The Evolution of Social Security in Jordan’s Labor Market: A Critical Comparison Between Pre- and Post- 2010 Social Security Reform

Jordan has undergone a profound social security reform since 2010, primarily aiming to ensure the financial sustainability of the system over time. The reform measures mainly included increasing the age of early retirement and the minimum contributions required to claim it, increasing employee and employer monthly contributions, covering even micro firms (with at least one employee), and allowing the self-employed and inactive housewives to voluntarily participate. Using data from the 2010 and 2016 Jordan Labor Market Panel Survey (JLMPS), this paper examines the dynamics of Jordanian workers’ access to social security before and after the 2010 reform and the coverage incidence across different firm sizes and workers’ characteristics. The paper also explores the time it takes to acquire social security coverage on the labor market before and after the reform. Moreover, trends in early retirement incidence among middle-aged male workers are examined. Our findings show that the overall incidence of social insurance coverage appears to slightly increase in 2016, for private sector wage workers, irregular wage workers, and non-wage workers (employers and self-employed). Workers starting in the public sector were the most likely to acquire social insurance coverage at the start of their jobs, followed by the private wage workers inside establishment. Both men and women who started their first job after the 2010 reform experienced a decline in their proportion of acquiring social insurance coverage upon their job start. Moreover, the average incidence of early retirement slightly declined among men while still being highly prevalent around ages 40-46.