Social security reforms: Unlocking the potential and responding to new norms

مديرعام الضمان الاجتماعي الدكتور حازم الرحاحلة
"We must also consider measures to ensure the sustainability of social security and its ability to serve future generations, which requires bridging the gaps in the current insurance system, ...” writes SSC Director General Hazim Rahahaleh.
There is no doubt that today, as part of the global system, we are facing a new set of norms that put us all, individuals and institutions, in front of new patterns and responsibilities that must be carefully thought about.اضافة اعلان

While these are being observed more as challenges, they present us with an opportunity to rethink our strategies toward more positive, agile, and responsive directions.

As social security systems are one of the most critical systems that are affecting the present and future of individuals and countries across the globe, related regulations, policies, and interventions must be aligned with these new norms in order to capitalize on the opportunity of having an environment that enables change.

Jordan’s social security system has evolved significantly over the last four decades, with efforts focusing on expanding the social security umbrella, starting with large firms and progressing through the strategic decision to include civil servants in 1995, followed by the inclusion of military personnel in 2003.

In the last decade, two significant new insurances — maternity insurance and unemployment insurance — were introduced, which not only strengthened the social security system, but also, and more crucially, served as effective tools for enhancing employment and labor market flexibility.

COVID-19 provided a real opportunity for the Social Security Corporation (SSC) to consider qualitative tools and measures to address the consequences of the pandemic, as we may witness new pandemics or geopolitical conditions that result in difficult economic circumstances similar to those experienced during the pandemic.

Today, all of us, organizations and individuals, must have clear visions and strategies in place to promote economic development, encourage investment, enhance youth employment opportunities, and reduce youth unemployment rates.

We must also consider measures to ensure the sustainability of social security and its ability to serve future generations, which requires bridging the gaps in the current insurance system, with early retirement at the top of the list.

These considerations and developments are essentially mirrored in the proposed amendments that the SSC is considering building to its law. While the scope of the amendments will be limited, their impact and effectiveness can be maximized.

The "sustainability package", the first set of such amendments, aims to address the early retirement phenomenon as well as demographic changes associated with higher life expectancies and increased ability to work at older ages.

In this regard, the SSC intends to subject contributors with less than 120 months of contributions to the 2019 amendment, which raised the retirement age for males to 55 and females to 52.

The SSC is also considering closing the early retirement window for participants with contributions of less than 36 months by 2025, as well as increasing fines for employers who hire early retirees without notifying the SSC.

The second package, named the "stimulus package" aims to lower the cost of social security contributions for young workers and entrants to the labor market; a measure designed to address their high unemployment rates and the need to increase their employment opportunities.

The "response package" represents a new approach to dealing with adverse business-cycle shocks, namely responding to slowing economic growth and downturns (a countercyclical measure).

Amendments included in this package will allow the SSC to activate the partial coverage window for old-age insurance, similar to Tamkeen Iktisadee 1, in the case where average annual economic growth rate is less than 2 percent in the past three years, in addition to utilizing tools developed by the SSC during the pandemic, such as issuing pension advances to participants without burdening future obligations.

The “social protection package” aims to strengthen the social protection system for retirees, with early retirees being eligible for an annual increase directly linked to the inflation rate on a progressive basis.

Furthermore, the package includes giving unemployment benefits to those who have been covered by social security for a long time. The SSC is also examining the possibility of giving the opportunity for residents from Gaza Strip and children of Jordanian mothers to voluntarily contribute to the SSC.

Read more National news