By : Ahmad M. Awad
Jordan Daily – In the midst of our region’s volatile political climate, as the Israeli occupying state intensifies its aggressive expansionism and tensions escalate to unprecedented heights, discussing economic issues like raising the minimum wage may seem like a luxury, far removed from our top-of-mind priorities. Yet by ignoring economic dimensions during crises, we weaken our ability to confront the challenges we face on social, economic, and political levels.
Implementing a minimum wage policy provides both individuals and families with income necessary to meet basic needs. Such a policy is considered one of the cornerstones of countries aiming to achieve social balance, reduce poverty, and enhance social protection – with more than 90% of countries worldwide applying a minimum wage policy in various ways.
The minimum wage is defined as the lowest level of pay that a worker should receive to cover their essential needs and ensure a dignified life for themselves and their families, especially for newcomers to the labor market and those with limited skills. However, in many sectors of the Jordanian economy, the minimum wage is treated as the maximum wage. When the minimum wage is treated as a cap, its fundamental role in enabling progress towards social justice is undermined.
Looking at international experiences, we find that raising the minimum wage is often based on an analysis of social and economic criteria that include the poverty line, dependency ratios, and inflation levels. In Jordan, the poverty line calculated using 2016 figures shows that the monthly poverty threshold for an individual is approximately 100 dinars, meaning that the minimum required to cover the needs of a standard family (comprising 4.8 members) should reach around 480 dinars monthly. Further, since 2016, Jordan has witnessed an accumulated inflation rate of about 20%, indicating a significant increase in the poverty line.
Based on these indicators, the current minimum wage of 260 dinars is clearly far from covering the basic needs of families. In this context, the Jordanian Trade Union Confederation calls for raising the minimum wage to 300 dinars per month. However, while important, this demand still remains insufficient to address the current economic challenges facing families today.
Some oppose a minimum wage policy despite its social welfare importance, arguing that such policies negatively impact unemployment rates and economic growth. Applied economic research describes varying outcomes in response to this claim. In many countries, no negative effects were observed, although in some limited cases, raising the minimum wage has led to a slight decrease in employment rates among less-skilled groups. On the other hand, studies have shown that increasing the minimum wage often boosts domestic consumption demand, which is the engine for fueling economic growth, increasing job opportunities, and thereby stimulating the economy.
Raising the minimum wage is not merely an economic issue, as some business leaders might view it; rather, it is a social and economic necessity. A minimum wage is critical to ensuring a minimum level of social justice, reducing economic inequality, and stimulating the economy. Given the current challenges facing society, it is essential to adopt economic policies that contribute to maintaining stability in Jordan, as well as stimulate domestic consumption to break free from the cycle of economic stagnation we have been experiencing for the past 15 years, and finally, to ensure a decent life for citizens.
Ahmad Awad is the founder and director of the Phenix Center for Economic Studies, specializes in human rights and socio-economic issues. Advocate for human rights and promoting democracy and civil society at local, Arab, and international levels.
The opinions expressed in this article are those of the writer and do not necessarily reflect the views or positions of the Jordan Daily.
