The Anatomy of the Middle Class in Jordan

For the first time, a comprehensive analysis of the impacts of the so-called "economic reform" process based on structural adjustment on the middle class in Jordan has been conducted. The study conducted by Dr. Ibrahim Saif and Yasmin Tabba'a aims to explore the effects of structural adjustment and economic reform in Jordan through the lens of income distribution. The main objective of the paper is to locate the middle classes in Jordan and explore the impact of economic reform on their standards of living and on their share of total GDP growth. Methodologically this task proved difficult, firstly because of the ambiguity of the middle class as a category, secondly due to the difficulties in transposing western class definitions into the non-western, non-industrial context and thirdly, because of the shortcomings of the available data in this study. Nonetheless, what is provvided is a detailed look into the socioeconomic realities of a period of sustained economic growth (2002-2006) across three broad classes or socio-economic groups.

The main findings show that income distribution at large is skewed in Jordan: the richest 30 percent of the population own around 60 percent of total income, with 30 percent of that income owned by the richest 10 percent. The richest two percent of the population own 13 percent of total income, while the poorest 30 percent own 11 percent. By way of comparison, the richest ten percent’s share of total income in 2002 in Brazil was 46.63 perccent, in China it amounted to 32 percent, while in France it amounted to 22 percent, 24 percent in Denmark and 19.12 percent in the Czech Republic.

Despite economic growth at an annual average of 6 percent, there has been very little achieved in the way of inequality reduction as can be seen by minimal improvement in the Gini coefficient from 0.379 in 1997, 0.361 in 2002, to 0.355 in 2006. After dividing the population into ten consumption groups, a change in the distributtion of households is observed whereby the number of families in the richest deciles declined between 2002 and 2006, and the number of poor families increased. With regards the middle consumption groups, they have been most affected by low wages and increased their dependence on other sources of income such as remittances from migration and self-employment. That the middle classes were difficult to locate may be interpreted as a sign of their precarious class position, with many previously middle class household having either become part of the working class or the upper classes.

The paper begins by providing various theoretical parameters with which we define the middle class. Section two provides an overview of structural adjustment in Jordan since 1989 and the ensuing changes in the social contract. It is argued that although inequality existed under the old social contract, the new social contract may have exacerbated this by removing social protection and subsidies for a large number of the Jordanian population, constructing a non-progressive tax system and declining employment opportunities. The third section provides an in-depth data analysis of various socio-economic groups so as to clearly outline the shifts in household welfare, social mobility and expenditure patterns from 2002 to 2006. Finally, conclusions have been drawn and some policy implications are provided.

This study has found that the middle class extends from the self-empployed craft workers with meagre incomes in deciles one to four up to professionals in deciles seven, eight and nine and high-salaried managers in the tenth decile. What is most evident is that there has been a decline in dependency on employment as a source of income for the middle deciles. Wages are clearly insufficient, and cannot be called ‘living wages’ i.e. wages and salaries that cover all living costs. The middle deciles suffered a squeeze in terms of declining assets and rents coupled with low wages, leading them to seek other sources of income through transfers and self-employment. The decline in asset ownership shows that the middle deciles may have also resorted to their savings and wealth in order to cover costs, meaning that they have depleted a future safety net, and may suffer more in the face of further economic difficulties. This implies that there is an urgent need for a comprehensive national development policy that seeks to enhance and distribute the benefits of economic growth across the Jordanian population through productive, remunerative employment for the relatively young labour force in order to assure the next generation’s financial security.

Expenditure on education shows just how rigid the Jordanian class structure is when

the tenth decile spends fifteen times more on education than the first decile and almost two folds the amount spent by the ninth decile. This goes to show that the class structure in Jordan is evidently stratified across public, private and elite private education. Rather than providing the means for social mobility, the educational system is reproducing the same social structure and inequalities when only the children of the richer deciles are provided with a high quality of education. This explicitly implies that there is dire need for an improvement in the quality of publicly provided education in order to increases the chances for intergenerational upward social mobility.

The study atgues that attempts at poverty reduction have focused on stimulating

growth, in the belief in an eventual trickle-down effect, coupled with specific poverty reduction programmes that target the poor. However, there has been little emphasis on tackling inequality as it is assumed that inequaliity will naturally disappear with increased economic growth. The study recommends that what is required now is a development strategy that seeks to couple economic growth with inequality-reducing policies through progressive taxation policies, job creation, minimum wage policies, labour protection and human capital enhancement.

Naturally, no reaction has been declared by the economic decision makers in Jordan to this study until now!