Controversy in Jordan over its two-tier minimum wage system
Amman - Jordan recently adopted economic measures that have been criticised by citizens, who called for the government to resign despite its decision to raise the minimum wage and cut expenses.
The raise in the minimum wage was received carefully by the labour market, which noted that the $43 increase to $310 a month does not reflect the increase in prices. The poverty line in the country is considered to be $423 a month.
There were rallies in Balqa, Tafileh and Madaba governorates demanding the resignation of the government of Prime Minister Hani Mulki.
While the government seeks to secure $635 million through tax increases on products, including cigarettes, soft drinks and telecom services, as part of a plan to narrow the budget deficit, the increase in the minimum wage is less than the increase in taxes.
The raise in the minimum wage applies to Jordanian workers who fall under Labour Law 8/1996 and its amendments. The minimum wage for non-Jordanians, however, is half that of Jordanians.
“We will not have a chance as employers will turn their heads to hire non-Jordanians who are happy to work for less and we will be struggling to find a job. The decision does not include foreign labourers and only for Jordanians so you will see employers looking for non-Jordanians and offer them jobs,” said worker Mahmoud Abu Douma, 32.
Jordanian Labour Minister Ali al-Ghazzawi said raising the minimum wage would contribute to job security for workers and would reflect positively on local demand for products and services. It would also encourage young people to join the labour market, he said.
“The minimum wage for non- Jordanians reaches $155 and that is why the government should have raised also their minimum wage as now employers will prefer hiring non-Jordanians, such as Syrians, more than Jordanians and this is not fair,” he added.
Economic analyst Issam Qadamani asked in a column whether the government would force its own entities to implement the minimum wage decision and, if there is a minimum wage, then there should be a maximum wage that cannot exist because the market is controlled by supply and demand.
Qadamani wrote that the minimum wage hampers job creation, limits employment and productivity and raises production costs.
“It might work in developed countries but in poor countries or those economically challenged countries, the minimum wage increases problems and challenges,” he said.
“The government should have left the increase in the minimum wage to be determined by the market factors. The increase in the minimum wage will hinder the employment of Jordanians by the employers.”
The General Federation of Jordanian Trade Unions (GFJTU) said raising the minimum wage was a step forward to give priority to Jordanians.
“The decision is considered a positive move and gives Jordanians the will to give and find stability in the working environment they are in,” said GFJTU head Mazen al-Maaytah.
“I urge employers to abide by this decision as this is a worker’s right to improve his career in face of the difficult situation he is facing such as the raise in commodities prices,” he added.
Ahmad Awad, director of the Phoenix Centre for Economic and Informatics Studies, a non-governmental organisation focusing on independent policy research, said the minimum wage raise proposal should have been studied more and based on international standards.
“If the government calculated the poverty lines and rates of dependency the minimum wage should be raised to $535,” he said. The decision to raise the minimum wage lost its essence when the government decided to announce a set of economic measures that included hiking fees and taxes at the same time.”
Awad said unfair competition between Jordanians and non-Jordanians was created with the decision.
“When the government decided to raise the minimum wage for Jordanians only, it created some kind of unfair competition among workers where employers will be targeting non-Jordanians to hire at (their) business place and this way they will cut the cost,” he added.
A study by the National Society for Consumer Protection indicated that 73.3% of Jordanian respondents said their financial circumstances were not fit to buy a car or appliances. The study also showed that only 7.6% of Jordanians asked said job opportunities in general are better in Jordan but 61.8% said they were worse and 23.3% responded they were the same.
“We currently have five Jordanian employees as we believe that Jordanians have the priority to work more than others. Raising the minimum wage should not affect employment because there are many establishments that look for Jordanians only. In my opinion raising the minimum wage is a right,” said Mohammed Tabaza, owner of a business that manufactures tents.
“Syrians do approach us to work but we prefer to hire only Jordanians,” he added.
Government estimates state there are more than 90,000 Syrians in the job market and about 1.3 million Syrians living in Jordan.