Revisiting and reforming social protection has become a central issue following the global shocks of COVID-19 and the invasion of Ukraine impacting food and energy prices.
The search for new and innovative policies to develop appropriate systems of social protection is more essential than ever, especially as social security expenditure increases with time as a proportion of GDP due to systems maturing and expanding in scope.
The expenditure can also rise if the participation rate of women, young people, and older workers in an economy does not increase – potentially destabilizing the dependency ratio between active and retired people.
The crucial role of the state as guarantor of the well-being of its population brings with it plenty of both indirect and direct costs – as financial guarantor or ‘insurer of last instance’ in either social security schemes or systems administered by private bodies.
Algeria’s social protection reforms
Since the creation of Algeria’s social protection system, it has been reformed many times, the most important being in 1983 when five laws1 were passed to unify the systems and benefits.
Social protection in the country is made up of two main policies – the social security policy represented by the contributory and the insurance system, and the social assistance policy which is the non-contributory and assistance system.
Currently under the supervision of the ministry of labour, employment and social protection, the range of services overall include ‘special funds’ and ‘social mutual funds’ for employees, which are:
• The National Fund of Social Insurance for Salaried Workers (CNAS)
• The National Fund of Retirement (CNR)
• The National Fund of Insurance for Non-Salaried Workers (CASNOS)
• The National Fund for Paid Leave and Unemployment of Bad Weather of Building, Public Works and Water sectors (CACOBATPH)
• The National Fund for the Collection of Social Protection Contributions (CNRSS)
• The National Insurance Fund for Unemployment (CNAC).
Of these six main funds, three (CACOBATPH, CNR, and CASNOS) struggle to meet their spending commitments.
In 2019, the employed population was estimated to be 11,281,000 people, with 18.3 per cent being women. But the social protection system was only covering 58.1 per cent of the employed population.2
A key factor in the low demand for insurance from the employed population is the growing informal economy in Algeria, estimated at 22.40 % in 20173. Informal workers do not pay social contributions but can still benefit from state healthcare and education provision.
According to 2011 statistics from the ministry of commerce, it is estimated the informal market in Algeria is made up of 61,500 illegal traders who are active in 761 informal markets. This informal economy compounds administrative corruption in the banking system, the financial losses to the state due to tax evasion, the imbalance in supply and demand (the spread of speculation), and the irregularity in the balance of payments.
The state also subsidizes the price of several products, notably food staples and energy products. And housing policies targeting certain categories of the population are also considered a form of social protection.
The unemployed and those benefitting from the Guaranteed National Minimum Wage (SNMG) can get free housing, and those in work are eligible for the Rent-to-Own Accommodation in Algeria (AADL) programme, the Assisted Promotional Housing (LPA), and Public Promotional Housing (LPP). Public rental housing known as SOCIAL Housing (LPL) is mainly intended for citizens who do not have a home or live in precarious conditions.
Some employers are known to deprive their employees of fundamental workers’ rights by not declaring them to the social protection bodies. This affects the true picture of social protection income through tax evasion and the reduction of subscription rates, making social protection funding unable to properly finance the various social services provided by the state.
The ‘socially insured’ class of worker
The low demand for insurance is also caused by a low confidence in institutions as affiliation to the system in Algeria is compulsory. Known as the ‘socially insured’, workers whose job is fixed by decree are eligible for social protection cover.
This includes both salaried and self-employed workers, or workers from specific categories, as well as beneficiaries of schemes such as the Program for Professional Integration (DAIP) and social DAIS.
DAIP is administered by the national agency for employment (ANEM) under the supervision of the ministry of labour, of employment, and social protection. It targets young unemployed individuals seeking jobs for the first time to allow them to obtain a job in the public or private sector in return for wages supported by the state.
DAIP is a real opportunity for unemployed young people to integrate into the labour market. At the beginning of the 2000s, an increase in oil prices put the Algerian government in a favorable situation to launch several employment programs targeting unemployed youth, create temporary jobs, and support self-employed individuals by providing micro credit.
The Agency for Social Development (ADS) also administers programmes to improve employment options for disadvantaged populations, quite similar to those from ANEM. But overall these programmes have largely failed to meet their objectives.
Employment has been decreasing significantly since the second half of 2014 due to the economic crises in Algeria and an increasing number of graduate students entering the labour market with inadequate skills and qualifications.
The 2014 oil price drop also led to a substantial fall in the number of funded projects and, by 2019, but most of these programmes had ended, replaced by a grant given to the unemployed and those first-time job seekers registered with the National Employment Agency.
This employment decrease will likely lead to a decrease in the value of the dinar, creating economic problems such as increased prices and a deterioration in citizens’ purchasing power. Those programmes promoting new companies have also struggled because of failures in the control procedures and the disengagement of those benefitting.
Current approaches are not working
Although developing an insurance market could be a solution to extend social protection to informal workers, all these measures remain incomplete and are no longer sufficient in the context of economic imbalance and changes in demographic growth.
The government must review social support and develop strategies to extend social protection to those informal workers who constitute potential contributors and could be an additional source of revenue for pension and social security funds.
The aim must be to transition away from a generalized public support approach to delivering support directed to those who deserve it. Social security is essentially based on the principle of risk pooling and, in general, the more participants there are, the more reliable the system is.
The state remains the guarantor of last resort of national social security schemes and must exercise its control functions. Solutions to the problem of the deficit of social security funds must come from the labour market, such as investing in economic diversification and developing labour-intensive sectors.
Overall, the demand for labour must be suitable to the supply, which means addressing the problem of skills mismatch. A strategic partnership is needed to tackle this, between the ministry of higher education and scientific research and other selected ministries, in particular the ministry of labour, of employment, and social protection.
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[1]
• Law No. 83-11 of July 2, 1983 relating to social insurance;
• Law No. 83-12 of July 2, 1983 relating to retirement;
• Law No. 83-13 of July 2, 1983 relating to accidents at work and occupational diseases;
• Law No. 83-14 of July 2, 1983 relating to the obligations of taxable persons in terms of Social Security;
• Law No. 83-15 of July 2, 1983 relating to social security litigation.
[2] ONS, Activity, employment & unemployment reports, N°879, 2019
[3] R.DAHMANI, M.ZAID, “Size estimation of the informal economy in Algeria during the period of 1990-2017, strategy and development review, volume:09/N°16(2019), p 181-200.
