Let them Work

Syrians in Jordan could make a huge contribution to the Kingdom’s economy, if only we would let them.

By Yusuf Mansur

Jordan is hosting around 1.4 million Syrians, almost half of whom are registered as refugees. They can’t remain refugees forever, and donor aid is starting to dry up. We need to start thinking about devising long-term solutions to this crisis. It’s possible for Jordan to turn this injection of human capital into a boon for its economy.

The general economic theory states that net inflows of people can potentially lead to an increase in aggregate demand (the sum of the demand of all residents) as well as supply an economy with working-age migrants, new technologies, innovations, and capital. This should increase aggregate supply, which is the total product of all those residing within the country. The increase in the supply of labor and other factors will thus be met with an increased demand for labor due to increased total spending, all else held equal.

Many think that refugees simply increase the supply of labor and thus take away jobs from locals. This is a fallacy which simply assumes that if a refugee has a job, then they’re denying that job to a Jordanian. It’s false because not only do refugees increase the supply of labor, but they also concomitantly increase demand, using their wages to rent apartments, buy goods and services, putting factories and retailers to work. If refugees are stealing jobs from Jordanians, then our young graduates who leave schools and universities also steal jobs from the older Jordanian labor force once they enter the labor market.

In summary, net migration should lead to an increase in the real GDP. Therefore, the impact of the Syrian refugees has been to increase the real growth rate of the GDP in Jordan to levels that were sufficient to counter the would be negative growth rate generated by the government’s agreed IMF stand-by-arrangement of 2012.

An example of scientific research in a developed country on the economic impact of refugees comes from the UK, which has seen a significant increase in migration over the past two decades. The UK research found relatively little evidence to suggest migration was a significant source of labor displacement for UK natives in periods of strong growth. In terms of employment and wages, the UK Migration Watch claims employment displacement was observed mostly in the low-skilled job sectors and displacement effects quickly dissipate as the labor market adjusts. Moreover, the Migration Advisory Committee suggests that migration has had small to insignificant impacts on wages, with low-skilled migrants putting downwards pressure on low skilled wages, and higher-skilled migrants more likely to increase wages. Overall, the UK research showed an increase in the GDP, investment, and innovation.

In Jordan, the Department of Statistics says only 4 percent of Jordanians compete for low-skilled jobs that refugees would be employed in. They would primarily compete with the 600,000 mainly-Egyptian guest workers currently employed in the Kingdom. Therefore, even if there is competition between the refugees and local workers, it’s confined to a tiny niche of the Jordanian labor market, and the primary competition is with the other guest workers. In Mafraq, for example, Egyptian guest workers are the ones who are busy informing labor inspectors and police about the whereabouts of their Syrian competitors, who are by-and-large working without permits and for much lower wages.

As for the 100,000-or-so Syrians confined to refugee camps in Jordan, many of them are capable of work and their dignity and wellbeing are being harmed everyday with the paltry aid they receive. Turkey is considering giving work permits to its Syrian refugees, so why doesn’t Jordan do the same? Surely we are wasting a tremendous opportunity here?