Unfazed by the increased uncertainty in the garment industry due to both internal and external reasons, Middle-East nation Jordan is targetting $7.3 billion in exports by 2033, and employment of 225,000 in the sector, an average annual growth of 12% and 9.5% respectively.
- A just released Annual Report 2023: An Industry and Compliance Review by Better Work Jordan for the period January-December 2022, contends that the “perennial problems” that the country’s garment sector faces include high production costs due to relatively high labour costs, high energy prices, and high taxes.
Economic Modernization Vision: In June 2022, the Government of Jordan launched the Economic Modernization Vision—a ten-year plan to increase job opportunities, incomes, and Jordan’s standing among countries by investing in high value industries, new services, education, and green technology.
- The Economic Modernization Vision touches on many aspects of economic and political life. Two key elements that are key for the garment sector are its inclusion as a key high-value industry and the decision to abolish the MoL.
- The garment sector has been identified as one of the high-value industries with a focus on moving up the value chain including through horizontal integration, increased sales throughout the seasons, and expanding vocational training and job opportunities for Jordanians.
- With these initiatives, the government hopes to reach $7.3 billion in exports by 2033, and employment of 225,000 in the sector, an average annual growth of 12% and 9.5% respectively.
Drop in exports: Although the garment industry has seen significant growth in the last ten years, driven primarily by large exporting factories who export to the US under the USJFTA, exports dropped by 15% in 2020 but rebounded in 2021 with 8% growth, followed by 22% growth in 2022.
- In total, $2.2 billion worth of garments were exported in 2022, the highest export value for the sector to date.
- The garment industry’s share of total exports has been dropping over the last few years—from 28% in 2019, to 19% in 2022. The US continues to be a major export market for Jordan, with 21% of all exports going to the US, although this has also dropped in recent years.
- While export growth remained strong through the end of 2022, factories began reporting reductions in order volume in October 2022 and throughout the autumn. This can partially be attributed to overstocked inventory and economic uncertainty. Worldwide inflation has hurt consumers, and additionally increased the cost of raw materials.
- In addition, the domestic workforce that is interested in garment sector work is limited, and they are frequently missing the skills required.
- Jordan does not have raw materials and other inputs to production, which lengthens the time and cost of the production process.
Improving working conditions: Better Work Jordan works to enhance decent work, opportunities for women and business competitiveness in the Jordanian garment industry. The programme has recently launched its Phase IV strategy which lays out the sustainability goals of the programme.
- Through capacity building, collaboration with stakeholders, and convening around key policy issues, the programme is working to ensure that the tripartite stakeholders (representatives from government, employers and workers) can take a leading role in maintaining and improving working conditions.
- There will be some outcomes in the Phase IV strategy: Outcome 1: By 2027, Jordan’s garment industry will have an effective system of tripartite-plus labour market governance, in which workers’ rights are upheld and protected in line with national labour laws and core international labour standards.
- Outcome 2: By 2027, export growth combined with active labour market policies will increase the garment industry’s contribution to Jordanian employment.
- The number of Better Work Jordan factories has grown with the garment industry’s expansion. After a contraction in the industry in 2020, there has been a small rebound in 2021 and a further increase in 2022.
- As of December 2022, 95 factories were enrolled in Better Work Jordan—45 direct exporters, 21 subcontractors, 24 satellite units, and 5 non-garment factories. Better Work Jordan completed 103 assessment reports in 2022. The number of reports is higher than the number of factories due to a slight backlog in assessments during the COVID-19 period.
Demographics of workers: According to payroll data gathered by Better Work Jordan through December 2022, there were 78,617 workers in Better Work Jordan participating factories.
- The number of workers in participating factories increased significantly in 2022, after two years of decline.
- Employment is even higher than the previous peak, recorded in 2019, of 74,970 workers. The largest single factory employed over 3,000 workers, while the smallest employed just 14.
- The sector is dominated by one major investor who employs over 20,000 workers across 12 main units and seven satellite factories.
- The majority of workers in the sector are women (75%), and the work force is mostly made up of migrants (74%).
- Direct exporters employed the vast majority of the workforce, with satellite units employing roughly 10% and subcontracting units the remaining 6%.
- Women are most heavily concentrated in satellite units (92% of the work force), followed by exporting factories (74%) and finally subcontracting factories (56%).
- The ratio of female supervisors follows this same pattern: 64% of supervisors in satellite factories are women, compared to 42% in exporting factories and 27% in subcontracting factories.
- Overall, the proportion of female supervisors in Better Work Jordan participating factories has increased in the last three years.
- Around 77,800 workers were employed in the garment-exporting sector in 2022. Migrant workers make up three-quarters of the workforce. These workers, primarily from South Asia, typically work in Jordan for a contracted period of two to three years, which can be extended.
- Bangladeshis are the largest group of workers (over 50% of migrant workers), and there are also workers from India, Sri Lanka, Nepal, and Myanmar. Jordanian workers make up the remaining 25% of the workforce.
The factories: Within the exporting garment industry, there are three types of factories. The largest factories are direct exporters who produce goods directly for buyers. These factories are mostly located in the main economic zones of Dulayl, Irbid and Sahab.
- Below these factories in the supply chain are numerous subcontracting factories – smaller factories that produce goods for the direct exporters upon request. Parallel to this system are satellite units, which operate outside of the industrial zones, primarily employ Jordanians, and are typically small.
- There are currently 24 satellite factories registered in the Better Work Jordan programme that employ over 8,000 Jordanian workers.
- The Government of Jordan incentivises satellite factories through monetary and logistical benefits in an effort to bring jobs to rural areas where many Jordanians live but are limited in employment opportunities, especially for women.
- Satellite units are typically affiliated with large exporting factories and help those factories reach their quota of Jordanian workers.
- In addition to the main garment factories that make clothing for export, there are also numerous small garment factories throughout the country that are not part of the Better Work Jordan programme. These factories are classified as SMEs and produce for the local market. They typically employ between 10 and 500 people. Many of these companies are not registered with the Social Security Corporation (SSC) so it is difficult to get accurate and up-to-date information on them.
- A study from the Netherlands in 2019 estimated that there were 150 garment SMEs in Jordan employing roughly 5% of workers in the garment industry.
- The minimum wage in the garment sector has been 220 JD per month since 2018, and changes in the wage structure were not discussed between employer and worker representatives in the 2022 CBA negotiations.
- Jordan has yet to ratify ILO Convention No. 87 on the Freedom of Association and Protection of the Right to Organize, and Jordanian law places several legal restrictions on Freedom of Association (FoA). Of note is the fact that the freedom to establish unions is highly constrained.
- Workers in the garment sector are represented by the General Trade Union of Workers in Textile, Garment and Clothing Industries (GTU, or simply referred to as the Trade Union or the union).
Free trade agreements: The Jordanian economy benefits from several free trade agreements. The most important agreement for the garment sector is the United States-Jordan free trade agreement, the US-Jordan Free Trade Agreement (USJFTA) that was signed in 2000 and went into full effect in 2010.
- The USJFTA allows Jordan to gain preferential duty and quota-free access to the US market. The Jordanian garment industry has been one of the primary beneficiaries of this agreement.
- In 2002, Jordan entered the Association Agreement with the European Union (EU) that enabled a Free Trade Area opening two-way trade. The agreement was revisited in 2016 when the EU and Jordan agreed to simplify the rules of origin (RoO) requirements as a component of the EU’s broader response to the Syrian refugee crisis.
- The revisions were aimed at boosting Jordan’s trade competitiveness, supporting the host communities, and promoting job creation for Jordanians and Syrians.
About Better Work Jordan: Better Work— a collaboration between the United Nations’ International Labour Organisation (ILO) and the International Finance Corporation (IFC), a member of the World Bank Group—is a comprehensive programme bringing together all levels of the garment industry to improve working conditions, respect of workers’ labour rights and boost the competitiveness of apparel and footwear businesses.
- Better Work Jordan is supported by the following partners: Canada (The Labour Program of Employment and Social Development Canada) European Union Jordan (Ministry of Labour) United States (Department of Labor).
