Introduction

This paper aims to explore the effects of structural adjustment and economic reform in Jordan through the lens of income distribution. The main objective of the paper was to locate the middle classes in Jordan and explore the impact of economic reform on their standards of living and on their share of total GDP growth. Methodologically this task proved difficult, firstly because of the ambiguity of the middle class as a category, secondly due to the difficulties in transposing western class definitions into the non-western, non-industrial context and thirdly, because of the shortcomings of the available data in this study. Nonetheless, what is provvided is a detailed look into the socioeconomic realities of a period of sustained economic growth (2002-2006) across three broad classes or socio-economic groups.

The main findings show that income distribution at large is skewed in Jordan: the richest 30 percent of the population own around 60 percent of total income, with 30 percent of that income owned by the richest 10 percent. The richest two percent of the population own 13percent of total income, while the poorest 30 percent own 11 percent. By way of comparison, the richest ten percent’s share of total income in 2002 in Brazil was 46.63 perccent, in China it amounted to 32 percent, while in France it amounted to 22 percent, 24 percent in Denmark and 19.12 percent in the Czech Republic.

Despite economic growth at an annual average of 6 percent, there has been very little achieved in the way of inequality reduction as can be seen by minimal improvement in the Gini coefficient from 0.379 in 1997, 0.361 in 2002, to 0.355 in 2006. After dividing the population into ten consumption groups, a change in the distributtion of households is observed whereby the number of families in the richest deciles declined between 2002 and 2006, and the number of poor families increased. With regards the middle consumption groups, they have been most affected by low wages and increased their dependence on other sources of income such as remittances from migration and self-employment. That the middle classes were difficult to locate may be interpreted as a sign of their precarious class position, with many previously middle class household having either become part of the working class or the upper classes.

The paper begins by providing various theoretical parameters with which we define the middle class. Section two provides an overview of structural adjustment in Jordan since 1989 and the ensuing changes in the social contract. It is argued that although inequality existed under the old social contract, the new social contract may have exacerbated this by removing social protection and subsidies for a large number of the Jordanian population, constructing a non-progressive tax system and declining employment opportunities. The third section will provide an in-depth data analysis of various socio-economic groups so as to clearly outline the shifts in household welfare, social mobility and expenditure patterns from 2002 to 2006. Finally, conclusions will be drawn and some policy implications will be provided.