The Standard of Living Conflict in Jordan
Introduction
Living costs in Jordan have accelerated sharply in recent years, outpacing income growth and placing sustained pressure on households. The prices of fuel, food, electricity, healthcare, and housing have risen far faster than wages, steadily eroding purchasing power. As this imbalance deepens, the gap between income and essential expenses is no longer a short-term strain but a structural economic and social issue.
Inflation Trends in Jordan and Their Impact on Household Purchasing Power
Over the past few years, living costs in Jordan have risen at a high rate. An article from the Jordanian Department of Statistics states that in the third quarter of 2025, the Consumer Price Index (CPI) for basic goods (such as food, fuel, electricity, and housing) rose by 1.97%. In 2024, the CPI in Jordan was 1.54%, indicating an increase from the previous year. In the meantime, a report from the Central Bank of Jordan emphasizes how economic pressures dampened wage growth in both the public and private sectors. These trends show that inflation is rising faster than wages. An increase in the CPI by almost 2% can place an significant burden on Jordanian households, especially the middle and low-income classes. If wages fail to keep pace with inflation, Household purchasing power will significantly decline. It affects rent, grocery prices, and transportation in Jordan. Wage stagnation reduces real income as earnings fail to keep pace with inflation. Reasons for this include regional instability, which limits exports and services. The private sector is also dominated by small firms, limiting productivity and wage growth. This emphasizes how even small inflation rates can significantly affect a household's income
Structural Differences Between Public and Private Sector Wages
There is a significant disparity between public and private sector wages relative to inflation. This is because the government determines public sector wages and jobs. Typically, wage adjustments depend on the state of the economy. When the economy is strong, wages tend to rise due to increased economic activity, and vice versa. However, wages have remained constant for several years, while costs have continued to rise. According to Numbeo, an average one-bedroom apartment outside Amman’s city center costs around 202.12 JOD per month, equivalent to 69.69% of the minimum wage, leaving limited income for food, utilities, and other expenses.
Private sector wages are determined by the market. Weak consumer demand has limited business revenues, reducing the ability of firms to raise wages. That means that inflation is slowly exceeding wage growth. Jordan maintained a minimum wage of 260 JOD per month for four years, from January 1, 2021, to December 31, 2024, when it changed to 290 JOD in 2025. Additionally, businesses operate based on their profit margins. If profits are high, then wages will slowly increase.
Furthermore, employers are not usually willing to increase wages often, as it can lower the company’s profit margins. Although raising the minimum wage might be beneficial and enhance the standard of living, it may reduce hiring and disrupt small businesses' profit margins. Unlike public sector wages, private sector wages are more unstable and heavily depend on business performance and productivity. According to the Phenix Center, the minimum wage issue is still largely debated, as it can either help improve workers’ lives or ruin business profit margins. The report discusses how private sector wages have failed to keep pace with living costs. This is because small and medium-sized enterprises dominate the market, which means their budgets are relatively small. A limited budget does not allow wages to grow significantly each year, which can cause people to fall behind inflation. Productivity also impacts business and profit growth. Low productivity can hinder business growth and wage increases, which negatively impact production and services.
Also, Jordan is located in one of the world's most unstable regions. Regional conflicts and instability discourage investment, which negatively impacts businesses and workers in Jordan. Furthermore, the lack of natural resources and low exports doesn’t attract as many investors, which also limits the growth of job opportunities. It negatively impacts workers and businesses, as they may lose funding and be unable to expand their businesses to other nations across the region or the world. Being surrounded by persistent regional instability limits the number of exports, as trade becomes more difficult during periods of instability. It increases job insecurity, as many businesses rely on foreign investment to continue their production and services. If investment is lost, then people will lose their jobs, and it will increase unemployment. This leaves many people below the poverty line and hungry.
Minimum Wage Growth Versus the Real Cost of Living in Jordan
In 2015, the minimum wage was 190 JOD. Since then, it has only increased by 100 JOD in 10 years. That is a 10 JOD increase per year. In 2015 and 2016, there was deflation, where prices dropped by 0.88% and 0.78%, respectively. However, prices have been increasing since 2017, when prices rose by 3.32%. The minimum wage increased from 190 JOD in 2015 to 220 JOD later on. The average rent price in Amman sits at around 400 JOD. However, if you live in East Amman, rent goes down to around 100–220 JOD. This consumes most of an individual’s income. It makes living on the minimum wage nearly impossible. The average grocery cost in East Amman ranges from 100–150 JOD, while in West Amman it costs between 100 and 250 JOD per month. This makes it difficult for a single person to live independently. It leaves the person with no choice but to live with a roommate. By doing this, rent and utilities will be reduced by 50%, making it easier for the individual to live more comfortably. This reduces rent to around 50–75 JOD, and utilities to 40–70 JOD per person. Although living with a roommate is cheaper, rent and utilities will still cost at least 40.9% of an individual’s income if they live in East Amman. The average real wage was about 534 JOD per month in Jordan in 2017. This makes it easier to afford expenses. However, a person would still need to live on a budget, as it is not substantial income.
The private sector generally experienced more challenges due to regional instability, low investment, and rising operational costs. The Central Bank of Jordan increased interest rates in February 2017 to adjust to inflation and support the dinar. Consequently, there was a decrease in demand for loans because businesses did not have a lot of money to cover the interest. Although the minimum wage has increased by 52% from 2015 to 2025, inflation has greatly reducedthe real value of these increases. Expenses have still risen along with the increase in wages. To live comfortably in 2015–2017, an income of between 600 and 800 JOD was necessary for a single person. For a couple, it would cost 1,000–1,200 JOD. For a family of four, it would cost around 1,500–1,800 JOD. However, to live a similar lifestyle in 2025, it would require a higher income. In 2025, a single person living comfortably needs around 1,000–1,500 JOD per month. A couple would need around 1,500–2,000 JOD a month. A family of four would need an income between 2,000 and 3,000 JOD monthly.
Balancing Wage Policy and Living Costs for Economic Stability
In conclusion, despite the minimum wage having increased by over 52% from 190 JOD in 2015 to 290 JOD in 2025, suggesting that wage growth has exceeded the inflation rate reported by the Department of Statistics, it has not fully enhanced living standards. According to Numbeo, rent and housing costs take around 70% of the minimum wage, making wages unable to keep up with rising living expenses. These findings demonstrate a relentless disparity between wage growth and living expenses. As rent, groceries, and transportation continue to rise quickly, many households will struggle to maintain a good standard of living.
Therefore, although inflation contributes to the issue, daily expenses continue to rise faster than the minimum wage. Policymakers must balance business sustainability and economic stability, especially in light of policy decisions by the Central Bank of Jordan. Fundamentally, Jordan’s main issue is the rising cost-to-income ratio. The Jordanian government needs to develop sustainable solutions that balance wage growth with rising living costs. The cost-of-living-to-income ratio places significant pressure on households, indicating that there should be reforms that enhance productivity, sustainable wage growth, and social protection. Without reforms that enhance productivity, attract investments, and protect low-income households, the gap will likely widen.
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