QIZ LABOR UPDATE

UNCLAS SECTION 01 OF 04 AMMAN 004250

SIPDIS

SENSITIVE

STATE PASS USTR FOR NED SAUMS
DOL FOR ILAB

E.O. 12958: N/A
TAGS: ELAB JO
SUBJECT: QIZ LABOR UPDATE

REF: A. A) AMMAN 686

B. B) 03 AMMAN 7292


1. (SBU) SUMMARY: Employing more than 30,000 workers, more
than half of whom are Jordanians, Qualifying Industrial Zones
(QIZs),are an important part of the Jordanian economy,
especially the textile and apparel sector. Though working
conditions are generally good, including for foreign workers,
low starting wages, demographics, and the lack of a skilled
workforce have limited the ability of the GOJ to increase the
percentage of Jordanian workers. The GOJ has instituted two
training programs to address these problems. The textile
workers, union sees most of their concerns being resolved,
but would like to see some improvements, including higher
wages. END SUMMARY.

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The Workers: Foreign vs. Domestic
--------------


2. (U) QIZs now employ between 30,000 and 38,000 workers,
depending on the source. The vast majority of these are
employed in textiles and apparel, Jordan,s leading export
manufactured goods and the primary QIZ export. Each QIZ and
firm within the QIZs offers slightly different working
conditions and wages, but as reported in ref B, most textile
and garment workers have a 48-hour week and can clock up to
12 hours of overtime, which provides 1.25 times regular pay
and 1.5 times on weekends and holidays. Most foreign workers
contract to work 60-hour weeks and are compensated at a
higher base ray rate than Jordanians. Anecdotal information
indicates a number of foreign workers are putting in more
than 60-hour weeks, especially in the high-demand seasons.
Many managers and union leaders report that Jordanians prefer
not to work overtime. Foreign workers are reportedly earning
USD 200 to 300 dollars on average a month, well above the
minimum wage of 85 JD (120 USD). (COMMENT: This likely
reflects the foreign workers' greater experience as
industrial garment workers, since many are recruited out of
native factories after at least five years of work. END
COMMENT.) With bonuses, the best workers are reportedly
making up to USD 350 to 400 per month.


3. (SBU) The percentage of Jordanian workers in the QIZs has
increased over recent years and as of one year ago reached a
high of 65 per cent. However, this percentage has declined to
56 per cent recently, due to at least three causes. First, as
new factories have continued to open, investors need a base
of experienced workers, which can thus far only be obtained
among expatriates, to begin production. Second, the expansion
and upgrading of product lines in established factories, some
of which once had 100 per cent Jordanian workers, require
similar inputs of experienced workers. Third, increases in
the aggregate Jordanian QIZ workforce come slowly in the face
of domestic demographics (see paragraphs 8 and 9).


4. (SBU) QIZ workers can be generally confident the labor
market favors them for the present. Judging from the
complaints of factory managers who say their workers are not
loyal, job-jumping to secure a better wage is a common
practice. Because of foreign workers, contractual
obligations, this is almost exclusively a practice among
Jordanian workers. One American manager who took over in a
QIZ firm planned on enhancing his bonus system to keep good
workers. This same firm reportedly hired away an effective
floor manager from a competitor by offering a substantially
higher wage.

--------------
Foreign Workers, Conditions
--------------


5. (SBU) The bulk of foreign workers come from China,
Pakistan, Sri Lanka, and Bangladesh, with smaller numbers
coming from the Philippines and South Korea. Foreign workers
usually live in dorms either on or near QIZ estates and many
receive meals as part of their contracts. Tajamouat Estate
near Amman built its dorms according to JC Penney standards
and hired chefs from Sri Lanka and China to cook for the
workers; the factories pay Tajamouat as part of its one-stop
shopping service. The source country embassies regularly
visit those QIZs with heavy foreign worker concentrations,
according to workers and managers. Consular officials from
the Sri Lankan and Philippine Embassies have stated that
their nationals working in the QIZs are the least of their
concerns because of the confidence the officials have in
their living and working conditions.


6. (SBU) The MOL Secretary General also confirmed that, in
the early years of the QIZs, he &used to hear daily8 from
the Sri Lankan, Indian, and Bangladeshi ambassadors. He hears
from them much less frequently now, an indication that
foreign workers currently experience fewer problems. An issue
that the concerned ministries are just beginning to address
in a systematic way is the behavior of home-country labor
recruiting agencies, to ensure they are acting in accordance
with international standards and Jordanian labor law. The GOJ
requires the licensing of bonded labor agencies within Jordan.


7. (U) The Embassy keeps a close eye on the QIZ conditions,
as do many Jordanians. When a brief press report mentioned
food poisoning among foreign workers at the Al Hassan QIZ
estate earlier this year, embassy followed up over the
weekend with factory and industry consultant contacts to get
a status report. It turned out that a group of workers had
gone to a low-grade restaurant in Irbid on their day off.
Based on many months of visits to QIZs (sometimes without an
appointment) we have seen first-hand that the Jordanian labor
code applies equally to foreign workers.

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Hiring Constraints
--------------


8. (U) The MOL,s goal remains 100 per cent domestic
employees in QIZs, but employers face problems recruiting and
retaining local employees. For example, most QIZ employers
pay the minimum wage as starting pay, which the MOL admits
does not meet Jordanians, needs. (Note: The GOJ is involved
in an ongoing dialogue with the General Federation of
Jordanian Trade Unions regarding raising the minimum wage.
End note.) In addition, the MOL reports that even workers
from rural areas especially hard hit by poverty are often not
willing to move to urban areas to earn the current minimum
wage, though the &Village Program8 described below is a
notable exception. At the same time, the MOL realizes that
low production costs attract and retain investors and they
recently reduced QIZ work permit fees for foreign workers in
order to maintain investment growth.


9. (U) Another key issue in recruiting Jordanians is
demographics. Garment factories are absorbing most of the
young female work force eligible for such work. Young males
are not inclined to do this work, for social and cultural
reasons. The QIZ factories are still attracting some young
men to sewing lines and more to the limited numbers of
packing and shipping jobs. The older generations of
unemployed and underemployed are not attracted to this type
of work. At the same time, manufacturers -- including those
who formerly had 100 percent Jordanian labor -- need
productive, experienced workers, who can more easily be
obtained from overseas.

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Training Jordanians to Do the Job
--------------


10. (U) The other main obstacle to increasing the percentage
of Jordanian QIZ employees is the lack of relevant skills. To
address the deficiency of qualified textile and garment
workers, the MOL has two training projects underway and also
endeavors to negotiate individual training agreements with
new investors. Last year the MOL through USAID contracted
with the Jordanian firm Textile Technology Centers (TTC) to
train 4,000 Jordanian garment workers by July to meet the
increasing labor demand at QIZs. However, MOL difficulties
in securing financing for the current phase of this training
program will delay completion of the program past July.
Already 2,500 have been trained in paid five-week courses led
by Tunisians experienced in modern garment factory production
techniques. TTC is training up to 120 Jordanian trainers who
will need years of experience to reach the levels of TTC's
current, effective trainers. Preliminary assessments from
the first phase show that most of the trainees are now
working.


11. (U) The Village Program at Tajamouat Industrial City has
grown to about 1000 mainly women from the south of Jordan,
where jobs are scarce and unemployment is high. These
workers live in dorms and contract to work 60-hour weeks.
Dormitories have inside supervisors, who act as chaperones.
Every two weeks the company buses the workers back to their
villages to see their families for two days. A Ministry of
Labor senior officer and two Social Welfare workers are
assigned in an office at Tajamouat to pay special attention
to the village group and to visit and coordinate with their
families. The MOL also sponsors special events for them.
Other MOL officers at Tajamouat monitor the condition of the
industrial park, as MOL officers do at all of the other QIZs.
Tajamouat management, which sees the village program as a
way to provide factories with dedicated workers, has a
cost-sharing program with the MOL for the first year. After
that, the factories will absorb all dorm and food costs.

--------------
The Union View
--------------


12. (SBU) According to union and Solidarity Center
representatives, physical working conditions in the QIZs are
generally good and the MOL helps maintain those conditions by
inspecting sites, checking records, and interviewing workers.
Fathallah Omrani, President of the General Trade Union of
Workers in Textile, Garment and Clothing Industries, says
labor difficulties at the QIZs have gone down by 80 per cent
since the early days. Most problems the union confronts in
QIZs are a result of Jordan-based foreign managers, and are
often compounded by language barriers. These problems are
usually amicably resolved with the MOL,s assistance, though
some do end up in courts. The union,s major complaints
remain delayed salary payments, which they list as the
leading problem, and extremely long working hours for foreign
workers, sometimes up to 14 hours per day, which is over the
legal limit. Other complaints include the lack of raises,
e.g. cost of living adjustments, and the need for better
health care or insurance coverage.


13. (SBU) Participation in most unions or professional
associations is mandatory in Jordan, but this is not the case
with garment workers in the QIZs. However, union officials
note that, given the preponderance of small manufacturers
outside the QIZs, it is actually easier to do union
organizing in the QIZs. While foreign workers are difficult
to organize given both language barriers and the closed
&company town8 lifestyle they live, union leaders view
their organization as representing all workers in this
sector. In fact, though foreigners are legally barred from
Jordanian union membership, these leaders have confirmed that
they register foreign workers in the trade union, with
Egyptians given as a specific example.


14. (SBU) Despite his upbeat view of QIZs and their
potential, Omrani says there has been little improvement for
the average Jordanian as a result of the QIZs, pointing out
that the primary benefit of QIZs is entry-level jobs. To help
illustrate the point, he added that the lowest minimum wage
his union has negotiated in a non-QIZ carpet factory is 130
JD (183 USD) per month. When asked whether working conditions
are better outside the QIZs, though, he said they were merely
different.

--------------
Comment
--------------


15. (U) This report focuses on the typical QIZ factory
worker. In addition to as many as 38,000 garment workers in
the peak season, QIZs account for thousands of jobs in
backward linkage economic sectors, from trucking and
transportation to food and services industries. The QIZs,
overall contribution to an improved employment picture has
never been documented, however. In addition, gains in QIZ
employment were offset by job losses in factories formerly
producing goods for what was a large monopoly market in Iraq
until the war last year.


16. (U) On worker wages, the longest-operating QIZ factory
was six years old this past March. Those Jordanians who have
been employed from the beginning are seeing sizeable monthly
paychecks, anecdotally placed at over 200 JD (282 USD) a
month. As more workers gain experience in mass production of
garments, there is a reasonable expectation that the low
entry-level wages paid to inexperienced Jordanians will
increase over a relatively short time.


17. (SBU) Finally, QIZ employment has an impact on rural
development and women,s empowerment. Under the Village
Program, most of the employees are women from rural areas who
have never before received an income. Not only do the QIZs
provide these and other women with salaries of their own, but
they also generate a new source of revenue for their families
and a boost to rural economies. Many female QIZ employees
reported to us significantly increased social status in their
families and communities, and more respectful treatment by
male relatives as a direct result of their QIZ employment.

GNEHM