Many thousands of Jordanian expats working in the Gulf face an uncertain future as low oil prices begin forcing GCC governments to cut spending. Just how prepared is Jordan for their potential return?
By Mothanna Gharaibeh
Following the energy sector challenge, which has been the main cause of our budget’s deficit over the past five years, it seems Jordan could face another serious economic challenge in the form of the many Jordanian expats that may soon be heading home from the Gulf.
The oil-dependent countries of the GCC , and particularly Saudi Arabia, are reducing spending on a number of major projects and the number of foreign workers involved in those projects. Gulf countries are looking to replace foreign workforce with a local one that is being trained and qualified gradually. These drastic changes include salary cuts, cancelling projects worth $20 billion, ministry budget cuts and, more importantly, the recent decision by the Saudi Ministry of Labor to implant 1.3 million Saudis in the labor market, while preparing a list of jobs restricted to the Saudi workforce.
All of these new plans indicate an upcoming crisis that Jordan could face in the near future. Not only that, it’s also expected that the Justice Against Sponsors of Terrorism Act (JASTA) under which the families of 9/11 victims are granted the right to sue and seek compensations from Saudi Arabia, will deal a huge blow to the kingdom’s economy. All recent developments indicate that Jordan is set to expect a mass exodus of Jordanian workers retuning from Saudi Arabia and other GCC countries. So the question remains: do we have a contingency plan to face the ramifications of this potential crisis?
In fact, Jordanian expats in the Gulf can prove to be a useful asset to the Kingdom’s development effort if we come up with a plan to correctly capitalize on their expertise.
It’s estimated that 1 million Jordanians work abroad, the vast majority of them in the GCC, with Saudi Arabia alone hosting 400,000. They sent back $3.3 billion in remittances to Jordan last year, which made up 12 percent of the total GDP. That is very close to the telecommunication sector’s contribution to the national economy. Not only that, Jordanian expats in the Gulf also help revive local businesses when they visit the Kingdom every summer with their overall expenditure. They also benefit the real estate sector as they invest their savings in houses and lands.
Jordanian expats work mainly in the medical, engineering, and IT sectors, and they’re considered to be among the most qualified workforce compared to their Arab peers in the region. So again they can contribute greatly to boosting the national economy.
At the moment, it is essential for the government to start thinking of ways to support those expats coming back with their families who are used to a higher standard of living, education, and medical care. The absence of a comprehensive contingency plan for the influx of expats could cause a socioeconomic crisis that can’t be solved in the short-term. Jordan needs to register an economic growth close to 7 percent to be able to create jobs for university graduates joining the labor market each year. It will certainly need an even higher number to be able to cope with a more demanding class of expert workers coming back from the gulf.
Part of the solution could be the amendment of investment laws and regulations to encourage these expats to invest in their own country. This could be achieved through an amendment to the Jordanian Investment Fund Law, which was hastily passed only recently, to offer them the same tax and custom incentives given to foreign investors.
It’s also important that we find ways to encourage expats to join the optional subscriptions to the Social Security Corporation, which only has 129,000 optional subscribers today. This means that there are hundreds of thousands of Jordanians outside Jordan without a secure retirement plan when they come back to the Kingdom. On one hand, joining these optional subscriptions supports the Social Security Corporation. On the other hand, it will guarantee a safe future for returning expats.
The Ministry of Foreign Affairs should shoulder the responsibility of facilitating the return of these expats while helping them plan for their future in the Kingdom.
Let’s not forget that the challenges facing the labor market once these expats return will not be the only challenges in the near future. The expected pressure on our schools, hospitals, electricity and water networks, as well as the expected inflation of real estate prices are also challenges that the government needs to prepare to deal with.
The Jordanian Expats Forum, which was held at the Dead Sea last year, discussed the problems expats face outside Jordan. The final recommendations highlighted the importance of creating an attractive investment environment and for investors to feel a tangible difference on the ground. New financial policies and legislations should be implemented to increase the competitiveness of local products, ensure sustainable development, and encourage expats to invest in the country through investment funds and holding companies.
However, to date, no actual plan was created to implement these recommendations or prepare to face the consequences of this unplanned wave of expats returning home. Additionally, no incentive plans were created to encourage expats to invest in their home country. The cost of any contingency plan could be high, but it will certainly cost less than simply doing nothing and waiting for the crisis to strike.
There is no magical solution to solve any problem. Nevertheless, through well-organized collective efforts supported by past experiences, such as the return of thousands of expats following the 1991 Gulf War, we can reduce the negative effects associated with the return of expats this time and capitalize on their expertise and qualifications to trigger a new development boom.
A version of this article originally appeared in Arabic on 7iber.com