1990. In the late 1980s, this prediction was proving accurate; about 40,000 people were joining the domestic labor pool every year. A combination of GNP growth, increased worker efficiency, emigration, and attrition created jobs for most new workers, and unemployment was kept to about 9 percent.

Experts believed, however, that unemployment and underemployment would probably increase rapidly in the 1990s as the labor pool continued to grow more quickly than labor demand. In 1986 only about 20 percent of Jordanian citizens worked or sought work, a figure expected to grow dramatically as the youthful population aged. In addition, because of the recession in Saudi Arabia and the Gulf states caused by slumping oil prices, Jordanians who had been working abroad were repatriating and seeking work at home. The Ministry of Labor estimated that about 2,500 Jordanians returned from abroad in 1986. Another source, however, estimated the number of returning workers and their dependents at 35,000 in 1986. Moreover, women--who in 1986 made up only a little more than 12 percent of the working population but almost 50 percent of secondary school and college enrollment--were expected to attempt to join the labor force in growing numbers. The work force had some elasticity in that approximately 150,000 foreign guest workers could be sent home and their jobs given to Jordanian citizens; but even if all guest workers were repatriated, unemployment would persist.

By one estimate that did not include repatriating Jordanian workers, unemployment could grow to 30 percent of the work force in the 1990s in the absence of extraordinary government action. Therefore, although aware of the problems caused by labor emigration, the government remained far more concerned about unemployment--and declining remittances--than about the problem of emigration. As of 1989, the government had stated explicitly that it would continue to permit unrestricted worker emigration.

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