Published on October 2nd, 2015. Originally posted in Al-Ghad Daily News Paper (AR).
Out of eight Jordanian women suitable to join the workforce (i.e. between the ages of 15 and 64), we find that only 1 woman is working or searching for work (participation rate around 13%). This extremely small ratio, which places Jordan near the bottom of global scales in terms of women participation in the economy, can be interpreted as a great potential opportunity for Jordan's economy. It should be noted that in the region, one woman out of four are working or searching for work (regional participation rate of 23%), while the global average is nearly one in two!
News sites have been saturated with reporting on this ratio; exploring the reasons behind it and possible solutions. The reasons always range between the abysmal quality of public transportation to family obligations to unequal wages between men and women for equal work. These reasons and their respective solutions have been researched multiple times from several civil society institutions and think tanks. What this post aims to do is to add another pillar to this debate which has, to my best of knowledge, never been explored within the Jordanian context before. The gap I seek to address to so figure out approximately the foregone economic opportunity from the low participation of women in the Jordanian economy? How much is the amount we forego in wages, profits, and taxes?
To answer this question, I replicate the methodology used in Strategy&'s "Empowering the Third Billion Report" report, published in 2012, on Jordanian data. The essential point behind this methodology is to quantify the additional benefit resulting from adding one additional woman in the labor force that is hypothetically added to the labor force. This effect is then multiplied by the amount of women required to raise the labor force participation rate to a hypothetical level.
In 2013, Jordan's GDP amounted to JD 23.0 billion (1 JD = 1.41 USD). In that year, the female participation rate was 13.2% (third lowest globally). Applying Strategy&'s methodology to those numbers yields that adding a single Jordanian woman to the work force adds roughly JD 13,000 to Jordan's GDP in a year. Using that number, we can calculate the foregone opportunity from the low participation rate for women for Jordan in 2013. To emphasize the magnitude of this foregone opportunity, I elected to express this in two different ways: one is to state the nominal and relative increase from a hypothetical labor force participation rate, the second is to paraphrase the nominal increase into the amount of years it takes to achieve such an increase under the average growth rate achieved in the past few years (approx 3%).
If the female labor force participation rate was 23% (equal to regional average), Jordan's GDP would have been higher by 9% (JD 26.2 billion) in 2013 - an increase of JD 2.2 billion. This would take Jordan 3 years under current growth rates to achieve.
If the female labor force participation rate was 50% (equal to global average), Jordan's GDP would have been higher by 36% (JD 32.5 billion) in 2013 - an increase of JD 8.6 billion. This would take Jordan 10 years under current growth rates to achieve.
There you have it. The gender inequality in Jordan's economy is costing us 46% of our GDP, or just about JD 11 billion. Jordan's GDP per capita has been described as stagnant at best in the past few years. The refugee crisis now (Jordan is hosting approximately the equivalent of 20% of its population in refugees) isn't making things better (though some argue it actually boosts aggregate demand - I'll address this later). Bottom line is: we're not doing so well economically. We could a lot more. Therefore, what I wanted to show here is how much Jordan can gain from gender equality in the work force.
Raising the participation rate of women in the workforce would require multiple policies that would ensure that business owners comply with the current labor code that ensures the provision of paid maternity leave, access to childcare, and equal wages for men and women for equal work. It's worth to note that women in Jordan earn 90 cents on the dollar relative to men, not to mention the multiple cases reported where some women are earning less than the minimum wage!
Jordan's human capital has helped build behemoth economies in the region. It's time that Jordan's human capital, male and female, help raise Jordan's economy to the next level.