Informal economy

Jordan endorses a national framework for regulating the informal economy

The national framework backs an integrated approach for upgrading the informal economy in Jordan through supporting informal enterprises and workers alike

Press release | Jordan | 27 April 2015
From left to right: Nadia Rawabdeh, Director General of Social Security Corporation, Mazen Maaytah, President of the General Federation of Jordanian Trade Unions, Hamada Abu Nijmeh, Secretary General of the Ministry of Labour, Adnan Abu Ragheb, Deputy Director of Jordan Chamber of Industry and Mary Kawar, Senior Employment Specialist at the ILO Regional Office for Arab States
AMMAN (ILO News) – A new national framework aimed at regulating Jordan’s substantial informal economy was launched at a meeting organised by the ILO in Amman on Monday (April 27).

The framework, entitled “Towards a National Framework for a Transition to Formal Economy in Jordan,” was endorsed by the Ministry of Labour, the General Federation of Jordanian Trade Unions (GFJTU), the Jordan Chamber of Industry (JCI) and the Social Security Corporation (SSC).

The framework aims to foster a more integrated approach to formalise Jordan’s informal sector, so as to ensure decent work and living conditions, social justice, increased productivity and economic growth.

The framework was developed in a consultative manner, which took into consideration the different needs and interests of the diverse actors involved. These included the Ministry of Labour, JCI, GFJTU, the Department of Statistics, the Ministry of Planning and International Cooperation and the SSC. This meant that a consensus needed to be reached on the causes and responses needed.

“The framework is a national working document based on a common understanding and joint efforts to address the needed response mechanisms to guarantee a successful transition to a formal economy,” said Hamada Abu Nijmeh, Secretary General of the Ministry of Labour.

It is estimated that more than half of overall employment in Jordan is informal, the majority of which consists of low-income, unskilled labour, lacking any legal protection. Jordan’s informal labour market challenges have been exacerbated by the influx of Syrian refugees. Jordan already hosts a large number of migrant workers from Egypt and several South East Asian countries.

“The informal economy creates unfair competition with the formal economy and creates many challenges in terms of increasing productivity and quality in line with national and international standards,” said Adnan Abu Ragheb, Deputy Director of JCI.

Moving towards a formal economy is essential for improving the efficiency of enterprises and the private sector as a whole, reducing the vulnerability of workers, improving working conditions, enhancing skills and productivity, expanding the scope of the social security coverage, increasing worker representation, as well as improving institutional capacities.

“The transition to a formal economy is in the interest of everyone, the government, employers and workers,” said Nadia Rawabdeh, Director General of SSC. “This framework… will create a protection system to cover Jordanian workers and their families.”

“The national framework is a step in the right direction for the transition of the informal economy to the formal economy, to secure basic principles and rights at work including decent work and social security protection,” said Ahmad Shawabkeh, Advisor to the GFJTU.

During the meeting, participants agreed that, based on the consensus reached on the document, it is now vital to move forward with a draft action plan, which is operational and which focuses on the different needs of different sectors. The participants also endorsed the idea that, in line with the diversity of the informal sector, there is a need to set priorities in order to achieve tangible results..

“The agreement reached today is significant as it indicates there is general awareness that we need a systematic and comprehensive approach to achieve this transition,” said Mary Kawar, Senior Employment Specialist at the ILO Regional Office for Arab States. “Jordan cannot afford to ignore the informal economy for much longer and today’s meeting proved a commitment.”

In July 2014, the ILO took the initiative to form a national working group for the formation of the framework, consisting of representatives from the Ministry of Labour, CJI, the GFJTU, SSC, the Department of Statistics, the Ministry of Planning and International Cooperation and King Abdullah II Fund for Development. In preparation for drafting the framework, the ILO trained constituents on issues related to informal economies at its Turin training centre and developed a report which aimed at reaching a national definition so that figures and estimates are aligned, and provided recommendations for statistical measurement. It also held a series of meetings to identify the roles and responsibilities of all stakeholders during the drafting process.

For media queries, contact:

Salwa Kanaana, Regional Communication and Public Information Officer, ILO Regional Office for Arab States, Tel: +961 1 752 400 (Ext 117), Mobile: +961 71 505958, email: kanaana@ilo.org