Research emphasises economic contribution of Jordan’s garment, textile and leather industry

AMMAN (ILO News) - The Jordan Chamber of Industry (JCI), in collaboration with the International Labour Organization (ILO)/ Better Work Jordan programme, has launched a research brief on “National Economic Contribution of Jordan’s Garment, Textile and Leather Industry,” (GTL) which has long been one of the country’s leading export sectors with a history of resilience and consistent growth.

The research provides an overview of the industry's contribution to Jordan’s economy, highlighting strengths and challenges faced by the sector and the implications for national economic and employment policies. It focuses on several key aspects of the sector, including its domestic value added (DVA), linkages to other economic sectors in Jordan and its direct and indirect role in employment creation.

“Understanding these linkages will enable us to leverage potentials of the sector and create positive economic impacts,” Better Work Jordan Programme Manager, Tareq Abu Qaoud, said at the launch of the research, attended by representatives of the Ministries of Labour (MoL) and Industry and Trade (MoIT), in addition to representatives of several other ministries, government agencies, the media and the private sector.

To complement the launch of the new research, Better Work Jordan and JCI organized a two-day capacity building workshop to train JCI staff and other stakeholders on replicating the value-added study using specifically designed tools and a replication guide. The initiative aimed to enable JCI to update such studies in the future and adapt it to other economic sectors, and falls within Better Work Jordan’s efforts to build the capacity of its partners and ensure the sustainability of its interventions.

Over the past decade, the industry’s exports have more than doubled, increasing from USD 1.12 billion in 2012 to over USD 2.26 billion in 2022. This is a significantly higher rate of growth than that observed for Jordan’s overall exports, which grew by 70 per cent over the same period. According to the latest official statistics, the industry accounts for 7.7 per cent of Jordan’s manufacturing gross domestic product (GDP) and 19.8 per cent of the country’s total exports of goods. “The facts highlighted in the research emphasise the achievements and advancements of the sector,” said Ihab Qadri, representative of the leather and textile industry at the JCI.

The garment, textile and leather industry “is a strategic economic sector because it leads Jordan’s exports to non-traditional markets, such as the United States,” said MoL Secretary General, Farouk Al Hadidi. The industry has expanded dramatically since 1996, when implementation of a series of free trade agreements between Jordan and the United States began, granting Jordan preferential access to the US market.

“A key aspect examined by the research is the industry’s role in creating direct and indirect employment opportunities,” Abu Qaoud noted. Al Hadidi also talked about the sector’s role in creating jobs for women under government efforts to enhance women’s economic empowerment in a decent work environment.

While a considerable proportion of industry DVA accruing to labour is currently remitted abroad, it is notable that the Government of Jordan’s Economic Modernisation Vision aims to increase the proportion of Jordanians employed in the sector, suggesting that the proportion of DVA retained in the country may increase over the coming years, according to the research.

The industry has considerable economic linkages to other sectors in Jordan’s economy, particularly the real estate sector, road transportation sector and the machinery, equipment and furniture manufacturing sector. These linkages have considerable indirect employment effects, the report said.

In recognition of the sector’s importance, the industry has been identified as a priority economic sector in the country’s Economic Modernization Vision, which anticipates that the sector has the potential to increase its
exports by 3-4 times over the next decade. The Economic Modernisation Vision also anticipates that the sector has the potential to create over 100,000 new jobs for Jordanians.

Key findings of the research The DVA of the industry as a share of production output stood at 41.7 per cent in 2018, the most recent year for which statistics are available. This figure is relatively high when benchmarked against low- and middle-income countries with notable export-oriented garment and textile industries. Returns to capital are estimated to comprise just over half of the sector’s DVA, while payments to labour comprise around 40 per cent of sectoral DVA and around five per cent of sectoral DVA accrues to the Jordanian government through income, corporate and production taxes. In 2018, the most recent year for which statistics are available, the industry expended a total of USD 429.5 million on domestic intermediate inputs compared to USD 603.1 million on imported intermediate inputs. During 2018, the most recent year for which statistics are available, industry activities in Jordan indirectly created around 12,400 jobs in the national economy. Put differently, for every seven workers employed directly by the garment industry there is approximately one additional worker employed in a job indirectly created by the sector.