Jordan’s Occupational Projection System: Outlook to 2020


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Executive Summary

· Economic growth is expected to be strong into 2020, but weaker than in previous years. Employment growth will favor services rather than goods-producing sectors

· Gains are expected in education, construction, mining and manufacturing, and personal services while decreases are expected in wholesale and retail trades, banking and finance, and public sector

· Research and results from developing a labor market projection system in Jordan has the intent of informing policy makers and labor market participants about future employment trends

· The report describes the development of the Jordan Occupational Projection Model (JOPMOD) and the assumptions and results of the first occupational projection using JOPMOD. The JOPMOD is a forecasting model of the Jordanian economy that helps estimate GDP by expenditure category and industry

· The report provides a summary of the benefits that can be expected from better labor market information and from an occupational projection system and describes some of the ongoing economic and labor market challenges faced by Jordanians and Jordan’s past and future economic performance on an industry by industry basis in addition to providing a number of next steps

Key Findings

Labor Market Challenges

· Jordan has a young population with 37% under 15 and 59% under 24. This young population could exacerbate unemployment crisis in the future, if students are not properly trained for the future jobs

· Labor force participation rate is low, pointing to underemployment in the country, especially among women

· Although Jordan features strong GDP growth and strong employment growth, unemployment ishigh indicatingincreased labor force participation and continued mismatches in the labor market

· Key mismatches include: job reality not aligned with job expectations resulting in voluntary unemployment; mismatch in skills taught and skills expected by employer; mismatch between high levels of female education but very low labor force participation

 

Macro-Economic Outlook to 2020

· Jordan’s main immediate challenge is the Syrian civil war due to the resulting increases in oil prices and the influx of refugees

· In the medium-term, Jordan’s main challenge is the budget deficit. Thegovernment has gradually lowered costly subsidies on water, cooking fuel, and some food with a potential to eliminate electricity subsidies

· Real government spending is expected to decrease into 2020, and growth is expected to be carried by increasing FDI and remittances, which will drive household spending and investment

· The average real GDP is expected to grow at 4.4% from 2013-2020 with an average annual employment growth at 3.5% and a modest improvement in unemployment rate of 12.2% in 2020 from an estimated 13.6% in 2012

 

Industrial Outlook to 2020

· Jordan has been known as a services economy and is expected to remain over the long term as it moves towards a knowledge-based economy

· Real GDP forecasts for 14 industries are generated using an input-output (IO) model incorporated in the prediction model. A briefing of selected industries with the highest projected growth rates in employment and GDP is provided:

o Agriculture, Hunting, and Forestry: expected to grow due to current efforts to enhance food security and the construction of pipelines to bring water to Amman

o Mining, Quarrying, Manufacturing, and Utilities: expected to increase due to expected inflows of FDI and success of mining projects started at time of writing

o Construction and Real estate: expected to grow due to large real estate projects (Abdali Urban Regeneration Project, Marsa Zayed Project) and public sector capital development projects

o Wholesale, Retail Trade and Hotels & Restaurants: expected to increase due to higher levels of consumption enabled by remittances and stable levels of tourism

o Transport, storage, and communications: expected to increase due to construction of new terminal at Queen Alia Airport and construction of the National Railway Project

o Financial intermediation and renting & business activities: labor creation is expected to be weak in this field because of the increasing use of internet and automation

o Non-commercial/public sector: growth and job creation expected to be weak due to decreases in government spending, though education and social work fields will maintain moderate growth

 

Occupational Outlook to 2020

Projections suggest the economy will see over 407,000 jobs between 2013-2020:

· Service sector occupations are expected to account for most of the employment growth with 150,000 jobs for professionals. Jordan’s young population base underpins the strong demand for this occupation as the education services sector is expected to be one of the top-performing industries in Jordan

· Occupations with the least potential for growth include hospitality, retail and other service managers, food preparation assistants, and production and specialized services managers

Recommended Actions and Initiatives

· Use projections to better inform the National Employment Strategy recommendations on the ways to increase employment and move up the value chain based on conditions in certain sectors at given periods

· Continue producing forecasts as information that wasn’t available at the time of this writing becomes available and further develop the prediction model to evaluate different policy levers or potential exogenous shocks on the labor market to continue gaining insight

  

Report Name

Date

Timeline

Jordan’s Occupational Projection System: Outlook to 2020

March 2013

2013-2020

Author

Supporting Donor

Conference Board of Canada

Canadian International Development Agency

Sector

Lead Ministry

General

Ministry of Planning and International Cooperation

Key Topics

Budget deficit – FDI increase – Government spending – Jobless growth–Industrial Outlook – Macro-Economic Outlook – Occupational Outlook – Real GDP growth

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