The social
insurance system in Muslim countries.
Chernigevich Olga, KNEU, tr. Stakhanova Katerina KNEU, origin article - http://www.klubok.net/article2538.html
In the Global Jobs Pact of ILO (The Global Jobs
Pact, 2009), governments of countries, employers and employees jointly
concluded that "countries having strong and efficiently functioning social protection
system have a valuable built-in mechanism for stabilisation of their economies
and reduction of social impact of the crisis. Therefore, a state should extend
the scope of social insurance, adapting it to new challenges that manifest
themselves in the rapidly changing modern economic conditions, in order to
react to and regulate the increasing level of poverty and vulnerability of
social strata”[1].
While the majority of the Arab countries have
introduced complex, inefficient and costly systems and social protection institutes
for the last decades, some of them have carried out and continue to carry out a
clear national policy on social protection, which includes both social insurance
and assistance and services, payment of which is not based on previous contributions
of recipients.
The goals that I set for myself in this study
are:
to research
the social insurance system in Muslim countries and the Arab Region;
to identify
problems existing in the modern social protection system of these countries and
possible ways of their solution.
Analysis of
the social insurance system in Muslim countries.
Historically, a social protection policy in
Muslim countries was very different: according to the types of programs, which
provided population with social protection (social insurance, programs that are
not based on previous contributions and health care) as well as according to the
target groups (employees of private and public sectors, various socially
vulnerable groups) and provision of financing of these programs (public,
private).
Socioeconomic status creates conditions, which
serve as basis for establishment and development of social protection system
and social insurance system, in particular. First of all it depends on the "tax
space” (amount of resources available for redistribution), population size and
composition (i.e. social differentiation of population is also taken in account),
living standards and level of requirements of
population.
It is important to note that Muslim countries
in the Arab Region greatly differ among themselves in terms of level of GDP:
there are both the richest and the poorest countries of the world in the
region.
Source:
IMF, World Economic Outlook Database, 2010
Figure 1. Level
of GDP per capita according to the purchasing power parity in 2010,
international dollar
It is noteworthy that most countries in the
pre-crisis period showed stable growth indicators, as well as most states,
which belong to the group of developing countries. Unfortunately, this
potential was not implemented in creation of necessary number of workplaces for
a growing quantity of young population. Unemployment, underemployment and shady
employment remain major challenges in the region, especially for women. [2] According
to recent estimates, the share of people living in poverty (with income below 2
US dollars a day) in the Arab countries is about 20% of the population of this
region [3].
The basic element of social protection in
Muslim countries is social insurance programs that provide
long-term benefits in case of reaching retirement age, disability or death of
breadwinner. These schemes protect employees of public sector of economy,
including military employees and private sector employees. In most countries
the existing schemes of social insurance protect those employees who are
employed on a permanent basis. Other categories of employees such as temporary
workers, agricultural workers, people who work at home and migrant workers, do
not receive a legitimate insurance coverage in all Arab countries. Recent
estimates of the World Bank have demonstrated that on average only one-third of
employees in the region are subject to pension insurance (there is a great
differentiation between countries in the level of provision of financial
security and social services in connection with retirement, for example, in
Yemen the share of population covered by this type of social insurance is 8%,
while in Libya it is 87%) [4].
Protection of mandatory social insurance
programs is limited. At the present time, civil servants in the Arab Region use
services having quite a high level of protection, while private sector employees
in some countries are only partly subject to social security or are not subject
at all (in the occupied Palestinian territories). Most of those people, who
provide themselves with work independently, are in the shadow economy and are
partly subject to social security in Algeria, Tunisia and Egypt [5]
Such social
insurance protects more than 50% of population in all countries, including
partial protection.
An important challenge for the Arab countries
today is also a social insurance for women. According to international
estimates there are very few officially employed women in the Arab countries,
while most of them are employed in shadow economy [6].
It is also worth noting that the actual level
of social security benefits can greatly differ from the legal level as a result
of the difficulty of enforcement and different duration of life [7].
New ways of
solving modern problems in the Arab Region.
In most Arab countries pension insurance
schemes underwent significant changes; several reforms were carried out, which
were aimed at reducing the pressure of costs on public finances for this type
of social insurance. For this end the following measures were taken: expanding insurance
coverage, increasing retirement age, reconsideration of the formula for
calculation of insurance benefits, equalisation of potential possibilities in
receiving reimbursement or social service according to social insurance of
employees of public and private sectors [8].
Main means of interaction with the challenges
of contemporary socioeconomic processes that exist in Muslim countries should
be the following:
The main goal of social protection programs
should be building of foundations for social insurance (social pensions,
benefits to children and necessary medical services) that will help to
disseminate knowledge about protection of one’s income and health, reduction of
incidents of child labour.
While the majority of the countries in the
world adopted international global social security standards, only a few
countries ratified some conventions in the Arab countries. For example, the
Convention on social security (1952), which contains the basic underlying
principles and standards of social protection, was ratified only by Libya and
Mauritania. Convention on equality of service (1962), which secures rights of
migrant workers, was ratified by Egypt, Iraq, Jordan, Libya, Mauritania and
Syria [9]. So, at this stage, Arab countries need a more extensive use of
international standards, introduction of international practice in the field of
social insurance.
Provision of appropriate pensions can be
achieved through adequate protection of pension reserves and accumulated
savings of employees, checking the adequacy of establishing the minimum level
of benefits [10].
To ensure a sufficient level of employment in
the economy and fight against unemployment it is necessary to apply a
combination of such measures as temporary benefits to employees and quick
attraction of unemployed people into the labour market through requalification
and retraining that will facilitate transfer of this segment of the population into
informal economy. One of the countries that introduced this scheme of unemployment
insurance (assistance is provided to those persons who are looking for work for
the first time and those who are having requalification and retraining) was
Bahrain, which in 2008 reformed the social insurance system, having created the Social Insurance Organisation (is
managing and executive state-owned enterprise, whose activities are aimed at
offering pension and insurance services to individuals who are the subjects
under the Civil and Military law) [11].
One of the most outstanding achievements of
development of Muslim countries for recent years has been a significant
increase in the number of women involved in education and paid work. Though,
the dynamic in a public sector is more active than in a private one due to
better social security and better access to its benefits. The problem is a lack
of will of the enterprises, especially Small and Medium Enterprise, to pay
maternity grants to women, that doubles expenses for salaries. In order to
solve this issue some counties decided to distribute the so-called "maternity
risk” among employers, employees and state. For example, in Jordan the benefits
scheme in case of maternity shifts the obligation to pay these benefits from
the entrepreneur to the state, through the introduction of this type of social
insurance.
The problem of growing number of aging
population, reduced adaptability of the labour market to the sharp economic
fluctuations more and more confirms the fact that to ensure economic stability,
it must have a stable basis ― population, people who are a perpetual motion of development
of a separate state or the whole world. Muslim countries have huge potential
for development, but the main task of governments in the region is not wasting
available resources, but their usage for creation of reserves of economic
growth and economic development.
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