Social protection programs in Egypt vary greatly. They include noncontributory social safety nets like the Takaful and Karama pension programs and other assistance provided to vulnerable groups, both temporary and permanent; food subsidies (supply cards) fall under this framework as well. There are also contributory social protection programs such as social and health insurance, it is noteworthy to mention that these programs seek to partially or wholly cover groups who cannot pay in. A third type of social protection, active labor market programs (ALMPs), straddle noncontributory social security programs and social and health insurance by providing job opportunities for the poorest and most vulnerable unemployed groups in order to transition them from a place of need to empowerment.
If properly designed, implemented and carefully targeted, ALMPs can build the capacities of the targeted group and prepare them to join the labor market on a sustainable basis. They therefore represent a bridge, empowering vulnerable groups while reducing the population in need of noncontributory social safety nets and bringing them under contributory social schemes like social and health insurance. Although there are multiple ALMPs in Egypt carried out by several parties, because of their design and method of administration, they have not fulfilled their primary purpose, which is to empower vulnerable groups by providing secure, protected, and decent jobs. Existing ALMPs do not meet these three basic job criteria in a genuine and comprehensive manner.
With this in mind, this brief paper will discuss the relationship between contributory and noncontributory social protection programs, and explore ways to integrate them by developing ALMPs, and also taking advantage of the opportunities offered by both the new social insurance law and the comprehensive health insurance law, which cover the most vulnerable groups in society.
<h3>Social protection programs: Fragmentation and its implications</h3>
At the outset, it must be emphasized that there is no comprehensive, integrated strategic vision for social protection programs, whether contributory or not; these two types of programs are designed and administered separately. What is available are some criteria for each type of program. For example, the Ministry of Social Solidarity, which is responsible for noncontributory social protection programs like Takaful and Karama, only looks at standards for targeting, verification, and gender-sensitivity. Other economic empowerment programs such as Fursa and Mastura, and others - which are ALMPs - there is thus far no assessment of the extent to which these programs target Takaful and Karama beneficiaries, and whether they have successfully transitioned them away from social safety nets.
The vision governing contributory social protection programs like social and health insurance becomes clear when reviewing the laws regulating them, namely Law 148/2019 and Law 2/2018 respectively. Expanded coverage and universality are two key criteria, but the law also provides for the most vulnerable groups in society (Official Gazette, 2018; Official Gazette, 2019).&nbsp;
<h3>Implications of fragmentation</h3>
According to the analytical statement on the draft state budget for fiscal year 2019/20, total spending on social protection programs&mdash;itemized as subsidies, grants, and social benefits&mdash;came to EGP327.699 billion. As shown in Figure 1, social spending surged between 2013/14 and 2019/2020 (Ministry of Finance, 2020a).&nbsp;
Figure 1: Spending on social protection programs
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://api-aps.aucegypt.edu/uploads/tinymce/1608632968imageScreen Shot 2020-12-22 at 12.27.46 PM.png" alt="" width="500" height="278">
Source: Ministry of Finance, 2020a
While taking in account the difference between real and nominal growth, this spending surge nevertheless raises a question: Why has the poverty rate risen to 32.5% (Central Agency for Public Mobilization and Statistics, 2018) despite increased social spending? Is it inefficiency, targeting issues, or the fragmentation of social protection programs, which reduces the efficiency and effectiveness of resource allocation? In fact, the problem is all of the above, although fragmentation and lack of integration are important considering the inefficiency and ineffectiveness they entail.
In contrast to the expansion of coverage of social safety nets, specifically the Takaful and Karama programs, which now cover nearly 15 million people, the social insurance system has seen a significant decline in coverage over the past two decades (Selwanes &amp; Ehab, 2019). It goes without saying that this is linked to the dearth of decent jobs and the expansion of the informal sector.&nbsp;
Figure 2: Development of social insurance coverage (total)
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://api-aps.aucegypt.edu/uploads/tinymce/1608633007imageScreen Shot 2020-12-22 at 12.28.37 PM.png" alt="" width="500" height="299">
Source: Selwanes &amp; Ehab, 2019
Health insurance is a different matter. Coverage has expanded to reach some 55.6 million citizens in 2018, half of them school students and nearly a quarter are workers. The 12 million workers who are covered constitute more than half of the employed workforce, which was estimated at 22.5 million the same year (Egyptian Center for Economic Studies, 2020). Looking at the evolution of health insurance coverage since 1990 shows that the base of the insured has expanded even as citizens spend more on health out of pocket. In 1990, the coverage rate stood at nearly 10%, with private spending constituting 56% of all health spending. As more groups were brought under the health insurance umbrella, coverage expanded to 37% in 1995 with a private spending rate of 51%. Coverage reached 45% in 2000 while private spending as a proportion of health spending rose to 61%; by 2015, coverage stood at 58%, with a private spending rate of 62%. It is thus clear that more coverage did not reduce private spending on health&mdash;quite the contrary&mdash;which indicates a deterioration of the quality of services provided. One study has found that no less than 80% of households have at least one person who is covered by public health insurance. Even so, only 25% of households benefit from this system due to the low quality of services and bureaucratic performance (ESCWA, 2019).
All of the foregoing indicates that several social protection programs, contributory or noncontributory, suffer from fragmentation and the absence of an integrative vision, which could creates a holistic system of social protection, capable of moving sectors of the population away from social safety nets&mdash;which barely keep the poor alive&mdash;to other protection systems that depend on work and derive their resiliency from their ability to empower people and lift them out of poverty, as well as their financial sustainability. This fragmentation makes existing systems more inefficient and ineffective, which is reflected in the increasing numbers of poor and uncovered groups as well as increased spending on programs that do not have the desired impact.&nbsp;
ALMPs are one of the most important social protection programs that enable the poor to join the labor market and depend on themselves while also guaranteeing them an adequate income, which gradually reduces their dependence on social safety nets and promotes their inclusion in social insurance systems. ALMPs in Egypt vary, including labor intensive projects such as public works, training and small and microenterprises. Multiple bodies oversee ALMPs, including the Ministry of Manpower, the Ministry of Industry and Trade (which is responsible for industrial training centers<a href="#end_1">[i]</a>), and the Local Development Fund under the Ministry of Local Development, but the Micro, Small, and Medium Enterprises Development Agency (MSMEDA) remains a key government agency administering ALMPs. MSMEDA was established by Prime Ministerial Decree 947/2017 and amended by Decree 2370/2018 to be directly subordinate to the prime minister.&nbsp;
The agency offers a variety of programs such as the public works program and projects for MSMEs, as well as training in the skills and trades needed in the labor market. It also targets the poorest areas and youth unemployment (MSMEDA, 2018). Despite the importance of ALMPs in Egypt, most of the jobs they provide cannot be considered decent, sustainable, or protected by social and health insurance. As such, the quality of these jobs differs little from those available in the informal sector.
<h3>Opportunities and requirements for integration</h3>
As a starting point, the quality of jobs offered by ALMPs could be fundamentally altered by extending social protection to workers in these programs, who should be encouraged to enroll in social and comprehensive health. In this respect, the provision in Law 148/2019 on social insurance for the extension of coverage to informal works is an important opportunity. For health insurance, in a departure from the old system, Article 2 of the new law makes the family, rather than the individual, the unit of coverage (Official Gazette, 2018).<a href="#end_2">[ii]</a>
The requirements are mainly related to the management of social and health insurance systems and good governance, as well the accurate, proper targeting of beneficiaries and guarantees for financial sustainability. At the same time, the provision of social safety nets should be conditional on joining the labor market for those who can work. This requires a database on the social, health, and occupational conditions of target groups, and the interventions they need to join the labor market and benefit from ALMPs. It is also necessary to avoid the risk of preference for coverage under social security programs instead of social insurance, if the material and in-kind benefits from the former are higher than social insurance. The benefits offered by the two systems must therefore be balanced. In fact, the benefits from contributory social protection systems (social insurance) should be expanded to encourage increased enrollment.
<hr>
<a href="#_ednref1">[i]</a> Technical Education and Vocational Training Sector Program in Egypt.
<a href="#endref_2">[ii]Article 2 states, &ldquo;Comprehensive health insurance is a compulsory system based on social solidarity. It covers all citizens in the Arab Republic of Egypt. The family is the principal unit of insurance coverage in the system. The state assumes responsibility for those unable [to pay], in accordance with the exemption rules to be determined by prime ministerial decree.&rdquo;</a>
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References
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Central Agency for Public Mobilization and Statistics (2018). The most important findings of research on income, spending, food subsidies, poverty indicators, and the poverty map 2017&ndash;2018 [Ahamm Nata&rsquo;ij Bahth al-Dakhl wa-l-Infaq wa-l-Da&lsquo;m al-Ghidha&rsquo;i wa Mu&rsquo;ashshirat al-Faqr wa Kharitat al-Faqr]. [In Arabic]
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Ministry of Finance (2020a). Semi-annual report of fiscal and economic performance, citizen edition 2019&ndash;2020 [al-Taqrir al-Nisf Sanawi li-l-Ada&rsquo; al-Mali wa-l-Iqtisadi, Nuskhat al-Muwatin 2019&ndash;2020]. [in Arabic].
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Ministry of Finance (2020b).&nbsp; Six years of outcomes from June 2014 to June 2020 [Hisad Sittat A&lsquo;wam min Yunyu 2014&ndash;Yunyu 2020]. [In Arabic]
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Selwaness, I., &amp; Ehab, M. (2019). <a href="https://erf.org.eg/publications/social-protection-and-vulnerability-in-egypt-a-gendered-analysis/">Social protection and vulnerability in Egypt: A gendered analysis</a> (Working Paper No. 1363). Economic Research Forum.
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