Between Costly Formality and Legal Informality: Egypt’s Social Insurance Design Woes

Over the past two decades, and even when Egypt exhibited positive annual growth rates, access to contributory social insurance (SI) coverage among workers continued to fall. Access to jobs with SI coverage declined steadily in Egypt from 42% of total employment in 2009 to 36% in 2021. Furthermore, while access to social insurance has been particularly low in the private sector, compared to the public sector (Assaad & Barsoum, 2019), it became even lower over time, reaching 20% of private sector employment in 2021, down from 24% in 2009. A key dimension of lack of access to SI is that it is also common among the nonpoor, with Lopez-Acevedo et al. (2023, p. 244) showing that workers who are not poor but are informally employed constitute 40% of workers in Egypt. What are key institutional elements in the scheme design that can lead to such wide and increasing coverage gap? This is the main question that we discuss in this policy brief based on Selwaness & Barsoum (Forthcoming). We argue that the increase in cost for regular wage workers, and the legal informality along with the exclusion of irregular wage workers, and own-account workers are key to understand the low and dropping SI coverage in Egypt.