The government recently proposed the dissolution of the Ministry of Labor and dispersing its functions among various ministries. The government’s argument for such a directive is that it would enhance efficiency and reduce costs. The proposal has been met with an overwhelmingly negative response from laypeople and pundits alike.

 

Labor ministries have been around for over 100 years. The first form of labor ministries were statistical and research centers that provided policy makers with data on the labor market and social situation to support the making of labor and socially relevant legislation. Examples are the German Commission for Labor Statistics (established in 1882), the British Statistical Office (1887), and French Office (1891), among others. However, by 1910, 22 European countries had such entities, which later became ministries.

 

Crises, economic depressions, high unemployment rates, social conflict have led to the promotion of labor departments to ministries of labor, such that 23 countries had ministries of labor by 1938. Currently, most countries have labor ministries.

 

Ministries of labor have a pivotal role in terms of influencing governance at the work place, specific labor markets, and the national labor market. This does not negate the fact that other ministries and government departments may have a role in labor administration.

 

Depending upon the development goals of the country and the strength of the ministry of labor, the role of the ministry itself can fluctuate between leadership and coordination to simply following and participating.

 

Given that high unemployment rates have brought about ministries of labor, does the unemployment rate in Jordan warrant the dissolution of the Ministry of Labor and the scattering of its functions among the ministries of education, industry, and others?

 

The unemployment rate in Jordan, at 23.2 percent, is the highest it has been in over three decades. Unemployment among women stands at 30.8 percent, and women’s labor participation at 14 percent places Jordan at a rank of 179 out of 181 countries, ahead only of two countries that suffer from political turmoil: Iraq and Yemen. Moreover, unemployment among youth is 49 percent; that is, one out of two youths is unemployed.

Given that each ministry operates vertically and in a seemingly independent manner from other ministries (I mind my shop and you mind yours), Jordanian Cabinets have not been known to be into coordination. As such, increased efficiency and effectiveness is not likely to happen.

Based on the current labor data, the role of the Ministry of Labor as a labor policy setter should be enhanced, not diminished.

 

How about the performance of the Ministry of Labor? Can one, based on the data, assert that the ministry is not performing well and warrants doing away with it?

 

The answer is no! The labor situation in Jordan, as elsewhere, is affected by social, economic, and political factors. The government has been repeatedly stating that the economy has been adversely affected by regional turmoil. If this statement is true, then the Ministry of Labor, like the other ministries, should be blameless. Moreover, raising energy prices leads to higher unemployment; raising taxes contributes to stagnation and economic downturns; etc. Therefore, the performance measure cannot be used as an excuse for fragmenting the ministry.

 

What if the breakup of the functions and their integration in other ministries leads to greater effectiveness and efficiency? Actually, for greater effectiveness and efficiency to occur, the government would have to demonstrate great coordination among the various ministries and departments. Given that each ministry operates vertically and in a seemingly independent manner from other ministries (I mind my shop and you mind yours), Jordanian Cabinets have not been known to be into coordination. As such, increased efficiency and effectiveness is not likely to happen.

 

In fact, inefficiencies may occur as mergers typically ignore the differences in the working culture of various organizations. Such disregard for working cultures had been estimated by McKinsey to lower performance by 14 percent. In addition, the various salary scales applied by the merged institutions will play havoc with the human resources departments.

 

Let us not rush to fragment any ministry before careful study and analysis. Jordan is not unique in the world. Other countries’ experiences and research should be used to avoid the blunders they made. Jordan is not inventing the wheel.

 

 

Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.