Research on Exports for Decent Youth Livelihoods and Labour Formalization in Jordan

I. Rationale

For years, Jordan has struggled to overcome long-enduring challenges of high informality and insufficient job creation, bearing heavy consequences on the population’s youth. The persisting issues can be attributed to a number of socio-cultural, economic and political factors that inhibit the economy from adapting to major shocks or capitalizing on emerging opportunities, particularly in trade. Issues of weak enterprise development, marketing capacities, persistent skills shortages, and infrastructure and logistics challenges are some of the many factors constraining enterprises from reaching their full export potential, immensely stagnating sectors’ capacity for growth and decent job creation. Considering the low consumption capabilities amongst the local population, a focus on trade is critical for improving Jordan’s economic situation. Increasing participation in international trade and global value chains holds a great opportunity for promoting growth, decent job creation, and labour formalization. That being said, Jordan’s international trade performance continues to lag behind those of other middle-income countries. While several enterprises have been successful in accessing non-neighboring markets, the majority of Jordan’s exports remain concentrated to a handful of receiving markets, mostly situated within the surrounding Arab region. Further, exporting enterprises typically participate in lower-levels of the value chain, leading to a greater prevalence of informality. Following the COVID-19 crises, the urgency of the situation has only intensified, as widespread job losses and trade disruptions led to increased job insecurity throughout the country. In order to address these issues, and foster improved youth livelihoods and labour formalization, there is a need to implement targeted interventions and policy measures that promote growth and job creation in higher-value-added segments of the economy. With that said, doing so would require an increased understanding of the core factors that contribute to high labour market informality in Jordan, particularly amongst producers of high export-potential products. Accordingly, this document proposes an exploration of the major factors that inhibit the transition towards greater formalization amongst enterprises engaged in the production of high-export-potential goods, with a focus on issues that hinder enterprises from participating at higher-ends of the value chain.

II. Objectives

Accordingly, this document proposes an exploration of the factors that inhibit the transition towards greater formalization amongst Jordanian enterprises involved in the production of high-export-potential goods. The study will focus on several identified high-export-potential products, while highlighting issues that hinder enterprises from participating at higher-ends of the value chain, rendering companies more susceptible to engaging in low value-added, informal activities. An immediate objective of the study, is to illustrate the current situation of the informal workforce within sub-sectors and enterprises engaged in the production of the identified goods, at any and all stages of the value chain. The study will not only analyze the composition of the informal workforce amongst identified producers, but also draw comparisons between enterprises at higher and lower ends of the value chain, to highlight discrepancies in the prevalence and nature of informality amongst various product producers. Export performance will be a major dimension of the study, in order to understand the relationship between trade and informality amongst producers, as well as highlight the major barriers enterprises face in expanding exports and participating in higher-value-added activities. The study will take into account challenges related to skills supply, enterprise development, transport and logistics, linkages to stakeholders in external markets, energy cost, water availability, local business culture, and the regulatory environment. Ultimately, the study seeks to better understand how international trade (focusing on export opportunities) could contribute to the inclusion of informal Jordanian and Syrian workers into formal productive activities. This will inform the production of recommendations for promoting greater formalization and decent job creation, through increasing the engagement of Jordanian enterprises in international trade, at higher ends of the value chain.

III. Scope of Work

The study will utilize a blend of research methods to examine the informal workforce amongst enterprises engaged in the production of high-export-potential goods, along with the major barriers producers face in capitalizing on high-value-added trade opportunities and transitioning toward greater labour formality. The study will assess enterprises involved in the production of a range of products, and at multiple levels of the value chain, chosen in accordance with the results of the ILO’s 2022 METI report; which highlighted several products with high potential for export in Jordan. Analysis shall begin with a thorough desk review process, utilizing reports and publications provided by national and international sources, including Jordan’s Department of Statistics, the Ministry of Labour, the Social Security Cooperation, World Bank, International Labour Organization, UNHCR, along with several others. The data gathered will highlight general information on the economic performance of identified enterprises and sub-sectors, local trade policies and supportive measures, statistics highlighting international trade flows and foreign direct investments, as well as relevant labour market indicators. Following the desk research stage, the study will implement primary data collection methods, gathering and analyzing quantitative data on the relative size and composition of the informal workforce, by economic activity, product category, participation in international trade, and stage along the value chain. Other factors will also be taken into account, including the average firm size per economic activity and/or product category, geographic location of enterprises, and the distribution of workers by age, education, gender, nationality, income, family size, and so on. This data will be collected through the distribution of questionnaires, surveys and other such tools amongst enterprise owners and workers. Variances in the relative size and composition of the informal workforce will be assessed, with a focus on the interaction between (i) informality and indecent employment, (ii) degree of involvement in international trade, (iii) stage of the value chain. Further, qualitative data collection tools will be applied to assess the barriers enterprises face in participating at higher-ends of the value chain, and integrating informal workers into formalized activities. Through structured discussions with enterprise owners, the study will gather insights on challenges related to skills supply, enterprise development, transport and logistics, linkages to stakeholders in external markets, energy cost, water availability, local business culture, and regulatory issues. Enterprise owners will also be questioned on solutions and supports that could potentially promote improved trade performance and facilitate participation in higher-value-added activities. This information will be accompanied by a thorough exploration of policies, initiatives and enterprise supports implemented across both the developed and developing worlds, in order to highlight major opportunities for improving trade performance and participation in high-value-added activities. All findings of the study will be verified and finalized in collaboration with various social partners and stakeholder groups involved, in order to develop data-driven recommendations for action.

IV. Main Tasks & Phases of the Research

The process of data collection and report delivery will be aligned with the following phases:

Phase 1: Planning and methodology preparation:

o Prepare activity action plan. o In depth secondary research review, drawing from internationally accredited sources, building on existing ILO and UN reports to the extent possible. o Prepare methodology, comprising a mixture of research tools, both qualitative and quantitative. o Prepare interview outline, with clear areas of focus to guide interviews/focus groups. o Prepare surveys and questionnaires. o Map out relevant stakeholders, to identify potential research participants. o Establish contact with potential participants and produce final respondent list, approved by the ILO, comprising the following composition of stakeholders:

For qualitative interviews:

i. Employer representatives (30 minimum). ii. Worker representatives (30 minimum). iii. Government representatives (10 minimum). iv. Representatives of international implementing agencies, research centres, think tanks, etc (5 minimum). For quantitative surveys and collection methods: i. Employer representatives (80 minimum). ii. Worker representatives (80 minimum).

Phase 2: Data collection and the production of findings:

o Coordinate with stakeholder to schedule interviews/focus groups/other data collection methods. o Distribute surveys and quantitative data collection tools across enterprise owners and worker representatives. o Conduct in person field visits with various stakeholders, maintaining adequate record of outcomes. o Conduct interviews/focus groups with stakeholder groups, maintaining adequate record of outcomes. o Transcribe interview/focus group outcomes.

Phase 3: Data analysis & validation:

o Clean and process data to extract relevant information and identify key trends and/or anomalies, applying statistical and/or logical techniques to illustrate, simplify and evaluate data. o Contextualize outcomes through measuring findings against both regional and global trends. o Validate findings with stakeholders and identify potential areas of contradiction and/or those requiring further investigation.

Phase 4: Report generation and recommendations for action:

o Prepare report on the factors that inhibit the transition towards greater formalization amongst Jordanian enterprises involved in the production of high-export-potential goods, including (i) an assessment of the size and composition of the informal workforce amongst identified product producers, (ii) an assessment of the major barriers impeding local producers from engaging in international trade at higher-ends of the value chain, (iii) an exploration of potential policies, initiatives, and supports for promoting labour formalization through promoting trade.

o Validate research through consultations with relevant government and private sector employers. o Consult with employer and government representatives to produce recommendations for improving trade performance for inclusive growth and livelihoods promotion.

V. Outputs and Deliverables

The research project is expected to require 85 working days for completion, and is planned to start on July 1st 2022 and is expected to be completed no later than October 15th 2022. The deadlines in the table below are a suggestion. However, it is preferable to abide by the starting date and finish date of the assignment.

– Outputs and deliverables. 1- Planning and methodology preparation:

i. Research activity action plan. ii. Secondary research review. iii. Report section 2: Methodology iv. Final respondent list, approved by the ILO. v. Brief on Jordan’s trade performance, labour market outcomes, and the potential for trade for inclusive growth and livelihoods promotion. vi. Questionnaire/interview outlines.

Number of Work days: 20

Due Date: 28/07/2022

2- Data collection and the production of findings

vii. Distribute surveys and quantitative data collection tools.

viii. Schedule interviews/focus groups/other collection methods.

ix. Transcriptions of field visit/ focus group/ interview results.

x. Brief on the size and composition of the informal workforce amongst identified product producers.

xi. Brief on the major barriers impeding local producers from engaging in international trade at higher-ends of the value chain.

Number of Work days: 30

Due Date: 10/09/2022

3- Data analysis & validation

xii. An exploration of potential policies, initiatives, and supports for promoting labour formalization through increasing trade.

Number of Work days: 15

Due Date: 25/09/2022

4- Report generation and recommendations for action

xiii. Draft final report.

xiv. Revised final report, based on ILO feedback and comments.

Number of Work days: 20

Due Date: 15/10/2022

VI. Payment Schedule: Payment 1: Upon the submission and approval of Output (phase) 1 & 2 Payment 2: Upon the submission and approval of Output (phase) 3 & 4