By : Ahmad M. Awad
Jordan Daily – In a long-awaited move, Jordan’s Tripartite Labor Committee announced last week its decision to raise the minimum wage, a necessary response to the years-long economic and social challenges faced by workers and their families.
After three years of the monthly minimum wage remaining fixed at 260 JOD, the minimum wage has now been raised to 290 JOD.
Despite the new minimum wage’s inadequacy of meeting the basic needs of working families, the lack of adherence in determining its level of increase to globally recognized methodologies, and its reliance on social power dynamics that necessarily work against workers’ interests, this decision has been made and is now a reality we must deal with.
The minimum wage is not merely an economic figure; it is a policy tool that reflects a state’s degree of commitment to ensuring a decent life for its citizens, particularly for new entrants to the labor market and those with limited skills. However, raising the minimum wage alone is not sufficient to achieve those desired goals. This decision requires additional measures to ensure its effective implementation and mitigate potential negative side effects.
First, the government must take responsibility for protecting small and micro-enterprises during this important policy transition, which may increase operating costs for certain economic activities. In order to ease such pressures, the government ought to take supplementary measures to financially support such businesses, such as tax reductions or disbursements, while also offering training programs to improve workers’ productivity and efficiency.
At the same time, the government must strengthen market oversight, particularly in anticipation potential increases in prices of goods and services that some may respond to the new policy with. Taking the target of price stability, it is crucial for the government to supplement the minimum wage increase to prevent any economic exploitation that could harm consumers and lead to an unjustified rise in inflation levels.
It’s important to note that the minimum wage increase is ideally applied evenly across economic sectors to avoid wage discrimination between different sectors – especially ones with a high concentration of marginalized workers. The exclusion of the garment manufacturing sector, accordingly, from this wage increase creates an unjustified loophole that will perpetuate and deepen labor market imbalances.
Additionally, the successful application of the minimum wage across sectors relies on the Ministry of Labor’s capacity to monitor its implementation, which requires enhancing the ministry’s capacities of regular inspection.
The oversight role of the Social Security Corporation must be strengthened, especially in sectors known for evading insurance, such as retail shops, car repair and other workshops, medical clinics, and law offices.
Despite concerns about potential side effects, raising the minimum wage represents a positive step toward stimulating the local economy. Higher wages mean improved purchasing power for workers, which contributes to boosting local consumer demand for goods and services and helps drive economic activity.
Providing fair incomes for workers is also crucial for providing for psychological and social stability, which positively enhances worker productivity, especially when accompanied by training programs from employers.
Finally, raising the minimum wage, even if by less than required, will contribute to reducing the income gap between different segments of society. Better wages in turn will make Jordan’s labor market more attractive to skilled workers, supporting sustainable economic growth.
The Tripartite Labor Committee’s decision to raise the minimum wage was necessary, though insufficient in scale. Yet in isolation, it is insufficient in achieving Jordan’s sustainable development goals; rather, the raised minimum wage requires strict and enhanced enforcement mechanisms as well as supportive government policies to ensure its objectives are achieved.
Ahmad Awad is the founder and director of the Phenix Center for Economic Studies, specializes in human rights and socio-economic issues. He is also 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.
