Manpower Exchange and Social Security System for Islamic Economic Co-operation

The Principle of Distributive Equity in Islam necessitates the institution of social security as mandatory for the Islamic society. An instrument for financing this social security fund is ‘Zakat’ (specific target wealth tax in Islam). But, when we are financing a social security system in relation to the labour market in general, then ‘Zakat’ cannot be used as a principal instrument in it. The reason for this is that in the labour market there would be claims on the social security system from the Islamic ‘needy’, on whom ‘Zakat’ can be spent, and from those who do not come into this category of recipients, on whom ‘Zakat’ funds cannot be spent. Thus, in the Islamic social security system, the ‘Zakat’ fund can at best be treated as a specific target social welfare expenditure. Other areas of social security, such as group life and health insurance, unemployment insurance, workmen’s compensation, family allowance and the like, must be financed through an individual contributory premium system in conjunction with government and employer contributions.