Study finds 44% of Jordan’s labour in shadow economy

by Laila Azzeh |

AMMAN — Around 44 per cent of Jordan’s workforce in 2010 operated in the shadow economy, according to a study announced on Wednesday.

“This magnitude requires intensified efforts to regulate the underground sector,’ Planning and International Cooperation Minister Jafar Hassan said during a press conference that revealed the results of the report, which was carried out in cooperation with the UN Development Programme, the Economic and Social Council with the support of the Spanish Agency for International Cooperation.

The grey market is characterised as salaried labourers who work in the private sector without contracts or social security, unpaid labourers or the self-employed.

“This is the first in-depth study of the informal sector, whose volume has always been underestimated,” Hassan said stressing that the survey is important in guaranteeing the quality of services provided to citizens through the underground market.

Noting that 56 per cent of the total labour force works in the formal sector (34 per cent in the public sector and 22 per cent in the private sector), the study showed that 26 per cent of informal workers were from the private sector, 17 per cent were self-employed and 1 per cent worked at (family businesses) without wages.

From a gender perspective, male informal workers constituted 48 per cent of the total workforce, while informal female labourers stood at 27 per cent of the total number of employed women in Jordan.

Of the total informal male workers, 19 per cent were self-employed, 28 per cent worked in the private sector and 1 per cent were unpaid, whereas informal female labourers in the private sector accounted for 17 per cent, 7 per cent were self-employed and 3 per cent were unpaid.

“Informal employment is traditionally associated with inferior earnings and wage inequality or emanating from mainstream poverty. But this is not necessarily the case, as some informal labourers are leading successful businesses and others are also working in the public sector,” Hassan highlighted.

According to the study, 30 per cent of informal workers was in the crafts sector, followed by services and suppliers, 24 per cent and then machine operators 17 per cent.

In high administrative jobs, the informal labour was a meager 0.4 per cent.

The concentration was in the retail, wholesale and vehicle repair sectors, at 30 per cent, followed by the manufacturing, 18.6 per cent, transport and stocking, 11.7 per cent and construction, 11.1 per cent.

Informal workers are less likely to engage in the ICT, hotels, education, health, agriculture and social services fields.

The study highlighted that, at 32.4 per cent, retail and wholesale trade, vehicle and motorcycles repair employed the highest number of informal male workers. Most informal female labourers were employed in the social services and healthcare services, 17 per cent.

Guest workers in the underground market constituted 25 per cent of those working in the private sector, showed the study, indicating that foreign labourers are mainly employed in small-and-micro enterprises.

Almost 80 per cent of informal labourers are not given work leaves, even in cases of illness or injury, and face job insecurity.

“We have conducted this study to regulate the informal market and ensure that workers are being granted their full rights, particularly health insurance and social security umbrellas,” the minister underlined.

He said the second phase of the study is in the pipeline, which includes a panoramic study on the informal sector in order to diagnose reasons behind employers’ preference for this sector, the impact of the under-the-table pay on workers and whether it is better to turn the sector into an official one and consequences associated with such a step.

The study will also address the impact of the unofficial sector on the overall economy, said Hassan.

The survey involved a sample of 5,760 families drawn from the 2004 General Census of Population and Housing.

The study was based on the 2010 Labour Market Survey carried out by the Department of Statistics in cooperation with Al Manar Project and the Economic Research Forum in Cairo.


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