JSF recommends reconsideration of minimum wage raise

AMMAN — The Jordan Strategy Forum (JSF) on Monday recommended the reconsideration of the decision to raise the minimum wage and its expected impacts on all sectors, particularly the job market.

In a position paper titled: “The minimum wage and the COVID-19 pandemic: Content and timing”, the JSF said in a statement that the prevailing economic conditions and living requirements call for considering a raise in the minimum wage to help workers adapt to the increasing expenses.

Prior to the outbreak of COVID-19, stakeholders have agreed to raise the minimum wage by 18 per cent from JD220 to JD260. 

However, the forum noted that the pandemic crisis has changed the economic landscape and as such the 18 per cent increase should be revisited. The forum recommended reconsidering both the timing of implementation and the percentage of the increase which is key to protect employers from possible negative impacts from such a decision amid the current recession when the unemployment rate is already very high nearing 23 per cent.

According to sources at the Companies Control Department at the Ministry of Industry, Trade and Supply, the JSF said that 1,426 companies have resorted to optional liquidation since the beginning of 2020, while the number of registered companies declined by 22 per cent.

The JSF said that this means that chances to get a job are already low before enforcing the raise decision, which is expected to reduce prospects for job seekers even further.

The paper also showed that unemployment rates among the youth are “exceptionally high” in the Kingdom, and went up from 39.7 per cent in the fourth quarter of 2019 to 45 per cent in the third quarter of 2020 among the age group between 20 and 24 years, expecting the rate to increase further in the fourth quarter of 2020.

The forum anticipated that the enforcement of the suggested increase in the minimum wage would be harmful to the availability of job opportunities for youth and would lead to an increase in the informal economy, recommending thorough reconsideration of the decision and its predicted repercussions on all stakeholders.