The impact of Syrian refugees on the Jordanian economy

The following text has been written by Katharina Lenner, University of Bath, UK.

A large number of Syrians have sought refuge in their southern neighbour Jordan since early 2012. Their numbers are disputed. The UNHCR had just over 650,000 Syrians on record in October 2017. The Jordanian government, in contrast, contends 1.3 million Syrians are currently resident, of whom 750,000 were already there when the crisis began. Many international stakeholders question these numbers, which come from a recently conducted national census, but do not contest them openly. They instead simply rely on UNHCR numbers for planning purposes. Maintaining good relations with the Jordanian government on many other aspects of the Syrian response is seen as more important than matching figures.

The Syrian presence – 80% of registered refugees live in urban host communities, rather than camps – has had mixed effects on the Jordanian economy and infrastructure. Syrians’ ability to access government schools and healthcare has exacerbated pre-existing problems in both sectors. Municipal services like waste and water infrastructure are strained, particularly in the main refugee-hosting communities in the north of the country. While complaints that the Syrian presence is driving up rent prices are common, surveys indicate that pressure on the rental market has lessened somewhat since around 2014. While Syrians are still struggling to find enough cash to pay rents, this does not equally impact Jordanians, who often own houses or pay lower rents. It does, however, benefit Jordanian landlords, who profit from renting to Syrians at inflated prices.

The first years of the Syrian presence were also marked by the charge of Syrians crowding Jordanians out of the labour market, yet the evidence to date does not, in the main, support this. While the Syrian presence has created downward pressure on wages in the informal sector, most Syrians work in sectors that are shunned by Jordanians (e.g. construction) and dominated by other migrant workers. Jordanian unemployment, currently estimated to be 18,2%, is thus largely independent from the Syrian presence, and rather due to other dynamics of the Jordanian political economy and labour market. Indeed, there is substantial evidence that both the Jordanian labour market and broader economy have benefitted from the Syrian presence. Syrian workers have brought skills to Jordan that were previously not available, e.g. in metal and woodwork, and have opened businesses that employ Jordanians. Overall, the Syrian presence has led to an economic expansion.

What is more, it has brought considerable donor funding to the country. Jordan’s geopolitical relevance – as a strong pro-Western ally, one of the few states in the region that has a peace agreement with neighbouring Israel, and a relatively stable polity that hosts many international organisations – has resulted in comparably high funding levels for the refugee response, and for other development needs of the country. This has been reinforced by a major policy change regarding the labour market participation of Syrian refugees. In early 2016, the Jordanian government agreed to provide up to 200,000 work permits to Syrian refugees by 2019 in return for renewed donor commitments. While working formally was always an option if one could afford the fees and provide the documentation, these requirements made the formal economy de facto off limits to all but exceptional cases. Thus, most Syrians had little choice but to work informally, if at all.

Since 2016, the formalization of Syrian employment has proceeded steadily, with considerable donor funding tied to the achievement of the projected 200,000 target. By October 2017, around 58,000 work permits had been given to Syrians, yet the number of permits valid at any one point was considerably smaller. Difficulties in reaching the ambitious targets are due to the very limited creation of new jobs, in spite of a variety of initiatives such as a renegotiated trade agreement with the EU to facilitate exports and spur manufacturing. Slow progress is also due to employers’ reluctance to formalize informal jobs for Syrian employees, which would mean paying higher wages, as well as their unwillingness to substitute other migrant workers with Syrians.

Syrians are also ambivalent about the prospect of formal work. While it does provide protection against deportations (to the camps or to Syria), many Syrians fear that having a work permit will lead to a reduction in assistance levels, and will lessen their chances for resettlement. This is compounded by low wage levels and bad working conditions in many sectors open to them, which makes formalization unattractive. Many sectors also remain formally closed to Syrians, who therefore aspire to either return to Syria or go to Europe, rather than staying in Jordan. While the situation for Syrians in Jordan is easier than e.g. in Lebanon, and tensions between the population groups are relatively low in comparison, this still does not mean that Syrians are on their way towards host country integration, as many European donors would hope.