Labour Migration to and from Jordan – Blessing or Curse to the Local Economy?

Labour Migration to and from Jordan – Blessing or Curse to the Local Economy?

Countries within the MENA region demonstrate a diverse range of economic structures. Jordan proves to be an interesting case study as remittances from labour migrations constitute up to a fifth of Jordan’s GDP.

Jordan’s labour market is characterized by a regular import and export of labour. According to the Jordanian Ministry of Labour, 288.000 Jordanians worked abroad in 2008. These workers are predominantly highly skilled, having finished secondary education or holding university degrees. A vast majority of the labour migrants from Jordan are young male adults who temporarily migrate to the countries of the Gulf Cooperation Council (GCC). In contrast, Jordan imports predominantly low-skilled migrant workers, mainly from Egypt, Syria and Iraq. These migrant workers provide a quarter of the labour force. Migrant workers are predominantly employed in manufacturing, construction, services and agriculture, jobs whose low wages and harsh working conditions are typically less attractive to native Jordanians.

Migrants, both to and from Jordan, leave their homes for a variety of reasons, pushed and pulled by both economic and social conditions. The unemployment rate in Jordan has been fluctuating around 15 percent for the past decades and a majority of the unemployed youth believed that no suitable jobs exist for them in Jordan. In contrast, the GCC countries offered many employment opportunities, due to a lack of labour resources. As a result of the high fertility rates in Jordan until the 1990s and a rising number of qualified workers from the Gulf countries themselves, the GCC can no longer absorb the excess of Jordanian work seekers. The problems of unemployment were also exacerbated by a mismatch between the skills of the people entering the workforce and market demands in Jordan. Thus, many Jordanian graduates still chose to migrate to the GCC countries, where wages are much higher.

The remittances that flow back to Jordan from emigrants have mixed micro- and macroeconomic impacts. The remittances make up around 23 percent of Jordan’s GDP today and the positive private effects of the remittance flows are relatively uncontested. The UNDP highlights the ability of these money transfers to eliminate poverty. On a macroeconomic level, remittances provide an important source of foreign exchange and have the potential to boost the economy. As remittances are, however, mainly spent on private consumption instead of productive investments and the effected sectors such as the construction sector meet the elevated demand for raw materials and labour through imports, only short-term economic growth is enabled. Furthermore, the newly created jobs are mainly low-skilled positions with small wages and mostly filled by migrant workers.
The potentially dangerous effects of a ‘brain drain’ through excessive labour migration, does not apply to Jordan. Jordan’s labour market is characterised by an oversupply of skilled, educated labour. Additionally, a majority of Jordan’s labour migrants leave the country only temporarily, returning to Jordan after a few years with an enhanced technical knowledge, diminishing the effects of a ‘brain drain’.

Despite the ambiguity of the effects of labour migration on a micro- and macroeconomic level, temporary labour migration has the potential to translate into sustainable development. The skills and know-how that migrant workers developed while working in other countries could be used to overcome the misalignment between the needs of Jordan’s economy and actions taken by diversifying the economy and expanding the private sector. This way the positive microeconomic development within private households due to remittance flows from migrant workers could pave the way for a sustainable macroeconomic development.

The article was previously published on the website of “Diplomatisches Magazin”, Issue 06/19 Labour Migration to and from Jordan – Blessing or Curse to the Local Economy.

Picture from Lukas Beer – Unsplash