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As the world marked International Workers’ Day, the Arab region finds itself grappling with an urgent question: How can wage policies truly reach the workers they are meant to protect, especially in economies where informality is the norm, not the exception?
Across countries such as Egypt, Morocco, Tunisia, Lebanon, and Jordan, International Workers’ Day serves not only to honor the struggles of labor movements but also to confront enduring gaps in economic justice. One of the most visible and persistent of these gaps is the disconnect between minimum wage laws and the reality of informal labor markets.
In these contexts, informal employment dominates the economic landscape. Workers often lack formal contracts, social security coverage, and access to even the most basic labor protections. Micro and small enterprises, which make up the majority of businesses in many Arab economies, frequently depend on informal labor, not due to negligence or malice, but because of structural constraints: high operating costs, narrow margins, and weak enforcement capacity.
Minimum wage increases, though frequently introduced as tools for poverty reduction and equity, often fall short of their promise. A growing body of global research, including an IMF study on Brazil, highlights that while wage hikes may reduce inequality in the formal sector, they can unintentionally widen inequality overall by pushing low-skilled workers and small firms deeper into informality, where wages are unregulated and rights unenforced.
Jordan offers a telling example. In late 2024, the government announced a long-awaited increase to the minimum wage, raising it from 260 to 290 Jordanian Dinars (approximately 408 USD), effective January 2025. The move was a response to mounting pressure over rising living costs and stagnant real wages. Framed as a step toward labor justice, the decision nonetheless drew criticism for falling short of workers’ basic needs.
Yet what was largely missing from public debate was a recognition of how this policy would play out in a labor market where informality is deeply entrenched. Field research conducted by the Renaissance Strategic Center across multiple sectors and governorates found that most workers particularly those in micro and small enterprises, earn below or just at the new minimum wage. None had formal contracts. None were enrolled in the Social Security Corporation. Many were paid in cash, without protections or recourse.
These workers are not outliers, they are representative of a large segment of Jordan’s (and the region’s) labor force. Jordan’s case illustrates a broader truth: wage policy alone is not enough.
If Arab countries are serious about translating symbolic wage increases into real improvements in workers’ lives, a broader, structural approach is needed. This includes:
Raising the minimum wage may be politically important, but real progress will come only when the informal majority is no longer invisible to labor policy.
