The impact of COVID-19 on enterprises in Jordan: One year into the pandemic

A new report calls for urgent action and tailored support to ensure response measures meet the needs of businesses in Jordan.

Press release | 13 July 2021
13 Jul 2021 - Amman, Jordan – Over one year into the COVID-19 pandemic, enterprises across Jordan continue to face profound challenges. Micro and small businesses - which make up the majority of private enterprises in the Jordanian economy - are hardest hit, according to a new report by the International Labour Organization (ILO), the United Nations Development Programme (UNDP) and Fafo Institute for Labour and Social Research (FAFO).

The assessment is based on data collected from more than 2,000 enterprises in February and March 2021, as well as individual interviews and focus group discussions with representatives from various sectors. It also builds on an earlier survey conducted over a year ago in April/May 2020.

The findings and recommendations were presented during a panel discussion held in Amman on Tuesday (July 13) bringing together representatives of the government and social partners, UN partners and other experts. The panel included discussions with H.E. Ahmad Al Hanandeh, Minister of Digital Economy and Entrepreneurship, Hassan Al-Omari, Secretary General of the Ministry of Trade and Industry, Ahmad Shawabkeh, advisor to the General Federation of Jordanian Trade Unions and economist Jawad Al-Anani.

The report points out the need to ‘building forward better’ through policy reforms assisting enterprises that ensure sustainability and greater resilience post-COVID-19, while continuing to support businesses through the pandemic. However, most enterprises surveyed reported that they did not benefit from government support. Of those which did, the majority were medium and large enterprises rather than micro and small enterprises. Nearly four out of five micro enterprises were not aware of any support packages. The report also highlights that the majority of businesses were only just coping with very few adapting business processes or introducing digital platforms.

“What we have experienced during the pandemic made it clear that digital transformation is not an option; it is something that needs to done. It is a way to support the economy and create jobs (…) The pandemic helped us get the buy-in from everybody. Everybody realises this is the way moving forward,” said Minister Al Hanandeh.

Most surveyed businesses saw a decline in revenues, with the majority reporting lower demand for their products and services and problems in accessing capital. Many saw their debt increase with the costs of energy and utilities being a major concern. Challenges to pay rent, wages and social security were among the greatest burdens faced by enterprises.

For many enterprises, the future remains uncertain, with one in five indicating they would not be able to bounce back to pre-pandemic levels of operations.

The crisis has exacerbated pre-existing labour market structural challenges, such as those faced by informal daily wage workers, who comprise a large proportion of the workforce in the construction, agriculture, and tourism sector. This highlights the need to address critical root challenges that lay the path for inclusive recovery.

“Even prior to the pandemic, many enterprises faced a challenging business environment, and these challenges were only further exacerbated during this crisis. We must continue to work closely with the government and our partners, including the private sector, to promote programmes and responses which address these structural challenges so that businesses and their workers can emerge stronger from the pandemic,” said ILO’s Country Coordinator for Jordan Frida Khan.

Majida Al-Assaf, UNDP Deputy Resident Representative in Jordan, expressed concern that so few businesses started investing in digital platforms or adjusted their business processes to explore new markets. “This does not bode well for the long-term resilience of enterprises and competitiveness of Jordan”, Al-Assaf said.

Based on the findings of the report as well as the programmatic experiences of the ILO and UNDP, recommendations that address the protection of workers and provision of tailored support are outlined. These include promotion of social protection and sustaining minimum wages to protect workers, and Incentivising enterprises to invest in employee training, upskilling and job creation through business scale-up tax breaks and deferrals.

The report also highlighted the need for tailored support to micro, small and medium enterprises and stronger public-private dialogue to ensure response measures meet the needs of the private sector.