Raising the Minimum Wage in Jordan: A Balancing Act for Workers and Employers
In Jordan, the decision to raise the minimum wage from 260 dinars ($366) to 290 dinars ($409) starting January 1, 2025, has sparked significant discussion among workers, employers, and government officials. The Labor Observatory in Jordan emphasizes that this increase aims to enhance social protection for workers, particularly in light of rising living costs and inflation. Many workers, like Obada Malham, a gas station employee, struggle to make ends meet on the current minimum wage, which often leads to a cycle of debt and financial hardship.
The tripartite committee, consisting of representatives from the government, employers, and workers, reached this decision after extensive discussions, acknowledging the need to balance workers' rights with the economic realities faced by employers. Adnan Al-Dahmasheh, Director of the Labor Relations Department at the Ministry of Labor, stated that the increase would apply to all institutions, including private educational establishments, ensuring that even the lowest-paid workers receive a wage that better reflects their needs.
Economic Implications of the Wage Increase
Economic expert Amer Al-Shoubaki highlighted the challenges the government faced in implementing this wage increase, noting concerns that employers might avoid registering workers with the Social Security Corporation to sidestep increased financial obligations. While the new minimum wage is seen as a step forward for employees, it still falls short of meeting the aspirations of many, especially in the context of ongoing inflation.
A recent study by the Jordanian Labor Observatory pointed out that the current minimum wage only constitutes 41% of the average wage of 627 dinars ($884), which is significantly below the recommended 55% threshold set by the International Labor Organization. The study argues that raising the minimum wage is crucial not only for improving the living conditions of workers but also for stimulating economic growth by enhancing purchasing power and local demand. Furthermore, it asserts that there is no substantial evidence linking minimum wage increases to job losses or small business bankruptcies, suggesting that a well-compensated workforce is essential for maintaining productivity and competitiveness.
The report also emphasizes the importance of addressing the barriers that low wages create for youth and women, who face high unemployment rates. By increasing the minimum wage, the government aims to improve economic participation among these groups, thereby fostering a more inclusive labor market.
