Unemployment: Statistics and reality

Published December 26th, 2000 - 02:00 GMT

When it comes to Jordan's unemployment rate, there has been a mumbo jumbo of figures over the past few years, with independent estimates more than twice as high as official rates. When in doubt, donor countries, international organizations and the foreign press have followed an unspoken but long-tested policy on unemployment in developing countries: The higher the figure, the more likely to reflect the truth.  


This is how a 27 percent unemployment rate resulting from a pioneering survey conducted by the University of Jordan's Center for Strategic Studies (CSS) four years ago is still commonly adopted today by media correspondents and international organizations. The survey — for the sake of preciseness — actually placed unemployment within a 22.7-27 percent range, against government statements at the time that the jobless rate was 14 percent.  


But here is a surprise: Both figures, by public recognition of the CSS itself, were scientifically sound, and they both resulted from a correct application of criteria set by the International Labor Organization (ILO). The problem is that the ILO has shown much flexibility and given its stamp of approval to different sets of criteria, and different methodologies would naturally result in different figures.  


Independent experts, including economists at the CSS, also confirm officials' claims that the sets of criteria used by the Department of Statistics — on which the government relies for its unemployment figures — are commonly used by many other countries. However, numbers are not as important as the lay might think, economists and experts preach: Conflicting figures will not change the reality of unemployment on the ground.  


What is needed, they say, is a general consensus, mainly among academics, civil society, and officials, on the methodology of not only counting the jobless but identifying them as well. Once decision-makers and the public are aware of the sex, age, cultural and educational background and geographic location of the unemployed, finding a cure might be much easier.  


Meanwhile, King Abdullah has pushed forward a host of projects, international treaties, and domestic reforms widely expected to create more jobs in the near future. And Labor Minister Eid Fayez said the positive turn of events witnessed by the labor sector over the last year will continue and get even better in 2001.  


CSS Director Mustafa Hamarneh concedes that “donor countries and international organizations normally tend to rely more on independent institutions,” like the center, and are naturally more suspicious of government figures. Furthermore, Hamarneh says, “the opposition also felt that our [1996] figures [on unemployment] were closer to reality than the government's. But both figures were scientifically sound. It is our mandate, as a research center, to do something new, to explore what others, and the government, have not done before.”  


Confirming Hamarneh's reading of the situation, labor leaders dismiss the ministry's figures. “The unemployment rate cannot be 13 percent or so, which [would be] less than last year's, because there was no tangible development in the economy and several businesses closed down,” says Fathalla Imrani, vice chairman of the Labor Associations Union. The labor market, Imrani adds, sees an influx of more than 50,000 new job-hunters every year, “therefore none of the unemployment studies in Jordan were accurate.”  


According to economist Atheel Jomard, who worked extensively on the 1996 CSS survey, “our questionnaire uncovered many unemployed [respondents] who were included in the ‘out of the work-force' category by the Department of Statistics.” However, “our survey is four years old, and it is ancient history in economic terms. We need to conduct a new survey,” Jomard says, adding also that 1996 was a particularly bad year for the economy in general, with an around one percent growth rate, “one of the lowest ever.”  


“In a recession year, it is the non-permanent labor force which suffers the most. The criteria we chose took more into account the casual labor force, and that partly explains the [discrepancy] between our figures and the government's.” Another factor contributing to the difference in unemployment rates was what Jomard describes as “discouraged labor.” When respondents are asked whether they had been looking for a job over the past week, many would render a negative response. As they have not been engaged in a job-search activity, they tend to be placed in the `out-of-the-work-force' category.  


But there are specific cultural components to be taken into account, explains Jomard. “Particularly females, normally stop looking for a job after a while, they find it embarrassing. Many people also rely on word of mouth to find a job: They tell relatives and friends that they need a job, and then sit back and wait, even for several months. When we ask them if they looked for a job last week or last month, they will therefore answer `no,' but that does not mean that they should be counted among those who are out of the work-force.”  


The Minister of Labor implicitly agrees that the problem of unemployment is not just a matter of numbers. “The majority of unemployed Jordanians refrain from working in many fields like construction and agriculture,” Fayez says, explaining that foreign labor is still needed to fill the gap in such vital areas of the economy. “Women cover only 16 percent of all production sectors” adds Fayez.  


The latest survey on unemployment conducted by the Department of Statistics placed the jobless rate at 13.7 percent for the month of November, up from 13.4 percent last August. The survey, released on Monday, showed that unemployment was 12.7 and 19.8 percent among males and females, respectively. The survey also showed that unemployment in rural areas stood at 14.6 percent, compared to 13.5 percent in urban areas.  


It also placed the unemployment average at 26.8 percent within the 15-24 age group, and it found that 22.9 percent of single citizens surveyed were unemployed, while the unemployment rate was 6.6 percent among married people. According to the department's figures, 66 percent of the unemployed live in the central region of Jordan, and 20 percent in the northern region.  


Both the Department of Statistics and the CSS used three main standard questions suggested by the ILO to measure unemployment. The first question, explains Jomard, is related to whether the interviewee has worked recently. “But while we asked whether they had done one hour of work yesterday [the day before the interview], the Department of Statistics asked them whether they had done one hour of work over the past week [the week before the interview],” he says.  


The second question is related to job searching, and the third is meant to assess polled persons' availability for work, meaning whether they would be available to start a new job in a given period of time. “The shorter the [time-frame] considered for the individual's last employment (one hour over the past week or one hour yesterday) and his/her availability for work, and the longer the time-span considered for job-search activity, the higher the resulting unemployment percentage would be,” Jormad notes.  


That is why Jordan needs to do what most other countries have already done: Build consensus on a national methodology that would take into account both international standards and specific realities, says Hamarneh. One example for all: the ILO stipulated in the early 1980s that a country's work-force should be measured starting from its population above the age of 15, Jomard says. But almost no country is doing that since, as it is the case in Jordan, in many states compulsory education continues for all until the age of 16, he says.  


The CSS is currently trying to gather academics, government officials and civil society representatives to devise a national methodology to measure unemployment. “We intend to test several methodologies, present and discuss the results to see which one is the most appropriate,” Hamarneh says.  


The CSS promises that the new survey will shed more light on a variety of unemployment related aspects, including the “culture of shame” — already one of the highlights of the 1996 study — and the phenomenon of discouraged labor. Other “novelties” are expected to include the issues of child labor, labor turnover — how often people change their jobs — and the phenomenon of multiple jobs — what percentage of the work force holds more than one job at the same time.  


“It will be a larger survey,” Hamarneh says, anticipating that, from the day pollsters will “hit the field,” it will take three months to be concluded. “We would also like to have the Department of Statistics on board in this effort,” he adds. Data resulting from the different methodologies would then be compared and a national strategy would be devised. Easier said than done: As it often happens, lack of funding is holding the project back. The Council of Ministers, which financed the 1996 survey, has yet to allocate funds for the new study, the CSS says.  


A large part of the unemployment problem, the Minister of Labor believes, lies in the high number of cheap foreign labor. “Thanks to its policy to downsize the number of foreign workers, the ministry managed to cut down the number of foreign workers from 800,000 to 400,000 in the past couple of years,” Fayez says.  


Among the measures taken to curtail foreign labor, the Kingdom has sealed agreements with labor exporting countries like Egypt. These enabled the ministry to control the numbers of foreign workers by not allowing any to work without a contract signed by the employer, the Ministry of Labor and the concerned embassy in Amman. Yet, according to ministry officials, only 170,000 of the existing foreign workers have had their status legally confirmed, a fact that some have attributed to lack of monitoring and enforcement.  


The Labour Ministry has also increased fees for work permits. “Fees were increased from 100 Jordanian dinars to JD180 for regular labor, and from JD20 to JD100 for agricultural labor,” Fayez says. But the higher fees, he admits, have precluded foreign workers from paying for the work permits themselves, as many had done in the past, thus paradoxically contributing to an increase the number of illegal aliens.  


In its campaign to cut foreign labor, the government also listed 16 professions `off limits' to foreigners, including medicine and engineering. Exceptions can be made in the case of investment corporations, which are permitted to employ foreign workers in collaboration with the Ministry of Labor. “Corporations investing in industrial zones are allowed to employ foreign workers in their factories in collaboration with the ministry, but only for a limited time wherein they are to train Jordanian workers who would eventually replace them,” Fayez specifies.  


As for the Aqaba Special Economic Zone, to be established early next year, the minister says it will have its own employment laws. This will allow foreign workers to operate without a contract, but, he added, the ministry and the police should still be informed about them.  


Prospects of new jobs have brightened over the past 18 months, and economists and officials alike expect 2001 to be the year of the “materialization” of most projects launched recently. “Unemployment, education and health will remain the biggest challenges in 2001, but we should start seeing improvements on the ground and hundreds, if not thousands, of new jobs,” says a former minister, asking not to be named.  


The Free Trade Agreement with the US, signed in October, was widely regarded as a giant step towards attracting foreign investment, raising domestic production, and consequently lowering unemployment. The establishment of several Qualified Industrial Zones throughout the country is also expected to bear fruit in terms of new jobs.  


But high hopes are especially pinned on two projects — both of which were untiringly promoted and pushed forward by the King: The establishment of the Aqaba Special Economic Zone (ASEZ) as of January, and the development of the information technology sector as a major engine of economic growth.  


Imad Fakhoury, commissioner for investment and economic development at the new Aqaba Special Economic Zone Authority (ASEZA), recently said the project to transform Jordan's only port city into a “duty-free paradise,” without red tape and offering a “first world environment to investors,” could create some 70,000 jobs over the next 20 years. The ASEZA came up with the figure after analyzing and comparing surveys and studies carried out by international consultants over the past three years. The surveys said the ASEZ could attract $6 billion in direct and indirect investments over the next two decades.  


As for the IT industry, a national strategy devised by the private sector in cooperation with international experts and the government envisages the creation of some 30,000 IT-related jobs by 2004. Reach 2.0 — the implementation plan for the development of Jordan's software and IT industry — also envisages the possibility of producing $550 million in annual software and IT services exports, and attracting $150 million in cumulative foreign direct and direct investment by 2004 (one-third of which, for a value of $53 million, has already been achieved in 2000).  


At the moment, industry sources say the IT sector employs some 4,000-5,000 individuals, but they estimate that the $30-40 million currently available in venture capital will soon materialize in job opportunities. While Arab investors continue to show interest in Jordan, “we are witnessing a formidable growth in foreign investors' interest,” says Bassem Awadallah, head of the Economic Unit at the Royal Court. “2001 will be the year in which we will see many projects become reality.” — ( Jordan Times )  


By Francesca Sawalha and Yacoub Abu Ghosh

© 2000 Mena Report (www.menareport.com)

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