Phenix Center, in collaboration with the FES, has released a comprehensive report titled ” Informal Employment in Jordan: Lack of Social Protection“. The report underscores the urgent need for innovative, affordable insurance mechanisms to enhance social security coverage in particular for informal workers, as almost 50% of Jordan’s workforce remains excluded from any social protection.
The report acknowledges that the renewal of the ‘Estidama++’ program by the Social Security Corporation is a positive step toward expanding coverage. However, it should also serve as a catalyst for developing additional sustainable insurance tools to ensure that all wage earners are encompassed by the social security umbrella. The recommended tools for achieving this expansive coverage could involve diminishing social security contribution rates or establishing a dedicated fund, sourced from the annual national budget, to subsidize a portion of these contributions.
One significant revelation from the report is the concentration of informal labor, those outside the social security system, in sectors such as agriculture, construction, and private sector transportation. Informal labor is also prevalent among supplementary education teachers, literacy program trainers and staff that are working for service providers contracted by the public sector, such as cleaning companies.
Furthermore, according to previous studies by the Social Security Corporation, an alarming 17% of the entire workforce consists of informal workers in formal sectors such as private schooling, secretarial roles, security, retail, and even barbershops.
Several prevailing policies in Jordan have either intentionally or unintentionally contributed to the growth of informal labor. As a result of these policies, many employers exclude their employees from social security coverage. A significant concern arises from the deficiency in mechanisms within the Social Security Law that would encourage self-enrollment, despite multiple revisions. The existing ‘voluntary subscriptions’ are remarkably high, costing as much as 17.5% of a worker’s monthly income, which discourages many from enrolling.
The exclusion of significant portions of the workforce from the coverage of social security laws in Jordan, including domestic workers and those working less than 16 days a month, has played a substantial role in the proliferation of informal employment.
The report also highlights that the lack of stringent oversight in enforcing decent work standards, while prioritizing investment over working conditions, along with weak enforcement of relevant legislation, has resulted in a rise in labor violations and infringements upon the rights of workers, particularly regarding social security.
Additionally, the unequal power dynamics between employers and workers in the labor market have contributed to the deterioration of working conditions across various sectors, paving the way for an increase in labor violations, including the denial of social security benefits.
According to the report, this can be attributed to flaws in Jordan’s trade union organization system. The labor law imposes numerous restrictions on the freedom to organize and engage in collective bargaining. For instance, Article 44 of the Jordanian Labor Law limits collective bargaining rights to trade unions and opposes expanding the number of unions, preferring to maintain only 17 unions under the General Federation of Jordanian Trade Unions. This weakens working conditions and hinders both male and female workers from advocating for improvements in all aspects of their working environment.
Furthermore, the report notes that the administrative, financial, and tax obligations associated with business registration, even for small enterprises, have dissuaded many employers from officially registering their businesses and their male and female employees under the social security system, a practice known as “insurance evasion.”
In light of these findings, the report calls for a comprehensive review of these policies, emphasizing that social protection is a fundamental human right and an essential tool for achieving justice for all.