Abstract:

The Identity Center for Human Development with the Business Development Center Issued the study of “ Labour Demands Forecast Research”. The study shed light on the evolving discrepancy between supply and demand, with a focus on recent development and the overall quality of education outputs in meeting market needs in the ICT, health and green energy sectors. It also seeks to provide forward-looking directions for policy-making, which should however be further, assessed and analyzed. The aim of this research is to analyze the dynamics of the domestic labour market with particular focus on three growing sectors, ICT, health and Green Energy, through analyzing demand, supply, and the existing incongruity between the two. This study was based on a combination of qualitative and quantitative research, from both primary and secondary sources. The main source of primary data and information is a survey that was administered to a total of 57 companies working in the focus sectors of information & communications technology (ICT), health, and green energy. The first section of this report provides a brief outline of the business environment in Jordan, in order to explain the context in which companies are working. What follows is an examination of the demands of the labour market through an analysis of employment and job creation trends in the Jordanian labour market, according to sector, employment status and other factors. This section will also present the field findings that detail the specific skills that companies require. The report then moves to the second section which tackles labour supply, through first analyzing the outputs of Jordan’s education system then investigating employment rates according to education and occupation, among other variables. This section then presents unemployment rates according to different variables as well as the economic participation rates. The section then presents the main existing challenges in the domestic labour supply, through utilizing survey results, as well as providing an account on the impact of the Syrian refugee crisis on the domestic labour market. The third section attempts to match the labour supply and demands. The final section concludes and provides suggestions for the way forward. The main problem in the aforementioned developments is that the labour supply is increasingly becoming overly skewed towards university level education that is not meeting the demands of the labour market, thereby intensifying the qualitative labour market disequilibrium. Moreover, the developments illustrate how the outputs of university-level education do not seem to adequatelymatch the requirements of the labour market, across most fields, and more and more job seekers are entering the labour market with no prior practical experience. Other than this qualitative discrepancy associated with the quality and relevance of education, the report investigated other possible sources. One major source of disequilibrium is the geographical disparity between labour supply and demand. In specific, the study found that over 72% of the net new jobs in 2014 were generated in the three governorates of Amman, Irbid, and Zarqa, with a disproportionally large share of job generated in Amman, at 45.6%. Another major source of mismatch found by the study was the restrictiveness of labour market regulations in Jordan. Some of the companies even indicated that universities are not offering some specializations, which the local labour market requires. This was especially the case for green energy companies, of which 75% believe that universities are unable to provide the required skills because of the fact that green energy specializations are not offered by Jordanian universities. Most of the companies surveyed face challenges in the technical level of recent graduates as was revealed by the survey results. The lack of practical experience and knowledge, along with the gap between education outputs and labour market requirements, were the most commonly cited challenges. Companies also focused their responses on a range of weak soft skills of recent graduates including poor communication and interpersonal skills. Companies when asked about the challenges they face in training and coaching recent graduates cited almost the same set of challenges. However, an additional challenge cited by most companies in this area was the high turnover rate of trained workers, who often receive the training for pursuing work elsewhere. The field research of this study found that employers experience significant challenges in the domestic labour supply, where 62% of ICT companies, 84% of health companies, and 50% of green energy companies indicated a number of challenges faced when recruiting new workers. The number one challenge most cited by companies was the difficulty in finding workers with the suitable knowledge and practical experience required for the job opening, in addition to the overall weak academic and technical backgrounds available in the labour supply that are irrelevant to market needs. Moreover, many companies cited the challenge of weak commitment by new workers, and the burden of having to sift through a large number of job applications, because applicants do not understand what the job requirements are. As for the labour market data in terms of the employment level and the rate of job generation point towards a declining labour demand in the formal labour market, especially in the past 5 years, corresponding with the low rate of economic growth registered over the same period. This is also clear in the decrease of jobs offered by the private sector and the increase in jobs offered by the public sector, which poses another problem related to the inflation of the public sector. Regarding the informal sector, measuring the extent to which the informal sector contributed to overall labour demand is impossible, as periodic information and data on informal employment does not exist. However, non-Jordanians obtained over half of the jobs generated by the ‘non-organised’ private sector in 2012, and non-Jordanians took almost all of the generated jobs by this sector in 2014 up. The labour supply is increasing becoming overly skewed towards university level rofessionals, thereby intensifying the qualitative labour market disequilibrium. Moreover, the developments illustrate how the outputs of university-level education do not seem to adequately match the requirements of the labour market, across most fields, and more and more job seekers are entering the labour market with no prior practical experience.