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Since 2010, most Arab countries—including many not visibly affected by the uprisings—have introduced or expanded worker benefits and, more broadly, social protection. These changes were additional to measures taken after the 2008 financial crisis. But the recent social benefits have been reactive and ad hoc at best, rather than being part of a clear, long-term social protection vision and development strategy. While short-term political pressures are understandable, the approach to employment creation and setting the composition and levels of benefits should be part of the overall economic and social agenda and, more broadly, should promote sustainable and inclusive development.

Social Protection and Employment Benefits: A Short History

Social protection in the Arab world has traditionally been provided through government jobs that ensured employment stability, health and maternity benefits, and pensions. This model survives in various forms in some Gulf Cooperation Council (GCC) states, although it has been changing in other Arab states since the 1990s. High unemployment rates among young Arab job seekers, especially the more educated, have been at least in part attributed to voluntary “queuing” for public sector work, rather than accepting a private sector job, given the differences in pay, employment, and benefits.

Outside the public sector and a small formal private labor sector, the majority of workers and citizens remain unprotected. A rather generalized system of various consumption subsidies was supposed to reach marginalized workers and the poor and vulnerable. However, empirical evidence has shown that these subsidies were mainly absorbed by the nonpoor, while large fiscal outlays were incurred, thus preventing higher public spending on social services.

Policy in the Making

Despite being predominantly a middle-income region, the Middle East and North Africa has the lowest coverage in terms of disability, work injury, sickness, maternity, unemployment, and family benefits, as well as worker and survivor pensions, although there is a trend to expand coverage. For example, in 2011, Jordan added the self-employed to the social security scheme under the same conditions as employees.

Coherence between labor, social, and economic policies is now more relevant than ever since the responsibility of employment creation in the Arab region has shifted to the private sector. However, coordination is lacking. Social protection in the region tends to be fragmented with many different types of programs.

An Unfinished Agenda

Many Arab states still fall short of offering a coherent benefit package to their workers and, more generally, to their citizens. As the regional governments move away from the social protection “via the government employment” toward improving their “social safety nets” and raising their “social protection floors,” they face the significant challenges of simultaneously expanding coverage, increasing effectiveness, and achieving equity while preserving the sustainability of public expenditures.

Along with health services that do not fall directly under the umbrella of labor policies, pensions are both the most significant component of worker benefits and public expenditure outlays. They are subject to an increase in both the system dependency ratios—the ratio of pensioners to contributors— and the old-age dependency ratio—the ratio of old to working-age persons. Measures to address this include: increasing the age of pension eligibility; improving pension reserves management, including avoiding the diversion of funds for subsidizing other government activities; and reducing the difference between public and private schemes, preferably creating a unified pension system for all workers. From the workers’ perspective, pensions should be made portable and be indexed to preserve the real value of benefits over time, free from government interference.

Zafiris Tzannatos is a senior international consultant for strategy and policy based in Lebanon. He was previously Chair and Professor of the Economics Department at the American University of Beirut. He is a former ILO advisor and has served as Advisor to Managing Director of the World Bank, where he was also Manager for Social Protection in the MENA, as well as, Leader of the Global Child Labor Program that he initiated. His publications include 14 books and monographs, and more than 200 reports and papers in the areas of labor economics, education, gender, child labor and, more broadly, social policy and development strategy. He holds a Ph.D. in Economics.