The Dynamics of Social Insurance in Egypt

Contributory social insurance provides essential benefits to workers when they retire and is associated with a host of other benefits while working. Yet social insurance coverage is low and declining in Egypt. This paper uses both panel and retrospective data from Egypt to assess the dynamics behind these trends in social insurance coverage. Analyses examine the dynamics of gaining social insurance, including specifically at entry and when already working but uninsured. Losing social insurance, both when continuing to work and due to exiting work, is also examined. The results highlight not only the decline of social insurance coverage but an informality trap: workers often obtain social insurance at the start of a job, and so long as they remain employed in that job, are unlikely to lose social insurance. However, workers who start work without social insurance coverage rarely gain social insurance thereafter, unless they change jobs. One reason for the decline in social insurance may be the low value workers place on coverage; the unemployed have, typically, the same reservation wages for jobs with and without social insurance coverage.