Egyptian MPs voted on 15 July in favour of a new Social Insurance and Pensions law. Parliament speaker Ali Abdel-Aal told MPs that “it is necessary for parliament to pass this law before it adjourns for summer recess.”
“This law is a remarkable one that offers many privileges to retired and insured people,” said Abdel-Aal, adding that “the law is one of major social protection measures aimed at mitigating the effects of economic reforms on limited-income and poor classes.”
A report prepared by parliament’s labour force committee explained that all laws tackling social insurance will be unified into this new law.
“It is important to have one unified law dealing with all social insurance and pension matters…Citizens have repeatedly complained that there are many laws on social insurance and pensions and this creates a lot of conflict and confusion,” the rep[ort stated.
According to Article 21, the main beneficiaries of the law are senior citizens who paid subscriptions to the insurance system for at least 120 months.
“It also includes those who left work due to death and disability,” said the article, adding that “if an insured employee dies, his family (including widows, sons, daughters, parents, brothers) will be entitled to obtain his pension under certain conditions.”
The report said the law states that a fund will be set up to cover all insured citizens, and that an independent apparatus will be established to invest the money of social insurance in an economic way in order to secure high returns and boost the value of pensions.
Omar Hassan, advisor to the minister of social solidarity, told MPs that the law also aims to raise the age of retirement to 65 by the year 2040.
“In the year 2034, the retirement ago will be increased to 62; in 2036 to 63; in 2038 to 64; and in 2040 to 65,” said Hassan, adding that “the objective is to put all employees, be they in the public or private and business sectors, on an equal footing, with all having equal access to insurance privileges.”
The report said that the law covers 26 categories, 10 of which are to be included for the first time.
“The most notable categories are civil servants, public and private sector employees, members of professional syndicates, members of productive cooperative societies, agricultural landlords and tenants, and trade agents,” said the report, adding that “others include property holders, owners of fishing boats, owners of all forms of means of transportation, owners of household industries, mayors and sheikhs, tourist guides, artists and men of letters, and expatriates.”
The report indicated that 10 categories are to be covered for the first time by the law.
“This is part of the social protection philosophy adopted by this new law,” said the report, adding that “the 10 categories are seasonal workers; street peddlers; housekeepers and servants; reciters of Koran; reciters in churches; small-scale agricultural tenants and landlords; short-term workers in projects related to agriculture, cattle breeding, fish culture and bee-keeping.
Gibali El-Maraghi, the head of the labour force committee, said that a remarkable feature of the new Social Insurance and Pensions Law is that it raises pensions by 15 percent on the first of July every year.
“This is important to help keep pensions in line with inflation rates and help pensioners be able to meet their basic needs,” said El-Maraghi, adding that “while 9 percent only will be deducted from each pension, the state treasury will contribute 12 percent to the subscriptions related to the insurance on old age, disability and death.”
El-Gibali said another feature is that the law introduces a new privilege which is called “the unemployment insurance.”
“All employers will be obliged to deduct 1 percent from the monthly salary of their affiliated insured workers,” said El-Gibali, indicating that “the law stipulates that those who resigned from jobs, chose to leave work without prior notice, or those who were dismissed from work after they were found guilty of crimes related to breach of honour and trust will not be entitled to obtain the unemployment insurance.”
The law also stipulates that those who are entitled to obtain the unemployment insurance should have joined this system for at least one year, and that he/she should register his/her name with the Unemployment Office, which is affiliated with the Ministry of Labour.
Leftist activists, however, criticised the law and urged president Abdel-Fattah El-Sisi not to ratify it.
El-Badri Farghali, head of the General Union of Pensioners, said as many as 29 million insured workers and 10 million pensions will be covered by the law. Farghali said the law’s stipulation that pensions be increased by 15 percent on the first of July every year is not enough.
“The increase should go up to at least 30 percent because inflation levels in Egypt are very high, reaching in some years to 37 percent,” said Farghali.
Farghali also claimed that the law is discriminatory, as it cuts a private employer’s subscription to insurance fees by 50 percent (from 75 percent to 25 percent), but cuts the employee’s subscription by only 3 percent (or from 14 percent to 11 percent).