Jordanians shun industrial zones
14 February 2009
By Ferry Biedermann, Financial Times
Dust sticks to everything in the stark industrial streets of the northern Jordanian town of Duleil. Shop fronts covered in dun-coloured dirt reveal the tell-tale signs of a migrant labour economy: money transfer offices and gold jewellers.
They offer their services to the thousands of Asians who work in Duleil’s qualifying industrial zone (QIZ), one of 13 in Jordan. These special economic areas were set up over a decade ago to help Jordan capitalise on its peace treaty with Israel by allowing it to export tariff-free to the US as long as its products incorporated an 8 per cent Israeli component.
Now, as the QIZs are gradually being joined by businesses set up under Jordan’s more recent Free Trade Agreement with the US, many question the benefit they have brought the economy - and whether the FTA will do any better. In a country where unemployment hovers around 13 per cent and underemployment is thought to be much higher, the zones overwhelmingly employ foreign labour.
"If these factories import most of their workers and they don’t pay taxes in Jordan either, then how much do they benefit the country?" wonders one official at the International Labour Organisation.
If anything, the world economic downturn, a dispute over a new minimum wage and competition from new QIZs in Egypt have driven the number of Jordanians employed in the zones down, from about 15,000 several years ago to some 11,000 at the end of 2008, according to trade unions. The number of foreign workers declined relatively less, from more than 37,000 in 2004 to 32,000 now.
Fathalla Omrani, head of the textile worker’s trade union, says the QIZs are "important official policy". The main aim was to knit the peace treaty with Israel into Jordanian society. But he says it also played into the hands of King Abdullah II, who wanted to project an image of Jordan as a magnet for foreign investment. "The government uses the QIZs to exaggerate the amount of foreign investment," says Omrani.
The zones are often depicted as a runaway success, boosting Jordan’s exports to the US from $25m in 1997 to almost $1.5bn last year. The bulk of the exports are made up of garments.
Omrani is blunt on why companies in the zone favour foreign workers over locals. "Because they are like slaves. They work them day and night." Many Jordanians will not put up with the dismal working conditions in the QIZs, he says.
But Omrani acknowledges that conditions have improved markedly since a report in 2006 by the US National Labour Committee highlighted abusive treatment and human trafficking.
Jordan’s government, the foreign investors association, and a group of employers mainly from the QIZs, addressed many of the issues. But the QIZ agreement does not offer the same protection for workers that the new US-Jordan FTA does, the report noted.
The US-Jordan Free Trade agreement came into force in 2001 and is being implemented over 10 years. Many products, including textiles which form the bulk of exports, can now be shipped tariff-free from Jordan to the US. The agreement will not eliminate the QIZ arrangement, and is different on several scores. For example, the FTA has a 35 per cent Jordanian origin requirement. It also has some workers’ protection requirements that the QIZ arrangement lacks.
In Duleil, working conditions and the willingness of foreign labourers to work long hours are only part of the QIZ story. The ILO, the trade union and the foreign investors’ association all agree that a lack of training, social and cultural attitudes towards certain jobs and lack of transport infrastructure all play a role in explaining the low number of Jordanians working in the zones.
At Duleil, female Jordanian workers say that many in their villages are out of work but refuse to come to the QIZs.
"It is seen as something bad," says 30-year-old Rana Eisa. Many Jordanians would rather work occasionally and be paid better even if they are worse off on average because of long unemployed spells, she explains.
Mansour Khawaja, director of the foreign investors association, says many companies have tried to improve community relations, explaining they offer decent work for women. But Jordanian women often have to be home before sunset, which limits working hours in the winter.
As a result much of the less skilled work goes to Jordanians, while the factories invest time and money in importing skilled workers from outside. And in lean times unskilled, local labour is trimmed first.
While Khawaja says the factories in the zones adhere to strict rules on hours and conditions, they do not fall under the regulations mandated by the US-Jordan FTA. And that may be one of the reasons that the QIZs will continue to exist, even when the FTA comes into full operation after 2011.