As much as social insurance is important, many workers in Egypt do not have access to it. Social insurance is a government sponsored programme which intends to promote the welfare of the population through assistance measures. People receive benefits or services in recognition of contributions to an insurance programme. In Egypt it includes pensions, grants and aid, and health insurance. All are vital but not all have it. A recent study by the Population Council states that although Egypt has achieved fairly high levels of access to social insurance largely through the expansion of public sector employment, hiring in the public sector has declined, with the implementation of structural adjustment, and informal employment has grown. Informal employment is known as employment without a contract or social insurance coverage which means that there are increasing numbers of workers, particularly young workers, who are outside the social insurance system. Workers and their families are thus left vulnerable to any unexpected events such as disability or loss of employment, and potentially without any income support in old age. The study identifies four challenges to social insurance compliance in the country's private sector. First, the high contribution rates discourage workers and employers from enrolling in social insurance because they have to give up a fairly substantial portion of their immediate income for something that most people will not see for years. This is particularly true of youth, many of whom are facing difficult labour conditions as well as financial pressure of starting their own families. “My employer wanted to insure me, but I refused because it will deduct 14 per cent from my salary,” said a 26-year-old private sector employee interviewed by the study. “My base salary is LE1,000, so if he deducts 14 per cent it will mean that I will be LE140 short, and that amount will make a difference to me.” The male youth explained that he is in need of the money since he is getting ready to get married and that he will not see the benefits of social insurance except in the long term. Some employers do not give their employees the option to contribute to social insurance to avoid paying the employer's contribution, while others enroll their employees in the system at a lower salary than they usually earn in order to reduce the amount of contribution they pay. According to Law 79/1975, social insurance is mandatory for all employees of private and public sector establishments. For these workers, social insurance covers old age, disability, maternity leave, sickness, workplace injury and unemployment. Total contribution rates on the basic wage reach 14 per cent for the employee, 26 per cent for the employer and one per cent for the government. Contribution rates on the variable wage are somewhat lower. Another obstacle to social insurance in Egypt is the discontinuity of employment. Many workers change jobs frequently particularly young workers in Cairo who have worked in several jobs since graduating, punctuated by periods of unemployment, in a constant search for a better paying job. The study stated that most of these young workers did not consider social insurance to be one of the important factors that determined their decision to move from one job to another. As a result of this turnover, some youths think that any social insurance contributions they make would be effectively money lost as they do not expect they would be continuously enrolled in the system long enough to qualify for a pension. For young women, this issue was compounded by the fact that some are expected to leave the labour force when they get married. Legally, workers must have made 120 months worth of consecutive contributions in order to qualify for a pension under any of Egypt's social insurance schemes. If they fall short of this mark, workers may “buy” any additional contributions needed to meet the 120-month requirement with a monetary fine. Discontinuity of employment also poses a problem for some of the older private sector workers who are approaching retirement age. Several made a few years' worth of social insurance contributions in the past, but not continuously, and did not reach 120 months of consecutive contributions required to qualify for a pension. Yet even older workers who knew they could buy the additional contributions said that the financial burden of paying for all the needed contributions, plus a fine, was too much. “I thought about completing the insurance the way it was, but it isn't possible for me to pay the contributions of about six years, with a fine as well,” a 53-year-old private sector employee said. This means that the laws which penalise workers for discontinuous participation in social insurance create a disincentive to enrollment and makes it more difficult for informal workers to access social insurance. The third challenge lies in the difficult labour market conditions and poor enforcement of labour laws which discourage workers from asking for their rights. This is evident in numerous examples from the interviews conducted by the study which illustrated young workers' reluctance to ask for their labour rights. A 30-year-old man was working in a restaurant where several employees caused a problem with the owner over social insurance. The employer then agreed to enroll some of the restaurant staff, but the young man interviewed did not want to push the issue and asked to be enrolled for fear of losing his job. The unwillingness of workers to argue and negotiate with their employers regarding their social insurance reflects the poor understanding they have of social insurance laws and their rights as workers. Many, particularly those of the younger generation, do not know what the correct contribution rates are for the employee and employer and what the eligibility requirements are for receiving a pension. And few know that missed contributions can be bought or that contributions may be withdrawn under certain conditions. In the Upper Egyptian governorate of Qena, some workers did not know that social insurance is something one could have in the private sector, let alone that it is legally required. Little awareness of the workings and benefits of social insurance is widely found among all segments of workers. The study shows that self-employed workers enrolled in social insurance only did so because they were made to when they obtained licenses for their businesses. Most were contributing at the lowest possible declared income, not understanding how this would affect their pension later on. More surprising, some of the public sector employees who did have full social insurance benefits had very little understanding of how these worked. In order to address these challenges which stand in the way of expanding social insurance coverage, the study recommends a new system that would better link benefits and contributions paid throughout the worker's period of service. Such a system should create this link through the use of national accounts, like virtual individual accounts that record employees' contributions throughout their period of service and then disburses them with interest at the time of retirement. This system was approved in the social insurance reform Law 135/2010 but has not yet been implemented in the aftermath of the 25 January Revolution. The study also recommends the elimination of fines charged for discontinuous contributions. The penalties increase the financial burden on workers who may already have a difficult time buying missed contributions which prevents them from accessing pensions. As for the challenges of labour force discontinuity and low awareness of social insurance, a computerisation of the social insurance system and making records publicly accessible are effective measures to redress these challenges. This system would allow workers to view their own records and know how many months they need for pension eligibility. It would also provide estimates of the individual's future pension value based on current contributions.
