Home » News and Events » Labor Watch Warns, Reduced Old-Age Insurance Contributions Will Weaken Social Protections for Thousands of Youth

Labor Watch Warns, Reduced Old-Age Insurance Contributions Will Weaken Social Protections for Thousands of Youth

The Jordanian Labor Watch has warned of the negative impacts of the new bylaw to reduce contributions to old-age, disability, and death insurance for private sector workers, which was approved by the government last week.

In a press release issued today, Sunday, the Labor Watch said the bylaw would allow small and medium-sized private sector establishments to reduce their contributions to old-age, disability, and death insurance for workers under the age of thirty by 50% for small establishments and 25% for medium establishments.

The Labor Watch stated that this measure constitutes a clear and explicit deprivation of thousands of workers in these establishments of their fundamental rights. It will weaken the social protections provided to them and adversely affect their future pension benefits.

The Labor Watch explained that the regulation would hinder the achievement of the National Social Protection Strategy’s goals related to promoting decent work and social security. It will also create negative discrimination in rights among insured individuals, undermining workers’ and the community’s trust in the social security system.

The Labor Watch pointed out that this bylaw contradicts the government’s objectives of ensuring youth engagement in the labor market, where unemployment rates among them are approaching 50%. It believes that this regulation will make it more challenging for young people to find employment, further increasing the already high unemployment rates.

Moreover, the regulation will encourage small and medium-sized private sector establishments to lay off workers over the age of thirty and replace them with younger workers to save on the contributions paid to the Social Security Corporation. This would push the youth to seek employment in the public sector, which offers better social protections than the private sector.

The Labor Watch emphasized that implementing this regulation will harm the social protection system guaranteed by international legislation and will weaken it.

The Labor Watch also stressed that this bylaw leans towards supporting employers in all small and medium-sized economic sectors, which constitute more than 90% of business establishments, at the expense of providing essential social protections for workers. This approach represents a dangerous trend by the Jordanian government, shirking its responsibilities in supporting the private sector and burdening workers’ rights.

The Labor Watch noted that there is no evidence to suggest that reducing social protections for youth will increase their employment. If the government aims to incentivize the private sector to employ unemployed youth, it should reduce indirect taxes (general sales tax, excise taxes, and customs duties) and offer employment-linked tax incentives rather than reducing social protections.

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