VZCZCXYZ0000
RR RUEHWEB

DE RUEHAM #3267/01 3431229
ZNR UUUUU ZZH
R 081229Z DEC 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 3950
INFO RUEHLB/AMEMBASSY BEIRUT 2950
RUEHEG/AMEMBASSY CAIRO 3847
RUEHDM/AMEMBASSY DAMASCUS 4022
RUEHRH/AMEMBASSY RIYADH 2059
RUEHTV/AMEMBASSY TEL AVIV 1429
RUEHJI/AMCONSUL JEDDAH 0847
RUEHJM/AMCONSUL JERUSALEM 5254
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS AMMAN 003267 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TPP/ABT, NEA/ELA, NEA/RA, DRL, G/TIP 
STATE PASS TO USTR (SFRANCESKI, LKARESH) 
COMMERCE FOR ITA/OTEXA MARIA D'ANDREA 
 
E.O. 12958: N/A 
TAGS: ELAB ECON ETRD EAID KTIP KTEX JO
SUBJECT:  Jordan Garment Factories Face Declining Sales and 
Negotiate for Government Assistance 
 
REF: A) AMMAN 3171; B) AMMAN 3173 
 
SENSITIVE BUT UNCLASSIFIED. 
 
¶1.  (SBU) Summary: Jordanian apparel exports fell 13.5% in the first 
nine months of 2008 compared to the same period in 2007 and are 
expected to continue falling, primarily due to the slowing U.S. 
economy.  Press reports announced the imminent closure of several 
factories, but government officials varied in their acknowledgement 
of the extent of the closures.  Garment factories are lobbying the 
government for additional support including a reduction in social 
security payments.  The government has exempted garment factories 
located within Qualifying Industrial Zones (QIZ) from an increase in 
the minimum wage scheduled for January 2009.  End Summary. 
 
Less U.S. Demand for Garments Means Fewer Jobs 
--------------------------------------------- - 
 
¶2.  (U) According to the Department of Statistics, apparel exports 
fell 13.5% from $918 million in the first nine months of 2007 to 
$794 million in the first nine months of 2008. Most garment exports 
are destined for the United States, and total exports to the United 
States fell a similar 14.8% from $949 million in 2007 to $809 
million in 2008, during the same period.  According to press 
reports, employment within Qualifying Industrial Zone (QIZ) 
factories declined 9% between January 2008 and October 2008 from 
48,972 to 44,585, including both foreign and Jordanian workers. 
 
¶3. (SBU) Officials from Jones New York (JNY), a U.S. apparel 
company, confirmed that JNY has been cutting its orders with 
Jordanian factories by approximately 50% in response to the slowing 
U.S. economy.  Jones has made similar cuts with all of their 
supplying countries, and Jordan has not seen deeper cuts than other 
countries, according to Jones officials.  The factories with which 
they work in Jordan have correspondingly been reducing headcount, 
through attrition and the non-renewal of contracts rather than 
layoffs, the officials added.  Farhan Afram, the head of Jordan 
Garments Accessories and Textiles Exporters Association (JGATE) was 
quoted in the Arabic-language press saying that the recession has 
affected QIZs and that local factories will continue to face 
difficult times in the next year. 
 
Press Says Eight Factories Will Close - GOJ Disagrees 
--------------------------------------------- -------- 
 
¶4. (SBU) Press reports in early December reported that eight 
factories operating in QIZs in Karak, Irbid, and Sahab have decided 
to stop production and lay off 2,000 Jordanian and 5,000 foreign 
employees.  In press statements, head of the Jordan Industrial 
Estates Corporation Amer Majali denied that any factories in Karak 
had closed because of an economic slowdown and that, while one plant 
was closed because of the owner's death, all of the impacted workers 
were relocated to other plants or repatriated.  Other government 
officials confirmed to PolOff that only two plants have closed in 
the last three months; one plant was recently closed because of the 
owner's death and another plant was closed in September after the 
manager disappeared, but the workforce was partially merged into a 
sister company. Atef Al-Majali, the head of the Labor Unit at the 
National Center for Human Rights (NCHR), told PolOff he spoke with 
officials at the Ministry of Labor, 21 Labor Inspectors in various 
QIZs, and several factory owners about the press reports. Besides 
the two aforementioned cases, Atef Al Majali found neither evidence 
of other plant closings nor indications of forthcoming ones. 
Several government officials have indicated that rumors are 
circulating of future factory closings but they have no specific 
knowledge or official notice from any factory to that affect. 
 
Long-Term Impact on Workers Remains Unclear 
------------------------------------------- 
 
¶5. (SBU) Governmental, union, and civil society officials have 
indicated that the impact on workers has been limited but they stand 
ready to assist if needed.  Fathallah Umrani, Head of the Textile 
Union, said that the three hundred workers affected by the September 
merger have already been relocated.  Future assistance could come 
from a Humanitarian and Legal Assistance Fund recently created with 
fees paid by factories to legalize their workers with expired work 
or residency permits during an March to July 2008 amnesty period 
(ref A).  Lejo Sibbel, USAID-funded Adviser to the Minister of 
 
Labor, said this fund was used to repatriate 38 Bangladeshi workers, 
who requested to return home, when the factory closed in September. 
NCHR has also pledged to monitor the situation closely and promised 
to visit current and future impacted factories to determine the 
status of their workers and provide possible assistance. 
 
QIZ Factories Want Government Support 
------------------------------------- 
 
¶6. (SBU) In one press account, a factory-owner is quoted as saying 
additional factories will close because of the failure of the 
government to reduce the costs of production.  Under negotiation are 
the costs of job permits and the amount of social security deducted 
from foreign workers wages.  Kamil Fakhoury, previous Vice-Chairman 
of JGATE, told EmbOff that Jordan's garment sector is a 
public-private partnership and, in this instance, the government is 
not keeping up its end of the bargain, which threatens the 
competitiveness of Jordan in this sector. 
 
¶7. (SBU) Garment factories within QIZs are being exempted from a 
minimum wage increase scheduled to take effect on January 1 which 
will increase the minimum wage to $212 per month, up from $156. (ref 
B).  Ministry of Labor Secretary General Dr. Gazi Shbaikat said that 
the decision was made because of the economic challenges facing the 
sector in reduced demand and high levels of competition worldwide. 
He said factory owners were also being asked to pay Jordanian 
workers an additional $14 per month to keep them financially on an 
equal footing with foreign workers who benefit from company-provided 
food and accommodations.  Shbaikat thought the payment was also 
important to decrease the likelihood that Jordanians would leave 
garment factories for other minimum wage jobs in other sectors. 
 
Visit Amman's Classified Website at: 
http://www.state.sgov.gov/p/nea/amman 
 
Beecroft