Poverty Profile In the last few years, there have been exogenous shocks to the economy that have increased the level of poverty. Between 1987 and 1991, the Jordanian population grew by 34 percent while real domestic output fell by 11 percent. The extent of poverty depends on which survey and which poverty line is used. Using the most widely accepted poverty line, 15 percent of Jordanians were estimated to live in poverty. The poor are twice as likely as the general population to be illiterate. As education rises, poverty falls, and virtually no one with a university education is poor. Poverty is more a problem of low wages than of unemployment since the poor cannot afford to be unemployed. Two-thirds of the poor work in the private sector and are most likely to be agricultural workers. The poverty level is similar among men and women. There is a strong correlation between household size and poverty—a household of 12 members is almost five times more likely to be poor than a household of six members. The young are disproportionately represented among the poor because the poor have more children, children have no earnings, and families with young children are not yet in their peak earning years. The incidence of poverty is higher in rural areas but only a third of the poor live in rural areas. Regardless of which measure is used, poverty, which was minimal in 1986, is now broader and deeper. Between 1986 and 1992, the expenditures of the poorest quintile fell more than those of the most prosperous (36 percent for the lowest quintile compared to 11 percent for the highest quintile). Income inequality rose between 1986 and 1992, but the bulk of the increase in poverty was due to lower incomes. Two-thirds of the poor's income is derived from wages and a fifth from transfers. Half their income is spent on food. Incentive and Regulatory Framework The major reason for the increase in poverty between 1986 and 1992 was the economic contraction. Poverty could be virtually eliminated by 2005 with sustained economic growth of 7 percent. Unless growth exceeds 3 percent, poverty cannot be reduced except by redistributing income. Jordan cannot achieve this level of required economic growth under its previous policies. To achieve sustained economic growth, an adjustment program was introduced based on trade and financial liberalization, deregulation, privatization, and a rationalization of the government's role in the economy. While these reforms may have effects that appear superficially contrary to the interests of the poor, on balance they do favor poor in the short run and in the long term are essential to eliminate poverty. Public Expenditure Expenditures in health and education have been effective in assisting the poor, and the principal issue is whether expenditures can be maintained as the population grows. Improved cost recovery, better targeting, and efficiency-enhancing measures will all be necessary to improve quality. Public expenditure on the poor's housing is limited, but there is no evidence that the poor have significant housing problems (80 percent own their own homes). The record on education has been remarkable and, despite recent budgetary cuts, education spending is relatively well-protected. Public spending is focused on primary and secondary education, and transfers to universities have declined significantly. Overall, the education system appears to be equitable, and the poor have good access to primary and secondary education. However, the relatively few dropouts are among the poor. Health indicators have improved significantly over the last 25 years. The public sector is the main source of health care service for the poor who have access to a network of primary health care centers and public hospitals, but the sustainability of the public system could be threatened by the fiscal deficit. Non-budgetary revenues for the system are insignificant, given the low insurance premiums for military and public employees, low fees, and dismal collection rates. Services to the poor could be ensured in the future by better efficiency and targeting. To increase the efficiency of the system, the Ministry of Health can (i) lower costs by eliminating redundant staff and reducing its role in direct provision of health care (as costs in the private sector are lower) and (ii) enhance revenues by increasing and equalizing public insurance premiums and increasing fees and collection rates. To improve targeting, the MOH can (i) increase the poor's share of publicly subsidized services and (ii) differentiate subsidies according to user incomes. Safety Net Intra-familial assistance is the most important element in the safety net. This is complemented by three major government programs: (i) the National Assistance Fund which gives cash to the unemployable poor; (ii) health cards from the MOH that reduce the cost of care for the poor and the disabled; and (iii) food coupons that give universal rationed subsidies on selected food items. NGOs have fewer resources than the government and emphasize social development rather than provision of cash or in kind benefits. The large NGOs deliver social services and, more recently, provide income-generating opportunities to the poor. The social safety net has adequate instruments to assist the poor, and the government could use these instruments to increase coverage and the amount of benefits to present recipients. The safety net program should be evaluated to determine if it is the best means of delivering assistance to the poor. Poverty Strategy To eliminate poverty, the assessment recommends a three-part strategy of growth with social equity. This strategy is based on the principle of reducing market distortions and creating an environment conducive to investment, employment, and growth in order to maximize domestic production. The three elements of the strategy are: (i) private-sector led outward-oriented growth; (ii) human resource development; and (iii) a targeted social safety net, using existing instruments to restore social equity. Poverty cannot be eliminated in the absence of any of these elements. Widespread prosperity requires growth, and growth cannot be sustained without continued investment in human capital. As efficient markets alone cannot ensure social equity, the safety net will need to be improved for those who may be left behind by a modernizing, expanding economy. Statistical System Compared to many developing countries, Jordan has a relatively good database. However more information is required on: (i) the number of the poor and their living conditions and (ii) how well safety net programs function, including the coverage of the poor, leakage to the nonpoor, and the appropriate level of benefits. This information should be collected at frequent intervals using consistent and improved survey methods and instruments. The data would also be more useful if it were processed more quickly and disseminated more widely. Back to Poverty Assessment Summaries — Middle East and North Africa |
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