Salam Jabbar Shihab, a researcher in political economy
Although the size of the labor force in Iraq is between (6-7) million people in the private sector, but (18) thousand workers are registered in social welfare programs.
The Social Security Law for workers will not be passed in Iraq as long as the size of deductions is large from workers and employers, and if it is approved, it is not expected that there will be incentives provided to employees and employers to register in it.
Mandatory application of the law on social guarantees for workers may lead to a weakening of the productive capacities in the market, as the Iraqi market is fragile and this will constitute an additional burden on employers.
It is imperative to design programs that give more flexibility to individuals in choosing the program package, the level of benefits, and savings policies, while providing better information and incentives for registration.
Relying on clear and integrated procedures will lead to the implementation of targeted redistribution arrangements to better contribute to the reduction of poverty and inequality.
Using a knowledge approach with employees where the focus is on providing general knowledge about the concepts and financial products offered, enhanced with skills to apply this knowledge to achieve good financial behavior.
A results-based approach that aims to directly influence behaviors that are important for achieving good financial results that lead to employees choosing their preferred programs.
Some countries have adopted guarantee programs based on systems that are not tied to employee contributions. From them depend on the value-added taxes of workers through the automation of incomes and consumer spending.
Evidence shows that the social insurance system interacts with labor markets when designing new programs or reforming existing social security programs for workers and decision-makers in Iraq should carefully consider how workers, companies, and employers will react to the implementation of Social Security programs for workers.
The importance of social guarantees for workers:
Most countries have mandatory protection, insurance, and savings programs to help individuals manage risks such as unemployment, disability, illness, old age, or death. These things are often based on financing, as these opportunities are financed through mandatory contributions imposed on employment (financial deductions). This type of model faces the challenges of covering workers in low-and middle-income countries, including Iraq, where a large part of the workforce and the majority are self-employed or work in subsistence jobs.
In addition, in this model of countries, a significant percentage of wage labor does not contribute to insurance programs or guarantees of a mandatory nature. There are various reasons for this, including small enterprises, projects with low productivity, companies or economic enterprises may not be able to afford the necessary contributions for insurance or guarantee, others are exempt from authorization, and so on, and in the presence of low enforcement capacity, employees and employers simply choose to evade the performance of this obligation. To address these challenges, many countries have established non – contributory schemes in recent years to cover individuals with low or limited ability to contribute, who work in the informal sector, which accounts for more than 90% of private sector workers in Iraq.