📋 Tender Overview
Recent research by ILO/Better Work Jordan in collaboration with Jordan Chamber of Industry highlights the strengths of Jordan’s garment, textile and leather industry and the challenges it faces, as well as implications for economic and employment policies in the country.
Jordan's garment, textile, and leather (GTL) industry is on a continuous path of development and advancement. With a history marked by resilience and consistent growth, the GTL sector has established itself as a prominent export powerhouse. Over the last decade, the exports from the GTL industry have more than doubled, surging from USD 1.12 billion in 2012 to an impressive USD 2.26 billion by 2022. This growth rate significantly outpaces the overall increase in Jordan's exports, which saw a 70 per cent expansion during the same period.
The latest official statistics affirm the substantial contribution of the GTL industry. It constitutes 7.7 per cent of Jordan's manufacturing gross domestic product (GDP) and contributes 19.8 per cent to the nation's total goods exports. One of the major catalysts behind this success story is the US-Jordan Free Trade Agreement (USJFTA), which was enacted in 2010 following its signing in 2000. A key beneficiary of this agreement, the GTL sector enjoys preferential duty and quota-free access to the US market, particularly through major exporters operating under the USJFTA.
Within this thriving sector, factories exporting to the US employ approximately 77,800 workers, with migrant labour comprising three-quarters of the workforce. In a reflection of global trends, women constitute around 75 per cent of the sector's labour force.
In 2022, the Government of Jordan (GoJ) introduced the ten-year Economic Modernisation Vision plan. This visionary strategy aims to bolster job opportunities, income levels, and the country's international standing by investing in high-value industries, innovative services, education, and green technology. Notably, the GTL industry has been singled out within this plan as a high-value sector. The focus lies on ascending the value chain through horizontal integration, bolstering sales throughout different seasons, and fostering vocational training and job prospects for Jordanians.
With these proactive measures, the GoJ aspires to elevate exports to around USD 8 billion by 2033, while concurrently generating employment for 149,000 Jordanians within the sector. This entails an average annual growth rate of 12 per cent in exports and 9.5 per cent in employment. The vision outlines strategic priorities for the GTL sector, encompassing fabric manufacturing development, streamlining sector-specific regulations, and promoting collaboration between large and small enterprises to nurture growth among smaller players.
National economic contribution
As part of its collaboration with national partners to build their institutional capacity, forge stronger partnerships, and enhance the GTL industry competitiveness, the ILO/Better Work Jordan programme has supported the Jordan Chamber of Industry (JCI) to conduct and publish research exploring the “National Economic Contribution of Jordan’s Garment, Textile and Leather Industry”.
This research delves into the sector's strengths and challenges, and their implications for economic and employment policies. It centres on vital aspects such as domestic value added (DVA), linkages with other sectors in Jordan, and its role in creating direct and indirect employment.
The study reveals that in 2018, the GTL industry's DVA as a share of production output stood at 41.7 per cent. This figure is relatively high when benchmarked against low- and middle-income countries with notable export-oriented garment and textile industries. It is also high when benchmarked against other Jordanian manufacturing sectors.
Furthermore, returns to capital comprised of 54.6 per cent (USD 433.3 million) of the sector’s DVA, while labour payments comprised 40.8 per cent (USD 323.6 million), and the remaining 4.6 per cent (USD 36.5 million) was accrued to the government in the form of income, corporate, and production taxes. Given that migrant workers constitute 56.0 per cent of the workforce and 64.2 per cent of their wages are remitted, the research estimates that 64.0 per cent of wages and salaries within the sector remain in Jordan. Additionally, all employer social contributions remain in Jordan due to local law.
The study also reflected on the sector’s role in creating “indirect” job opportunities and concluded that industry activities in Jordan indirectly created around 12,400 jobs in the national economy. Put differently, for every seven workers employed directly by the garment industry there is approximately one additional worker employed in a job indirectly created by the sector.
Going beyond export figures, the research underscores the pivotal role the GTL sector plays in Jordan's export economy. It highlights the sector's robust economic interconnections with other sectors, particularly in real estate, road transportation, and machinery, equipment, and furniture manufacturing.
Takeaway
Guided by these research findings, the GoJ is positioned to harness the strengths of the GTL sector, magnify its contributions, and establish a comprehensive framework for holistic economic progress. These findings serve as a cornerstone for shaping future governmental policies, offering invaluable insights to inform strategic investment decisions, with a special emphasis on sectors boasting high DVA and export potential. To realise these aspirations, policies can prioritise initiatives fostering skill development, labour force dynamics and decent working conditions, inclusive growth and local impact and partnerships with local input suppliers.
