Unemployment remains one of the most serious challenges facing Jordan’s economy, despite the large number of employment initiatives, job fairs, training programs, and workshops launched every year. An unemployment rate of 21.4 per cent among Jordanians in the third quarter of 2025 is clearly high and alarming. This brings us to a basic question. Is unemployment in Jordan the result of a problem on the supply side of the labor market, or is it mainly a demand-side problem?

 

From a demand perspective, the Jordanian economy suffers from a chronic weakness in job creation. Economic growth over the past years has been modest and insufficient to absorb the growing number of graduates and new entrants to the labor market. Moreover, much of this growth is concentrated in capital-intensive sectors that rely more on machinery than on workers. As a result, the demand for labor remains limited, and unemployment stays high. Traditional labor-intensive sectors have also struggled to expand, partly because the business and working environment is not attractive enough, especially in sectors such as agriculture. This clearly points to a structural weakness on the demand side of the labor market.

 

On the supply side, education and skills are often blamed for unemployment. There is some truth to this argument. Many university programs focus mainly on theoretical knowledge, with limited emphasis on practical training and soft skills such as communication, teamwork, digital skills, and workplace readiness. This can reduce the employability of graduates. However, supply-side weaknesses alone do not explain the scale of unemployment. When the economy does not create enough jobs, improving skills by itself cannot solve the problem. The mismatch between education and employment is closely linked to weak labor demand, not just to the quality of labor supply.

 

Wages also play a key role in shaping both demand and supply in the labor market. Living costs have increased, while wages in the public and private sectors have remained largely stagnant. Many available jobs do not offer incomes that meet basic living needs. On the supply side, this discourages people from accepting jobs or pushes them to wait for public sector employment. On the demand side, high non wage labor costs and low productivity limit firms’ ability to raise wages or hire more workers. The result is a labor market stuck between weak demand and discouraged supply.

 

Another distortion affects both sides of the market. Many sectors rely heavily on non-Jordanian labor because it is cheaper and more flexible. Uneven enforcement of minimum wage and social security regulations further weakens the position of Jordanian workers. This reduces demand for local labor while also discouraging Jordanians from competing for certain jobs, deepening imbalances on both the demand and supply sides.

 

Employment and training programs mostly address the supply side by improving skills or providing temporary jobs. While important, their impact is limited. Most programs are short-term and do not lead to permanent employment, especially in the private sector. Once funding ends, many participants return to unemployment because the underlying demand for labor has not changed.

 

Weak growth and low productivity continue to restrain labor demand. Faced with rising costs and uncertainty, private firms remain cautious in hiring and increasingly turn to automation. This further limits job creation and reduces demand for labor.

 

While Jordan’s labor market faces challenges on both the demand and supply sides, the core problem lies in weak demand for labor. Unemployment cannot be reduced through training and education reforms alone. What is needed is stronger and more inclusive growth, a shift toward labor-intensive sectors, and reforms to wage and labor cost policies that encourage firms to hire. Without addressing the demand side, unemployment will remain high, regardless of how many supply-side initiatives are introduced.