Jordan is creating jobs for thousands of refugees by setting up Special Economic Zones, where companies can access trade concessions and perks in exchange for offering jobs to Syrians. Organisations operating from the SEZs will be expected to employ 15% Syrians within their workforce, and will access tariff-free trade in the European market in exchange. The program is part of the $1.7 billion Jordan Compact, a wide-ranging deal of loans and pledges from the international community in exchange for Jordan opening up its labour market to refugees.
Results & Impact
The Jordanian government hopes to create jobs for 200,000 Syrian refugees over the next five years, through both SEZs and other routes such as the relaxation of work permits for Syrians and economic investment from the international community
Jordan, European Union, World Bank
Businesses in Jordan’s Special Economic Zones are able to trade with the European Union under relaxed rule of origin laws, on the condition that their workforce is comprised of at least 15% Syrians. Special Economic Zones also offer a range of trade incentives, including tax exemptions and ready-made business infrastructure, in an attempt to boost the Jordanian economy. The Compact agreement was made between Jordan and major international donors at the London Conference in February 2016
Cost & Value
The Jordan Compact attracted some $700 million in economic support to underpin its work for 2016, of a $1.7 billion total
Running since 2016
Jobs in the Special Economic Zones, where trade concessions are granted, tend to be in sectors like garment manufacture which are low paid and not attractive to many Syrians, who often live far away from where the areas are located. It is also doubtful whether the stimulus for the Jordanian economy is sufficient to make a significant dent in the country's high unemployment rate, especially given the level of conflict and instability in the region
Jordan is hoping to use Special Economic Zones (SEZs) to create jobs for refugees while boosting an ailing economy, by offering businesses tax concessions and perks on the condition they employ Syrian workers.
In a much-hyped deal finalised last summer, trade exemptions will apply to 52 categories of goods which are manufactured in any of 18 SEZs in the country. There’s one condition to accessing the benefits: 15% of a company’s workforce needs to be made up of Syrian refugees.
More than 1.5 million Syrians are currently thought to live in Jordan, 658,000 of whom are registered with the UN High Commissioner for Refugees, and providing them with sustainable livelihoods is a tough ask. Unemployment in the Kingdom stands at nearly 15%, and anxiety over refugees taking already scarce jobs has prevented the government granting them the right to work legally. Both politically and practically, any movement to opening the job market to Syrians needs to boost employment opportunities for Jordanians, too.
By tying economic incentives directly to work opportunities for refugees the framework for SEZs attempts to do that.
Relaxed rule-of-origin laws will apply to selected EU exports made by refugees in the zones, a sought-after allowance that Jordanian manufacturers hope could significantly boost exports. The program is one component of the Jordan Compact, a deal between the Jordanian and foreign governments that aims to map a sustainable future for Syrian refugees in Jordan through job creation and economic support.
Other elements of the Jordan Compact include a $300 million World Bank loan, tied to key reforms designed to stimulate the Jordanian economy and help refugees get jobs. They include issuing 200,000 work permits for Syrian refugees, supporting small businesses and reducing red tape. Businesses operating from the zones also benefit from other perks, including tax exemptions and easy licensing and registration requirements, free-of-charge road and power infrastructure and one-stop-shops for support and business administration.
But while there have been high hopes for job creation, some of the promised results have been slow to emerge.
While the Jordanian government hoped to issue 50,000 work permits to Syrians by the end of 2016, by February 2017 only 38,516 permits had been issued. The reasons for the lack of take-up are complex: employers find the process of getting permits time-consuming, or don’t want to commit to legal responsibilities, while Syrians are sometimes wary of contact with authorities or find they’re unable to obtain work permits for jobs in their area of expertise.
They are even less enthusiastic about work in the Special Economic Zones, and even when opportunities have been advertised through job fairs few Syrians have taken up roles. Part of the problem is that the jobs available in these industrial parks are often in the garment sector or similar areas, low-skilled, low-paid jobs that commonly employ women. Many Syrians don’t want these jobs: they’d rather take work in the informal sector, where pay and conditions are better.
There may be further hidden costs in the drive to employ Syrians too. Jobs in Special Economic Zones, and those that are available for work permits for refugees, are generally in lower skilled areas that are currently dominated by migrants from countries like Bangladesh or the Philippines. That’s because policy makers hope to avoid encroaching on the jobs of Jordanians. But it means “guest workers” from other countries may be replaced by Syrians and be forced to return home.
(Picture: Flickr / DFID)