This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 AMMAN 008145 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/ARN 
STATE ALSO FOR EB/TPP/ABT E. HEARTNEY 
COMMERCE FOR ITA/OTEXA - M. ANDREA 
 
E.O. 12958: N/A 
TAGS: KTEX ECON ETRD ELAB JO
SUBJECT: TRACKING CHANGES IN TEXTILES AND APPAREL 
EMPLOYMENT AND PRODUCTION AFTER QUOTA ELIMINATION - JORDAN 
 
REF: STATE 184238 
 
SENSITIVE BUT UNCLASSIFIED.  FOR USG USE ONLY. 
 
¶1.  (SBU) SUMMARY:  The textiles and apparel sector continues 
to increase its share of Jordan's GDP, due largely to the 
contribution of Qualifying Industrial Zones (QIZs) and their 
duty-free, quota-free exports to the United States, which 
stood at USD 584 million in 2003.  In 2002-2003, 
manufacturing employment dipped in Jordan after the Iraq war, 
due to the loss of Iraq trade protocol arrangements.  Textile 
employment increased to almost a quarter of the manufacturing 
workforce, according to data based on a household survey used 
in Jordan.  The best estimates available put the apparel 
workforce at 55,000 to 60,000 employees.  The high 
absenteeism found in modern QIZ textile factories is evidence 
that the culture of "manufacturing employment" is still a new 
concept to many here, though Jordanians are catching on.  The 
Government of Jordan (GOJ) leadership is attuned to the 
imminent challenge of apparel trade liberalization and loss 
of quotas in 2005, but is seeking to gain from FTA tariff 
advantages.  END SUMMARY. 
 
The Government Data 
------------------- 
 
¶2.  (U)  In response to reftel request, following are data 
for calendar years 2002 and 2003 for Jordan, which benefits 
from a bilateral Free Trade Agreement and the QIZ arrangement 
under the U.S.-Israel FTA. (SOURCE:  GOJ Department of 
Statistics;  no FY02 and FY03 data are available.): 
 
                         2002                  2003 
¶A. Total industrial 
 production (USD)      4.6 billion           5.0 billion 
 
¶B. Total textile 
   and apparel 
 production (USD)      457 million*          532 million* 
 
¶C. Item B/Item A 
   (percentage)           10.0                  10.7 
 
¶D. Textile/apparel 
  percentage share of: 
    -- Imports             6.09                 6.16 
    -- Exports            23.07                28.63 
    -- Re-Exports          4.40                 2.03 
 
¶E. Total manufacturing 
   employment            218,389**              217,290** 
 
¶F.  Total textiles/ 
   apparel employment 
   (percentage of all 
    manufacturing jobs)   14.8                 22.0 
 
¶G. Nat'l Population     5,329,000             5,480,000 
 
 
* NOTE:  Jordan does not report accurate data on gross 
industrial outputs; the GOJ relies on incomplete 
self-reporting by factories.  The textile/apparel number 
combines the (less accurate) reported gross output produced 
by factories for domestic consumption plus the (somewhat more 
accurate) export data.  Both are based on total production 
input values. 
 
** NOTE:  The employment data are based on an unsophisticated 
household survey that tries to discern all economically 
active residents in Jordan and, among those, individuals 
employed in the manufacturing sector.  The survey is 
conducted four times a year -- Feb, May, Aug, Nov -- and then 
combined to yield an "annual" composite.  The composite 
includes sectoral employment data expressed as a percentage. 
 
(COMMENT:  Relevant GOJ offices do not have the necessary 
depth in human resources to collect and analyze employment 
data on a monthly basis.  We believe that the household 
survey data are a somewhat reliable, crude but consistent 
measure of general employment trends.  END COMMENT.) 
 
¶3.  (U)  QIZ factories are exporting to the U.S. garments 
with 8 percent Israeli content duty- and quota-free.  More 
than 95 percent of QIZ factory output is in apparel, which 
constituted more than $550 million in QIZ exports to the U.S. 
alone in 2003.  QIZ apparel are shipped direct to an 
impressive list of buyers such as Macy's, Lee, Levi's, JC 
Penney, Walmart, Nordstrom's, and Gap.  QIZ factories account 
for more than two thirds of all apparel workers in Jordan, by 
most estimates.  The Ministry of Industry and Trade (MOIT) 
tracks the QIZ labor force, compiling data on total employees 
two times a year, based on interviews.  The MOIT's QIZ labor 
force data follow: 
 
               2002       2003      2004 (Aug) 
QIZ Labor 
 Force        24,243     28,639    31,190 
 
(NOTE:  These are totals of combined domestic and foreign 
workers at the end of the period, not averages.  We cannot 
vouch for the thoroughness of the MOIT survey.) 
 
Employment in QIZ Factories 
--------------------------- 
 
¶4. (SBU)  Post conducted its own up-to-date employment survey 
of QIZ factories which export to the U.S.  Over a two-week 
period in September, we interviewed personnel managers at 59 
QIZ garment companies, asking a series of questions about 
general employment.  As QIZ factories employ workers from 
outside Jordan  under 2-3 year contracts, we asked for those 
numbers, as well.  Regarding machine operating line 
employees, we also asked the number of employees who reported 
to work that day.  (NOTE: These QIZ factories have contracts 
to export direct to the U.S.  Another roughly 30 subcontract 
QIZ factories have more widely fluctuating workforces.) 
 
QIZ Factory Employment: 
 
Management staff                        1,297 
Average annual line employees          32,223 
 
 
Foreign line employees now             22,390 
Jordanian line employees now           18,332 
  TOTAL line employees now             40,722 
 
Employees who reported to work today   36,220 
 
 
It is notable that of 40,722 line employees, only 36,220 
reported to work, yielding an absenteeism rate of 11 percent. 
 (COMMENT:  Factory owners have noted to us the missing 
domestic workers, who intermittently go off to take care of 
family obligations such as harvesting olives or attending a 
wedding.  These numbers are testimony to the anecdotal 
information that Jordan's formerly rural and largely tribal 
population is still learning to cope with the demands of 
modern industrial society.  END COMMENT.) 
 
Private Estimates of Textile/Apparel Workers 
-------------------------------------------- 
 
¶5. (U)  The Association of Textile Workers reports there are 
45,356 QIZ workers (both direct and subcontract factories) of 
which 23,581 are Jordanian.  According to a textile union 
leader, there are an additional 10,000-15,000 apparel workers 
outside the QIZs, some in factories, but most in small 
production shops.  Based on these reports, Jordan could have 
an estimated 55,000 to 60,000 apparel workers. 
 
COMMENT 
------- 
 
¶6.  (SBU)  The GOJ has a long way to go before it can 
adequately track either employment or production data.  At 
the same time, the GOJ has focused strong resources on 
supporting the apparel sector in the quota-free QIZs and is 
working to capitalize on tariff-free benefits afforded by the 
FTA in some apparel categories.  Tariffs in other major 
garment categories do not zero out until 2010 under the FTA. 
The GOJ requested tariff reduction acceleration for virtually 
all apparel categories during FTA Joint Committee talks last 
June. 
 
¶7.  (SBU)  A National Committee formed by the MOIT has 
recommended training in the mid-term an additional 12,000 
garment machine operators and another 700 middle managers and 
design/production planners.  These would replace foreign 
workers as their contracts expired.  The committee aims to 
reach USD 3 billion in garment exports by 2010 (this assumes 
FTA tariff reductions are accelerated) and a total workforce 
of 88,000.  These are ambitious goals fueled by the 
tremendous success of the quota-free QIZs over the last five 
years.  Jordanian manufacturers at least have the momentum 
going in their direction, with experience in meeting 
commitments to a strong base of buyers.  The Government of 
Jordan is doing all that it can to show investors from South 
and East Asia that they can continue to sell garments "Made 
in Jordan" to the U.S. market with the tariff reductions 
afforded by the FTA. 
 
¶8.  (SBU)   It remains to be seen if Jordan's ambitious goals 
in the textiles and apparel industry can be met.  At least 
until 2008, it is expected that growth will continue.  Much 
will depend on the USG's response to Jordan's request for 
tariff reduction acceleration if growth is to be as rapid as 
it has been in the past few years. 
HALE