The Jordanian Social Contract: Shifting from Public Employment As A Source of Social Insurance to Government-Regulated Social Insurance

Under the old social contract, the main components of social insurance were provided through several features of public employment: income during old-age and in case of disability was assured through pensions, while income was protected from sudden shocks by job security. In its effort to shift toward a new social contract, the Government of Jordan has consistently articulated its vision of a private sector led economy, and its intention to implement this vision through a shift from direct public provision of the social insurance components of the social contract to government as a regulator and facilitator of social insurance through private sector employment. This paper examines the extent to which Government regulatory efforts are ensuring private wage employment provides social insurance. The paper shows that it has become increasingly difficult for Jordanians entering the labor market to obtain a first job that provides effective coverage and that there are few opportunities for Jordanian workers to shift later into a job that provides effective coverage. The law is relatively comprehensive in requiring coverage. Despite the fact that coverage is required without regard to firm size, the existence of a written contract or regularity of work, compliance with the law is strongly determined by these factors. Surprisingly, when controlling for a wide range of job characteristics, there are no significant differences in coverage by gender or nationality.