Jordan has a labor market problem. It is not that people work too little. It is that too much labor remains concentrated in activities that generate relatively little value.
The country has a comparatively educated workforce, substantial migrant labor, a large refugee population, and experience adapting to repeated economic and demographic shocks. Yet these resources have not been translated into sustained productivity growth. In fact, Jordanians are working longer hours, but each hour of work is producing less value than it did two decades ago. Output per hour worked declined from approximately $20.2 in 2005 to $16.7 in 2025. At the same time, workers in Jordan averaged 48.8 hours per week in 2023, the fifth highest figure in the world.
The explanation lies partly in how labor is allocated across jobs. Employment has expanded primarily in sectors that can absorb large numbers of workers but generate relatively low value per hour. More productive sectors, meanwhile, have created comparatively few jobs. Jordan’s productivity challenge is therefore not simply a matter of worker effort or individual skills. It is a structural problem: labor is not moving easily from lower-productivity activities toward higher-productivity ones.
Large productivity gaps, limited labor mobility
Productivity differs substantially across Jordan’s economic sectors. Output per hour in wholesale and retail trade is approximately 7.6 Jordanian dinars, compared with 37.8 dinars in agriculture. The agricultural estimate may be overstated as informal, seasonal and migrant workers are typically undercounted. However, other sectors like mining, manufacturing, and certain professional activities still generate considerably more value per worker than many labor-intensive services.
Yet employment remains heavily concentrated in trade and other service activities. The trade sector alone employed approximately 247,000 workers in 2024. More productive sectors account for a much smaller share of total employment and have often expanded without generating commensurate job growth.
Similarly, much of the employment created over recent decades has emerged in relatively low-productivity sectors, while more dynamic sectors have remained less labor-intensive. Consequently, increases in employment have not produced proportional increases in output.
In a well-functioning economy, large and persistent productivity differences should create incentives for workers, capital, and firms to move toward more productive activities. In practice, however, that movement is often constrained. Workers often lack the specific qualifications, professional networks, geographic mobility, or financial resources required to change sectors. Firms in productive industries may face financing constraints, regulatory uncertainty, high energy costs, limited export opportunities, or other obstacles that prevent them from expanding and hiring. In Jordan, institutional frictions also play an important role.
A segmented labor market
Jordan’s labor market is divided along lines of nationality, legal status, occupation, and social standing. Jordanians, migrant workers, and refugees often participate in different parts of the economy and under different employment arrangements. They are therefore not always competing within a single, integrated labor market.
Foreign workers account for roughly one-fifth of Jordan’s workforce and are concentrated in agriculture, construction, manufacturing, and other physically demanding activities. Available figures suggest that foreign workers substantially outnumber Jordanians in agriculture and constitute an important share of the manufacturing and construction workforces. Their presence is much more limited in education, healthcare, public administration, and many professional occupations.
This distribution reflects more than differences in education or ability. Work-permit rules, occupational restrictions, employer recruitment practices, informality, and differences in bargaining power all influence which workers can enter which jobs. Migrants and refugees are frequently channeled toward a narrow set of sectors, while Jordanians have greater access to public employment, regulated professions, and occupations associated with greater stability or social status.
Such segmentation can prevent labor from moving to where it would be most productive. A refugee with professional experience may be unable to work formally in the occupation for which he or she was trained. A migrant worker may remain confined to a particular employer or sector. A Jordanian graduate may spend years waiting for a public-sector or professional position rather than entering an occupation perceived as insecure or socially undesirable.
The relevant question is therefore not simply whether Jordan has enough skilled workers. It is whether workers can use their skills in the places where they generate the most value.
Wages do not fully reveal productivity
The concentration of migrants in agriculture, manufacturing, and construction also complicates the relationship between wages and productivity. Low wages in these sectors do not necessarily mean that the workers themselves are unproductive. They often reflect weak bargaining power, restricted mobility, informal employment arrangements, or an abundant supply of workers willing—or compelled—to accept difficult jobs at low pay.
Employers may consequently rely on inexpensive labor even in sectors where output per worker is relatively high. This can sustain production, but it may also weaken incentives to adopt labor-saving technologies, invest in equipment, improve management, or provide training.
When firms can maintain profitability by hiring workers at low wages, increasing productivity becomes less urgent. Labor-intensive production methods persist, workers remain concentrated in low-paid tasks, and technological upgrading slows. What is individually rational for firms can therefore reinforce low productivity at the level of the economy.
This mechanism should not be interpreted as an argument against migrant or refugee employment. Migrant workers perform activities that are essential to Jordan’s economy, often in occupations that employers struggle to fill with Jordanian workers. The problem is the institutional structure through which this labor is employed. A system based on restricted mobility, informality, and weak bargaining power may keep wages low without creating incentives for either workers or firms to become more productive.
Refugees and the allocation of work
The arrival of Syrian refugees has made labor-market divisions more visible. Jordan has hosted more than one million Syrians since the beginning of the conflict, including approximately 420,000 people registered with the United Nations High Commissioner for Refugees (UNHCR).
Public debate often focuses on whether refugees reduce wages or displace Jordanian workers. Surveys suggest that such concerns have been widespread, particularly regarding low-skilled employment, although they appear to have moderated over time. The share of Jordanians who believed Syrians were depressing wages reportedly declined from about 90 percent in 2014 to 65 percent in 2020.
But the larger economic issue is not simply whether refugees and Jordanians compete for the same jobs. They frequently do not. Refugees have concentrated on a limited range of occupations, many of them informal, low-paid, and subject to regulatory restrictions. This segmentation can produce several inefficiencies simultaneously: refugees may be unable to use their existing skills, Jordanian workers may avoid occupations associated with low wages and poor conditions, and firms may continue relying on inexpensive labor rather than upgrading production.
The Jordan Compact, introduced in 2016, represented an important effort to expand refugees’ access to formal employment and connect refugee inclusion with investment and export growth. Its underlying logic was sound: refugee employment should be managed through formalization and economic expansion rather than through exclusion.
Yet issuing work permits alone cannot eliminate segmentation. Workers must also be able to change employers, enter occupations consistent with their qualifications, obtain recognition for previous education and experience, and access training that responds to actual labor demand. Without these complementary reforms, formalization may reproduce existing occupational divisions rather than overcome them.
Social preferences vs. economic incentives
The allocation of labor is also shaped by the characteristics of available jobs. Jordanian workers are often described as unwilling to accept certain occupations, but such explanations can be misleading. Workers may be responding rationally to low wages, poor working conditions, limited advancement opportunities, insecurity, or weak social protection.
Preferences for public-sector employment and stable professional work probably have social and cultural dimensions. But they also reflect the structure of incentives. Public employment has traditionally offered greater security, predictable hours, social insurance, and social standing. Many private-sector jobs, particularly in low-productivity services, offer few of these benefits.
The relevant policy response is therefore not to persuade Jordanians to accept any available job. It is to improve the quality and productivity of private employment. Better enforcement of labor standards, portable social insurance, clearer career progression, and investments in workforce skills could make private-sector work more attractive while reducing the gap between occupations performed by Jordanians and those assigned to migrants.
From employment growth to productivity growth
Jordan’s labor market has proven capable of absorbing workers, including large numbers of migrants and refugees. But moving from a wage-depressing absorption to productivity enhancing growth requires action on both sides of the labor market.
On the demand side, productive firms must be able to expand. This requires improved access to finance, greater regulatory predictability, stronger competition, reliable infrastructure, and better access to regional and international markets. Policies intended to increase employment will have limited effects on productivity when the firms best positioned to generate high-value jobs remain constrained.
On the supply side, workers must be able to move across firms, sectors, and occupations. Work-permit restrictions, the non-recognition of qualifications, weak training systems, informality, and limited social protection all reduce mobility. These barriers affect Jordanians, migrants, and refugees differently, but their cumulative effect is the same: workers remain separated into occupational segments rather than moving toward their most productive uses.
Jordan’s productivity challenge is therefore not that its workers lack effort. They already work long hours. Nor is it simply that the country lacks human capital. The deeper problem is that institutional and economic barriers prevent human capital from being allocated efficiently.
The central challenge is to build a labor market in which firms have incentives to invest and workers regardless of nationality or legal status can move toward activities where their skills generate greater value. Until that happens, Jordan may continue to create work without creating enough productivity.
