The amended Social Security Law No. 112023 as published in the Official Gazette on Sunday 16 April 2023, saw amendments to articles relating to old-age, disability, and death insurance, as well as subscription rates.
One of the most prominent amendments to the law is the revision of Article 59, which pertains to the insurance of old age, disability, and death. A new paragraph has been added that allows the private sector to reduce the monthly subscription rate for insurance by a maximum of 50 percent for Jordanian individuals who have not yet joined the Social Security Corporation and are under 30 years of age. A new system will be implemented for this purpose.
Phenix Center for Economic Studies demanded, in a memorandum to the labor committees of the House of Representatives and Senate during their discussion of the draft law, that the amendments proposed by the government to Article 59 be reconsidered because of their negative effects on the protections provided to young people.
The Center believes that this amendment represents a clear denial of a basic right for young individuals. It emphasized that this change would have a negative impact on their future earnings and discourage them from joining the labor market. Their involvement in the job market. In addition, the change would encourage private sector institutions to make workers over the age of 30 redundant, with the aim of saving Social Security subscription rates.
Within the same article, another paragraph was added that provides insurance services for workers in Jordan's agricultural sector, covering them for maternity leave and work injuries only, until the cabinet issues a decision to include them in all the other social securities.
Furthermore, an amendment has been made to Article 72 of the original law, which now links the percentage of subscription rate paid by the armed forces and security services for old age, disability, and death insurance to the rate of economic growth recorded in the Kingdom during the previous year. If the real growth rate for the previous year is less than 5%, the subscription rate paid by the government for the military insured will be reduced to 17%.
In its memorandum, Phenix Center calls for a reconsideration of these amendments to Article 72. The Center emphasized that these changes would negatively impact the Social Security Fund's financial solvency and its sustainability, if economic growth rates continue to be less than 5%. The Center has also called on the government to commit to paying full subscription rates for workers in the armed forces and security services, as is the case for other workers.
As part of the memorandum, the Center presented additional recommendations that could strengthen the social protection system and the solvency of the Social Security Fund simultaneously. The main recommendation is to provide all forms of support to the agricultural sector and its workers, and to reduce pressure on it by reducing the prices of production inputs and the costs of issuing and renewing work permits for foreign workers.
Additionally, the Center recommends reducing the social security subscription rate in general and expanding its coverage to enable the largest possible number of workers to be covered by its protections. It is important to note that around 48% of the total workforce in Jordan is not currently covered by the insurance umbrella.
The Center also stressed, with its recommendations, the importance of stimulating the private sector through tax cuts on production inputs such as sales, special and income tax, as a better way to stimulate investment without violating social securities for workers.