Government urged to repeal decision freezing minimum wage

AMMAN — Labour rights activists are calling on authorities to reconsider the recent decision to keep the minimum wage at its current level, claiming that the move doesn’t comply with Jordanian labour laws.

Labour rights activists said that keeping the minimum wage at its present rate of JD260 per month will further worsen poverty and increase Jordan’s unemployment rate. The poverty line for a Jordanian household stands at JD480 per month. 

During a meeting of the Trilateral Labour Affairs Committee, members of the panel decided to keep the minimum wage unchanged at JD260 for 2023-2024, provided that the decision will be reconsidered in 2025 to consider the cumulative inflation rate for the 2022-2024 period. 

Attorney and human rights activist Hamada Abu Nijmeh told The Jordan Times that the decision “doesn’t comply with Jordanian labour rights law”, which requires raising the minimum wage consistently with the inflation rate and cost of living increases. 

“How would we guarantee that the committee will increase the minimum wages in 2025” Abu Nijmeh said, noting that the same committee previously announced that it would raise the minimum wage in 2023, yet failed to abide by its own decision.

“Around 500,000 Jordanians will be directly affected by this decision, whether they are engaged in the formal or informal workforce,” Abu Nijmeh added. 

The minimum wage is a tool that governments around the world use to counter inflationary pressures on the fixity of low wages. However, hikes in the minimum wage seem to be independent of inflation, according to Abu Nijmeh. 

According to data from the Department of Statistics, the Consumer Price Index (CPI), a measure of inflation, increased by 4.22 per cent in the January-November period of 2022. 

According to the Minimum Wage Organisation’s website, Jordan’s minimum wage is ranked 69 among 197 countries.

From an economic perspective, economist Khaled Salameh told The Jordan Times that a low minimum wage will directly impact the local economy. 

“Low wages mean low purchasing power, which will bring limited income to the treasury, which is mainly filled via sales tax and income tax. This will ultimately translated into poor GDP growth,” Salameh added. 

A member of the business community, who preferred to remain anonymous, told The Jordan Times that raising the minimum wage at such a “dire economic time” would shift the burden of improving welfare onto the private sector. 

“Relieving low-wage workers at the expense of micro, small- and medium-sized enterprises will result in limited employment opportunities,” the source argued. 

Salameh stated that the government could relieve low-wage workers by increasing the minimum wage but could also reduce production and operational costs of the private sector.

 “Reducing the cost of production inputs, from energy, taxes, transport or transaction fees, while simultaneously increasing the minimum wage would relieve low-wage workers and wouldn’t be a burden on the private sector,” Salameh said. 

Labour rights activist Ahmad Awad told The Jordan Times that increasing the minimum wage will “significantly reduce unemployment”, as well as bring other benefits, such as increased women’s workforce participation and contributions to the overall well-being of Jordanians.

“The absolute poverty line per household stands at JD480 a month; the minimum wage falls way behind it,” Awad added. 

Sticking to the current minimum wage will increase poverty, deepen social and economic inequalities and will be an obstacle to women’s employment, Awad said.